LDK Solar Co., the second-biggest maker of solar wafers, said it’s in advanced talks with two companies that are interested in making an investment as it cut staff to cope with widening losses.
The Chinese manufacturer is in “very detailed discussions” with potential “partners” about investing in the company, LDK Chairman Peng Xiaofeng said in a conference call today. “Two very well-capitalized companies that are familiar with the industry have shown significant interest in taking a strategic investment.”
Solar panel makers are grappling with a global supply glut that’s cut prices and profit margins, limiting the ability of companies to pay off borrowings. LDK has $3.3 billion in interest-bearing debt and received a bailout in July for a portion of its liabilities from the local authority of Xinyu, the Chinese city where it’s based.
“The company remains challenged due to its cash and liquidity position,” the chairman said. “But we are maintaining constructive relations with our banks and they are committed to work with LDK to achieve long-time support by renewing current loans.”
The company manufactures polysilicon, wafers, panels and photovoltaic cells and trails GCL-Poly Energy Holdings Ltd., which is the world’s biggest maker of polysilicon and solar wafers. LDK reported its net loss widened today and said it reduced 19 percent of its staff to 16,512 workers during the quarter after prices fell more than it anticipated. In the first quarter, LDK already cut 22 percent of its workforce.
The net loss of $254.3 million compares with losses of $185.2 million in the first quarter and $87.7 million a year ago. Revenue halved to $235.4 million on increased competition and demand constraints. Gross margins improved, while operating margins worsened compared with the first quarter.
LDK’s American depositary receipts, each worth one ordinary share, fell as much as 4.1 percent to $1.19 at 1:28 p.m. in New York trading. They are down about 71 percent since the start of the year.
The company said the third quarter would continue to be challenging as it reduced its full-year revenue forecast to $1.1 billion to $1.5 billion from $1.5 billion to $2 billion previously. It expects to ship 1,100 to 1,400 tons of polysilicon, 0.9 to 1.2 gigawatts in wafers and modules and cells with 550 to 750 megawatts.
LDK said it will focus on reducing production costs and improving utilization rates. The company expects improvements in its projects business and improved demand from the Chinese solar market in the second half of the year.
In the second quarter, LDK produced a “very, very small” amount of polysilicon because it’s retrofitting a new technology that aims to reduce manufacturing costs to about $20 after about six months, Chief Financial Officer Jack Lai said in the call. In June, it produced the raw material for about $41 a kilogram, or almost double spot prices. LDK’s solar panels now sell for an average of 80 cents a watt, he said.