LDK Solar files for liquidation in Caymans

Feb 24, 2014 - Chinese photovoltaics (PV) maker LDK Solar Co Ltd (NYSE:LDK) has applied for provisional liquidation in the Cayman Islands in a bid to solve its offshore debt issues, it said in a statement today.

The application for the appointment of joint provisional liquidators was filed with the Grand Court of the Cayman Islands on February 21. The Chinese company pointed out that the proceedings do not involve its operations in China and said it does not intend to start any debt restructuring programmes at home.

In August 2013, LDK Solar failed to make the interest payment on US dollar-settled senior notes that actually mature this month. The CNY 1.2 billion (USD 197m/EUR 143m) worth of notes with a 10% annual coupon were sold in February 2011. The coupon payment for August 28, 2013 remains unpaid, while the solar products maker has already signed seven forbearance deals with bondholders.

Right after Christmas, LDK presented a draft restructuring proposal giving two options -- exchange of securities or a cash-out -- to the holders of the 10% notes. Under the exchange of securities path, the holders could get LDK Solar shares in exchange for 8.736% of the senior notes principal they hold plus accrued interest through June 3, 2013. The remaining 91.264% of the claim is to be paid in 2018 convertible notes with an interest rate equal to 90% of the Shanghai Inter-Bank Offered Rate (SHIBOR). Under the cash-out option, on the other hand, holders were offered USD 0.20 (EUR 0.274) for each USD 1.00 of senior notes principal plus accrued interest through December 31, 2013.

In today’s press release, LDK Solar said it had “made considerable progress” in the negotiation with major offshore creditors as regards to the restructuring proposal. The latest forbearance agreement expires on February 27.

(CNY 10 = USD 1.640/EUR 1.195)

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