Feb 24 Debt-laden Chinese solar company LDK
Solar Co Ltd said it filed in the Cayman Islands for the
appointment of provisional liquidators, four days before it is
due to make a $197 million bond repayment.
LDK Solar, which is incorporated in the Cayman Islands, has
received several reprieves from investors on interest payments
on the bond, which matures on Feb. 28.
S&P Capital IQ analyst Angelo Zino said he believed that LDK
Solar could fail to meet its commitments.
"As a result you will eventually see a liquidity crisis ...
similar to what we have seen with Suntech last year," said Zino,
who has a "sell" rating on the stock.
Bigger rival Suntech Power Holdings Co Ltd's main
unit, Wuxi, was dragged into bankruptcy proceedings by creditors
last March, days after Suntech defaulted on a debt payment.
LDK Solar said on Monday it has made "considerable progress"
in its ongoing discussions with key offshore creditors.
The Cayman Islands filing does not affect LDK's operations
in China and the company had no intention of initiating any more
debt restructuring proceedings in that jurisdiction, it said on
However, the liquidity crisis triggered by the company's
inability to repay debt would not only affect the parent company
incorporated in Cayman Islands but also its subsidiaries in
China, S&P Capital IQ's Zino said.
Almost all of LDK Solar's manufacturing operations are in
The companies piled on debt to expand capacity, but have
struggled to repay it as a steep fall in panel prices over the
past four years dented their cash flows.
LDK has about $2.7 billion of short-term borrowings, an
executive said on a call in November.