LDK Solar has amassed funds needed to exit insolvency

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Embattled Chinese giant LDK Solar, and its joint provisional liquidators (JPLs), say they have raised sufficient finance to steer through plans for an offshore – outside its Cayman Islands-registered base – restructuring.

LDK and JPLs Tammy Fu and Eleanor Fisher, both of Zolfo Cooper (Cayman) Limited, are seeking permission from the Cayman Court to extend the deadline for completion of the restructuring and to ratify a deal negotiated with preferred creditors.

Having announced, on July 15, it had secured a commitment from Heng Rui Xin Energy to supply $10 million in cash and $14 million in working capital financing – as well as $5 million towards the restructuring from various LDK subsidiaries – and having since raised a further $3.2 million from internal accounts receivables; LDK and the liquidators say they have raised the exit financing needed to complete the restructuring.

Creditor payment halved

The company announced on Wednesday it has agreed with the holders of the 10% notes that LDK defaulted on in February – sparking insolvency proceedings and a de-listing from the New York Stock Exchange – as well as with 78% of the holders of convertible preferred shares with claims against the company, and with shareholders, to halve the cash-out option to creditors from $0.20 in the dollar to $0.10.

LDK now wants the Cayman Court to ratify that amendment to its restructuring support agreement (RSA) and to extend the deadline for completing restructuring to September 30, with an automatic further extension to November 14, provided it files its scheme of agreement for the restructure at the Cayman Court by the end of the month.

LDK is also seeking permission to negotiate with other creditors by offering a mix of cash, equity and convertible securities.

The debt-laden manufacturer has already had the reassurance of state backing with the China Development Bank leading a consortium of 11 lenders offering CNY2 billion ($324 million) in financing, on May 27.