LDK Solar Ltd’s failure to fully pay notes this week has raised the prospect of China’s second solar-industry failure this year as the company needs to repay a loan 10 times larger by June.
The world’s second-biggest maker of wafers that convert sunlight into power couldn’t repay all of the $23.8 million of dollar-denominated convertible bonds that matured on April 15, according to a company statement yesterday. Before the delinquency, its 2014 yuan notes dropped below 50 yuan per 100 yuan face value, according to data compiled by Bloomberg. The yield reached a six-month high of 125 percent last week, compared with the 79 percent for Bonn-based Solarworld AG.
LDK, which will probably report a second year of losses tomorrow, must repay a $240 million loan unless it spins off its polysilicon unit by June 3, according to regulatory filings. Suntech Power Holdings Co, once the world’s largest panel maker, was dragged into insolvency days after it defaulted on a $541 million bond repayment on March 15.
LDK failed to repay about $7 million of bonds for which it could not reach a settlement, and may receive a notice of default, said Edward Guinness, a fund manager at Guinness Atkinson Funds in London who oversees about $800 million, including a “tiny” position in LDK.
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