LDK Solar Co. (LDK:US), the second-biggest maker of wafers that convert the sun’s energy to electricity, rose the most in almost a year after Chinese investors purchased a minority stake.
LDK’s American depositary receipts climbed 21 percent to 86 cents at the close in New York, the most since Oct. 27, 2011. Each ADR is worth one regular share.
The solar company is issuing new shares that Heng Rui Xin Energy Co. will buy for 86 cents each. When the deal closes, Heng Rui, owned by the Xinyu State-owned Asset Management Co. and Hi-Tech Wealth Investment and Developing Co. will own 19.9 percent of LDK’s outstanding shares, Xinyu, China-based LDK said today in a statement.
LDK had $3.6 billion in short and long-term debt (LDK:US) as of June 30. “Some companies, such as LDK, have balance sheets so strained that further borrowing is impractical,” Pavel Molchanov, an analyst at Raymond James & Associates Inc. in Houston, said today in an e-mail. “In those cases, issuing extremely dilutive equity may be the only viable option.”
Heng Rui will have the right to place three additional directors to LDK’s board and the companies will add two independent directors, according to the statement. The transaction is subject to government and regulatory approval.
LDK Chairman and Chief Executive Officer Peng Xiaofeng said in a Sept. 17 conference call that the company is in advanced talks with two potential investors.
GCL-Poly Energy Holdings Ltd. (3800), based in Hong Kong, was the largest solar wafer company by capacity last year, according to Bloomberg New Energy Finance.
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