GCL dilutes stock as senior note deadline approaches

Polysilicon manufacturer GCL-Poly Energy Holdings Ltd continued its fundraising efforts as a deadline for honoring US$500 million worth of Hong Kong senior notes approached, by issuing 21.1 billion new shares in the business.

The group’s heavily indebted solar project company is attempting to persuade the holders of 7.1%, three-year senior notes due to mature on January 30 to hold off for another three years in return for a 1% immediate payment and a rate of 9.75% from new instruments listed on the Singapore Exchange. To qualify for the new notes, investors have to agree to a restructuring of the company in the event GCL-Poly cannot honor the obligation and suffers a cross default, and with the deadline for agreeing to the note swap due to have lapsed yesterday, GCL on Tuesday extended that sign-off date until January 26.

GCL-Poly Energy Holdings this morning announced the placement of shares amounting to 18.44% of the business – and up to 15.57% of the enlarged company – in a bid to raise a net HK$4.15 billion (US$535 million) for “reduction of existing borrowings level and gearing level, adjustment of the debt structure, development of the company’s FBR [fluidized bed reactor-]based granular silicon production business and production capacity, and for general corporate purposes.”

The HK$1.08 issue price of the stock constituted a 12.2% discount on Wednesday’s closing price of HK$1.23 (US$0.14) per share.