S&P Capital IQ Equity Research Analyst Angelo Zino says LDK Solar Co., Ltd. (LDK) has about $2.8 billion in interest-bearing debt, about $280 million of which is convertible debt that was due at the end of February. Zino says that convertible debt is of particular concern for him because it is outside of China.
“So we think that LDK until now has benefited from favorable lending support from China lenders,” Zino says. “However, when you start talking about offshore debt, that’s a totally different animal, and our belief is that LDK may not be able to come up with an agreement with these credit holders by the end of February, and if no agreement has been reached, it has the potential to really create a liquidity crisis for the company.”
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Zino says that debt, in his view, calls into question LDK’s longer-term financial stability.
“We saw a similar situation occur with another company, Suntech Power Holdings, last year, which led the firm into bankruptcy, and we think LDK could be heading in the same direction,” he says.
The company has since has filed a liquidation petition, and has welcomed appointed joint provisional liquidators.
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