LDK Solar Co. (LDK), the Chinese manufacturer that failed to pay a maturing bond at the end of February, said today that holders of 60 percent of the notes’ principal have agreed to a restructuring deal.
Minority shareholder Heng Rui Xin Energy Co. also agreed to provide as much as $14 million in interim financing, Xinyu, China-based LDK said in a statement today.
Swelling global demand for solar panels has helped Chinese producers including JinkoSolar Holding Co. and Trina Solar Ltd. return to profitability after a two-year slump. That’s not the case at LDK, which missed a semi-annual bond payment Aug. 28 and has announced numerous short-term forbearance deals since then as it worked out terms of the restructuring. The company had $2.8 billion in debt at the end of the third quarter and hasn’t reported a profit since the first quarter of 2011.
Under the deal announced today, bondholders of the company’s 1.7 billion yuan ($274 million) in outstanding notes may redeem them for 20 cents on the dollar. They may also exchange them for stock, at $1.586 an ordinary share, or for bonds that may be converted into LDK’s American depositary receipts.
Holders of preferred shares of LDK unit LDK Silicon & Chemical Technology Co., issued for $240 million in June 2011, were offered similar options.
The company said today its ADRs, each worth one ordinary share, may be delisted from the New York Stock Exchange. They haven’t traded in the U.S. since March 18, when they closed at $1.01.
The restructuring agreement and the interim financing offer will be evaluated at a hearing “on or around April 2” in the Cayman Islands, where LDK is incorporated, according to the statement.
LDK is seeking to avoid the fate of Suntech Power Holdings Co., a Chinese panel producer that defaulted on a $541 million bond in March 2013, leading to bankruptcy proceedings. Suntech filed for bankruptcy protection from U.S. creditors in the Caymans on Feb. 21 and plans to sell its largest unit.
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