LDK Solar Co., a Chinese solar manufacturer burdened with $2.8 billion in debt, agreed to sell more shares to investor Cheng Kin Ming’s Fulai Investments Ltd., boosting his stake in LDK to 25 percent and diluting that of its biggest holder, founder and chairman Peng Xiaofeng.
The company will issue 25 million new shares at $1.03 each to Fulai, which also has the right to choose two non-executive directors, Xinyu-based LDK said today in a statement. That will boost the solar company’s total outstanding shares to about 169 million, according to data compiled by Bloomberg.
This is the third time in six months that LDK has issued new shares to an investor, and the company has now sold or agreed to sell about 40 percent of itself. The solar manufacturer is trying to raise capital to pay down debts after a global oversupply of photovoltaic panels drove down prices and cut into margins.
Peng owned about 72.5 million shares as of May, a majority stake, according to data compiled by Bloomberg. With the newly issued shares, his stake will decline to about 43 percent.
LDK Chief Financial Officer Jack Lai didn’t reply to phone and e-mail messages today.
LDK sold 17 million new shares to Fulai in two installments in February and March, about 10 percent of the current outstanding total, and 25.3 million to Heng Rui Xin Energy Co. on Oct. 22, now about a 15 percent stake.
Fulai, incorporated in the British Virgin Islands, is owned by Chinese businessman Cheng. Cheng was a government researcher who has been involved in real estate development since 1993, according to a 2010 credit report from Huajie Rating on his company Shanghai Qianjiang Industry (Group) Co. Two calls to the company weren’t answered.
Cheng also owns a 30 percent stake in another solar company, Shunfeng Photovoltaic International Ltd., through an investment company, according to a Dec. 13 Hong Kong Stock Exchange filing.
The LDK transaction will be 28 percent less than the weighted average of $1.44 each that Fulai paid for LDK shares under its earlier deal.
The solar-panel maker reported April 18 its seventh straight quarter of losses, with a three-year low of $98.3 million in cash.
LDK’s American depositary receipts, each worth one ordinary share, fell 1.6 percent to $1.26 at the close in New York. They have declined 13 percent this year.