With the Chinese government pressing for consolidation among the myriad solar players in the People’s Republic, the reported re-sale of a former unit of debt-saddled LDK Solar shows what rich pickings are available.
An affiliate of the Hefei government banked a healthy profit from cell and module manufacturer LDK Solar Hi-Tech (Hefei) Co just five months on from purchasing it from LDK for a reported RMB120 million ($19.6 million).
According to a Bloomberg report citing a statement on the Hefei government bidding center webpage, polysilicon manufacturer Tongwei Group has paid RMB870 million for the business, representing a profit of RMB750 million or more than 700 per cent for the Hefei government.
Tongwei moves into cell manufacture
The acquisition means Tongwei can manufacture solar cells and modules using its own polysilicon, much like biggest rival, GCL Poly.
News of the acquisition is likely be greeted with dismay at LDK which sold off the unit at the bargain basement price a day after announcing a default on a $23 million convertible bond payment and at cell and module manufacturer Shanghai Qianjiang Group which had reportedly lined up a RMB25 million raid for the unit only to fail to secure the required government guarantees. It appears the authorities in Hefei had a better idea of the unit’s value.
That RMB870 million would have been a drop in LDK’s RMB29.3 billion debt ocean.
According to second quarter figures released by the company late last month, more than RMB26.9 billion of the debt pile is in current or short term liabilities.