GCL-Poly seeks $1.3bn sale of wafer business

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The ongoing debt struggles of China’s GCL-Poly Energy Holdings Ltd. have forced the company to sell a number of its core business assets for around eight billion yuan ($1.3 billion).

GCL, the world’s largest polysilicon and wafer maker, announced in a statement over the weekend that it will sell seven wafer and two ingot factories to two buyers.

The announcement of the proposed sale – which would see GCL-Poly relinquish assets that generated $1.4 billion revenue in the first half of 2014, or 63% of the company’s entire revenue for that period – prompted shares in the company to fall by 6% on the Hong Kong Stock Exchange on Monday.

One of the two buyers identified is a fund controlled by Zhu Gongshan, who is GCL-Poly’s chairman, while the other buyer is Shanghai Miaochang Investment Management Center L.P.(SMIMC) It is believed that Gongshan may then purchase at least 30% of the acquired assets from SMIMC once the deal is complete.

The investment fund owned by Gongshan took part earlier in the year in the buyout of Chaori Solar – the first Chinese solar company to ever default on a domestic onshore debt, while a general partner of the second buyer was also involved in guaranteeing a sizeable portion of Choari’s defaulted bonds.

The GCL-Poly statement added that its buyers ultimately hope to steer their acquired assets into Chaori Solar – a company that has been a large client of GCL’s since the summer.

Debt or glory

The first six months of the year were profitable ones for GCL-Poly. After suffering a net loss throughout 2013 due to the difficult solar conditions experienced across China that year and in 2012, GCL-Poly posted a profit in H1 2014. However, financial reports from June revealed that the company was still lumbered with a sizeable debt of around $5 billion. This asset sale is forecast to ease that debt burden by an estimated $2 billion.

More widely, China’s solar industry has seen its impressive growth suppressed somewhat in the final quarter of 2014 as political pressure has caused connection delays for a number of utility scale PV installations. The government’s intention to grow the country’s distributed generation market – which has so far fallen well short of the proposed 8 GW of new capacity for the year – has caused a bottleneck in the larger ground-mount sector.

So much so, in fact, that solar analysts have suggested that Japan could well steal a march on China and end the year as the most dynamic solar market in the world.