March 11, 2014 / 12:40 PM / 3 years ago

China's Chaori Solar risks delisting after third straight annual loss

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March 11 (Reuters) - Solar equipment producer Chaori Solar , which last week recorded China's first domestic bond default, said on Tuesday it could be delisted from the Shenzhen stock exchange after posting a preliminary loss for a third year in a row.

China's securities law states that a company has to suspend trading of its shares after making a net loss for three consecutive years and will be de-listed if it fails to make a profit in the following year.

This means Shanghai Chaori Solar Energy Science and Technology Co Ltd could be de-listed if it fails to make a profit in 2014.

China's solar industry has suffered from severe overcapacity and falling prices for photovoltaic cells.

Chaori Solar recorded a default last Friday, when it missed an interest payment on a bond. It warned that it would only pay out less than five percent of the 89 million yuan ($14.5 million) in interest due on 1 billion yuan worth of bonds issued in 2012.

The company suspended trading in its shares on Feb. 19.

The group, which had 6.5 billion yuan in liabilities outstanding at end-September, reported a 2013 preliminary net loss of 1.33 billion yuan ($216.67 million), it said in a filing released on the Shenzhen exchange on Tuesday.

The company's Chaori-11 bond also faces delisting risks, it said in the statement.

Chaori could not be reached for further comment.

$1 = 6.1385 Chinese Yuan Reporting by Hong Kong newsroom and Shanghai newsroom. Editing by Jane Merriman

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