GCL-Poly Seeks Fresh Credit After First Profit Since 2011

GCL-Poly Energy Holdings Ltd., the biggest maker of polysilicon and wafers for solar panels, is in talks to extend HK$21.9 billion ($2.8 billion) in bank credit lines after posting its first annual profit since 2011.

Record installations of photovoltaics boosted demand for its products, increasing net income to HK$1.96 billion ($252 million) for 2014 from a loss of HK$664.3 million the previous year, the company said in a Hong Kong stock exchange filing on Thursday. Profit trailed the average estimate of HK$2.01 billion from a survey of eight analysts by Bloomberg.

“The operating environment of photovoltaic industry saw a significant improvement in 2014,” Chairman Zhu Gongshan said in the statement. “Due to the continuous decrease in the cost of solar power generation, the global demand for PV will continue to grow in 2015 and there will be a huge wave of installation.”

The Chinese manufacturer said it currently has cash of HK$5.5 billion and that it doesn’t anticipate difficulty in obtaining new lending agreements following discussions with banks in Hong Kong and mainland China.

“The group will have sufficient working capital to meet its cashflow requirements in the next 12 months,” GCL-Poly said. It didn’t identify the banks involved.

Those comments underscore the growing need for cash for GCL-Poly to expand in into developing solar farms, which require capital to complete. GCL-Poly last year acquired GCL New Energy Holdings, an affiliate with its own listing in Hong Kong whose finances are now consolidated with its own accounts.

Cash Needs

The unit had a net loss of HK$113 million and net cash outflow of HK$518 million in the nine months ended in December. It had capital expenditure needs of HK$6.9 billion relating to solar farms it acquired and intends to build.

“GCL New Energy Group is currently negotiating with several banks both in Hong Kong and the PRC (People’s Republic of China) for additional financing,” the company said in the statement. “It has received detailed proposals from certain banks” including letters of intent that may grant it HK$7.6 billion.

Polysilicon prices have tumbled to below $19 since reaching almost $80 a kilogram in 2011, leading to losses at GCL-Poly in 2012 and 2013. Record installations of solar panels have since eased an industry glut, although prices are yet to rebound.

Higher demand for solar panels -- led by China, Japan and the U.S. -- bolstered polysilicon production in China last year. GCL was able to sell its products at stable prices, and factories were running at full capacity, GCL-Poly said in November.

Zhu said earlier this month that the solar market will grow as much as 30 percent this year and prices will be steady.

The stock fell 2.4 percent to to close at HK$2.02 in Hong Kong trading Thursday before earnings were announced.

— With assistance by Feifei Shen

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