GCL Poly extends loan term to subsidiary – has the wafer maker had help with its debt pile?

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Talk about perfect timing – Chinese PV-grade polysilicon and wafer maker GCL Poly announced today it has granted an extension to the repayment date of a $110 million loan it made to its indirect, wholly-owned subsidiary GNE Development.

Having loaned the solar plant EPC the money at 8% interest in April last year, a $70 million slice of the cash was due for repayment tomorrow, but that repayment date has now been extended until November 18, in order to help the borrower’s cashflow and earn more interest for GCL, according to an update made to the Hong Kong Stock Exchange today.

Under the terms of the extended arrangement, GNE Development will have to pay back principal and interest in November.

All of which makes interesting reading given that GCL reported last summer that it was sitting on its own RMB61.3 billion debt pile ($9.06 billion), of which RMB 21.4 billion was due for repayment in July.

With GCL Poly’s share price having risen markedly since the start of the month it is tempting to wonder whether the company has managed to renegotiate some of those onerous credit lines, although no announcement appears to have been made to that effect on the Hong Kong exchange and neither is there any mention of developments on the company website.

Today’s update announced the GNE Development loan had been renegotiated at arms-length, which is just as well given GCL Poly has a 62.28% stake in the recipient of the loan and GCL Poly directors Mr Zhu and Zhu Yufeng have 22.12% and 28.09% stakes in GCL System Integration, a business which has a 10.01% stake in GNE Development.