LDK Solar Co., a Chinese photovoltaic manufacturer with more than $3.1 billion in debt, hired Citigroup Inc. to help renegotiate its liabilities.
The company has “entered into discussions with certain creditors to obtain additional flexibility,” Xinyu, China-based LDK said today in a statement.
The Chinese government is offering support to selected solar manufacturers, and LDK may be seeking access to that financial lifeline, Edwin Mok, an analyst at Needham & Co. in San Francisco, said today in an interview.
“In China, there’s some opportunity for these challenged solar companies to find ways to get financing or liquidity, and Citi will help them figure out the best way to do that,” Mok said. “The company has a very challenging balance sheet.”
Chinese solar companies gained today after a report that the government has allocated 13 billion yuan ($2 billion) in subsidies for domestic solar companies this year. A glut of capacity has depressed prices and profits worldwide. LDK climbed 15 percent to $1.20 at the close in New York.
LDK, the biggest maker of wafers for solar cells after GCL-Poly Energy Holdings Ltd., last week cut its full-year forecast for sales and shipments on waning demand.