LDK Solar Co. Ltd.(NYSE: LDK), which Mergers & Acquisitions placed on our Distressed Company Watch List, has filed for provisional liquidation in the Cayman Islands.
The filing was made as the company attempts to resolve its offshore liquidity issues and is in discussions with creditors, according to a statement. On Dec. 27, the company proposed a plan to restructure notes on which it has an overdue interest payment. Appointing liquidators in the Cayman Islands would not affect the company's operations in China, where it is based. LDK has no intention of filing for debt restructuring in China, the company says.
LDK, headquartered in Xinyu City, China, makes photovoltaic (PV) products, including polysilicon, monocrystalline and multicrystalline products for use in solar panels.
On Feb. 13, the company announced that it had entered into a 14-day forbearance period for a $279 million in 10 percent senior notes due in 2014. The forbearance period, which ends Feb. 27, is in regards to an interest payment that was due Aug. 28, which LDK never paid. LDK had already entered into several other forbearance periods regarding the missed payment, filings with the U.S. Securities and Exchange Commission show.
In SEC filings, the company blamed the "deteriorating PV market conditions and overall global economic slowdown" for some of its problems, which are widespread among solar panel groups. LDK said that uncertainty surrounding the photovolatic market and economic climate are likely to continue to adversely impact demand for the company's products.
The company is just one of many solar panel groups to struggle, partially because of oversupply in the market. Wuxi Suntech Power Holdings Co. Ltd., a subsidiary of Suntech Power Holdings Co Ltd. (NYSE: STP), was placed into bankruptcy in China in March. Suntech also filed for provisional liquidation in the Cayman Islands in November, and filed a Chapter 15 filing in the U.S. to have that restructuring case recognized. Filing for Chapter 15 was an agreement the solar panel group came to with creditors after its creditors filed an involuntary Chapter 7 petition in October.
Jefferies LLC is the company's financial adviser. Sidley Austin is the company's legal counsel. Ropes & Gray LLP is acting as counsel to the noteholders.
For more on distressed solar panel companies, see "Finance Finesse: Solar Panel Groups Modify Loans."
For more on LDK, see "LDK Solar Reaches Forbearance Agreement."