Solar Panel Groups Modify Loans

Last updated: Finance Finesse

LDK and Envision join several other solar panel companies that have struggled

Solar and alternative energy companies have altered their loan agreements as they struggle with price competition. Both LDK Solar Co. Ltd., maker of multicrystalline wafers for solar panels, and Envision Solar International Inc., have recently amended their loans. Xinyu City, China-based LDK Solar announced in a filing with the U.S. Securities and Exchange Commission that it came to a 30-day forbearance agreement on its notes.

The company had an interest payment due on the notes in August, which it did not make. Previously, the company announced a forbearance period in September. The manufacturer also has offices in Sunnyvale, Calif.

Envision Solar has extended the maturity dates on its loans several times, most recently through the end of 2013. In a 10-Q filing from Aug. 14, the company says that it intends to raise additional working capital and renegotiate the loans again. Envision, which makes solar panels for parking garages, said in SEC filings that it was struggling because potential customers couldn’t get financing for large infrastructure purchases due to macroeconomic conditions. Both companies cited very competitive pricing as a cause of their financial problems.

“The [photovoltaic] market is highly competitive and volatile,” LDK said in a May 15 SEC filing.

“Currently, China’s major solar manufacturers, including us, substantially rely on both exports of solar products to Europe and the United States and domestic demand. The reduced market demand for PV products in these markets has resulted in substantial oversupply. In addition, we and many of our competitors engaged in aggressive expansion programs during the past several years.”

“As a result, competition has increased and the industry has experienced price reductions, which have materially and adversely affected our business operations and financial condition,” the LDK filing states.

Envision notes in documents that it has high installation costs and that competitor prices may be lower. Both LDK and Envision are on the Mergers & Acquisitions Distressed Company Watch List after raising doubts about their abilities to continue without the threat of liquidation.
LDK and Envision join several other solar panel companies that have struggled, including Wuxi Suntech Power Holdings Co. Ltd., the China-based subsidiary of Suntech Power Holdings Co. Ltd. Wuxi went into bankruptcy in March. In 2011, manufacturers Solyndra LLC, SpectraWatt and Evergreen Solar sought bankruptcy due to product oversupply.

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