* Says reduced workforce by 4113 employees in the fourth quarter
* Says working with bankers to bring in fresh capital
* Says will continue to get support from China-based banks
* Posts seventh quarterly loss
By Swetha Gopinath
April 18 (Reuters) - Chinese solar panel maker LDK Solar Co Ltd, which partially defaulted on a bond payment this week, said it was in the process of securing a 2 billion yuan ($324 million) credit facility as it struggles to meet looming debt payments.
The company, which has more than $3 billion in debt, reported its seventh straight quarterly loss on Thursday due to a prolonged slump in panel prices.
Like many of its domestic rivals, LDK ran up huge debts to expand manufacturing capacity before being hit by the euro zone crisis that triggered a collapse in demand for solar panels.
It must repay two-thirds of its outstanding debt in about a year, according to analysts’ estimates.
LDK partially defaulted on a $24 million bond payment on Monday, citing a “temporary cash-flow shortage”.
The company was working with bankers to bring in funds to meet working capital needs, Chairman Xiaofeng Peng said on a conference call with analysts.
The company’s total debt is about 105 times its total equity, the highest among its peers, according to Thomson Reuters data.
The chairman also said LDK was seeking a strategic investor to lower its debt-to-equity ratio.
The company is working closely with banks, lenders, creditors and even government institutions, LDK said.
Bigger rival Suntech Power Holdings Co Ltd’s main unit in China was pushed into insolvency as it defaulted on $541 million in bonds due March 15, though it was able to strike a deal with 60 percent of the noteholders.
LDK may be able to pressure its lenders to take a cut to bring down its debt levels, said Glenn Gu, a China-based analyst for business information provider IHS.
James Dinsmore, a portfolio manager at Dinsmore Capital Management in Morristown, New Jersey, said companies sometimes work with holders of convertible bonds to come out with a new debt structure.
“It’s possible that current holders would view an exchange as superior to the alternative of dealing with a bankruptcy in China,” he said. His firm does not own LDK bonds, but owns notes issued by Trina Solar Ltd.
LDK will continue to get support from China-based banks, company executives said on the conference call.
LDK has already struck a deal with the government of its home city, and received a $71 million loan from the China Development Bank Corp, but analysts questioned whether the firm can rely on the Chinese government’s backing.
China’s State Council, the country’s cabinet, last December indicated that the government would stop propping up loss-making solar companies.
“LDK, which is even more over levered than Suntech, should not expect a bailout from China’s central government,” said Raymond James analyst Pavel Molchanov, adding, however, that local governments could step in.
“For the local and provincial governments, the priority is simple - keeping fabs open and workers employed,” he said.
LDK solar said its employee count was down 4,113 since Sept. 30. Including the job cuts disclosed on Thursday, LDK has laid off roughly 13,000 people in the past year.
It had 9,845 employees as of Dec.31.
LDK said it would focus on the emerging solar markets such as China, Africa, India and the United States, but warned that the demand for solar panels would remain weak in the near term.
Net loss hit $517 million or $3.68 per American Depositary Share (ADS) in the fourth quarter, compared with $588.7 million or $4.63 per ADS a year earlier.
Net sales fell nearly 67 percent to $135.9 million.
LDK’s free cash flow - cash generated from operations after subtracting capital expenditure - has been negative since the company was established in 2005, Thomson Reuters data showed.
The company expects its revenue to fall to $80-100 million in the first quarter, with wafer shipments of 260-270 megawatts (MW) and cell and module shipments at 30-40 MW. In the fourth quarter, LDK shipped 184.7 MW of wafers and 69.1 MW of modules.
LDK shares were down less than 1 percent at $1.07 in morning trade on Thursday. The stock has fallen 75 percent from the start of 2012 through Wednesday’s close.