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 companys 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-Polys 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 Choaris 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 GCLs 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.