LDK Solar Co. (LDK:US), a Chinese solar manufacturer that owes more than $3.1 billion, is seeking consent from investors to take on more debt.
The company will offer noteholders 10 yuan ($1.60) for every 10,000 yuan they hold in its notes due in 2014, Xinyu, China-based LDK said today in a filing. The payment would come with conditions, including allowing LDK to take on more debt.
The filing follows LDK’s announcement on Dec. 12 that it hired Citigroup Inc. to assist in improving working capital and getting flexibility from creditors, said Edwin Mok, an analyst at Needham & Co. in San Francisco.
“They are doing whatever they can to keep up liquidity,” Mok said. “It’s not like they’ve actually gotten the debt.”
LDK’s 10 percent yuan notes due February 2014 traded at 57.4 percent of face value in Singapore, after reaching 26.2 percent on Sept. 17.
By accepting the payment, creditors will consent to various conditions, including approval for LDK to issue as much as $200 million in convertible preferred shares, and to take on as much as $350 million in additional debt to increase production and fund the development of solar farms.
Consent from holders representing the majority of the principal amount held must occur before Dec. 21 for the amendments and payments to be made, LDK said.
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