GCL enters another expensive sale-and-leaseback deal

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The project development business of Chinese polysilicon power GCL-Poly has been forced into another eye-wateringly expensive sale and leaseback agreement as it continues to squeeze its PV assets to fund its parent’s production expansion plans.

GCL New Energy Holdings Ltd today announced it had signed a ten-year lease with Kangfu International Leasing related to an 80 MW generation capacity solar project in Yongcheng city in Henan province.

Under the terms of the deal signed yesterday, GCL New Energy will receive RMB350 million ($51 million) from the sale towards poly manufacturing parent GCL-Poly Energy Holdings Ltd’s ever expanding debt pile.

Long-term cost

However, GCL New Energy will then have to pay back almost RMB500 million over ten years to lease back the project plus a RMB22.75 million leasing service fee, with the repayments due in 40 three-month intervals. After the lease expires, GCL New Energy will have the option of repurchasing the project for RMB10,000.

The deal is similar to one signed by GCL New Energy for a 140 MW project in Shaanxi province in April. That arrangement, with Cinda Financial Leasing, brought a RMB600 million windfall but will cost the company more than RMB811 million over the nine-year term of the lease.

GCL needs funds as it bids to rapidly ramp up its polysilicon production capacity to feed an anticipated solar gold rush around the world.