A syndicate of 11 commercial banks in China have provided technically bankrupt, LDK Solar with a RMB 1.56 billion (US$256 million) credit facility.
The deal was said to have been struck on November 11, 2013 but the agreement was only officially announced when LDK Solar had drawn down RMB 200 million (US$32.8 million) on November 21.
“We are pleased to enter this financing arrangement with the banking syndicate in China,” stated Sam Tong, president and CEO of LDK Solar. “While we are beginning to experience improvements in our business operations, we believe this discretionary loan facility will provide LDK Solar with the necessary support to ramp up our manufacturing operations of polysilicon, wafers, cells and modules in Jiangxi Province when business circumstances so permit. When the global solar industry regains strength, we are committed to taking advantage of new opportunities that emerge.”
However, LDK Solar noted that strict conditions had been applied to the loan facility by the unidentified banks in the syndicate.
According to the company, proceeds from the credit facility have been strictly limited to financing LDK Solar's onshore operations within Jiangxi Province, preventing the funds being used to service any of its existing indebtedness, which is in excess of US$3.1 billion (end of 2012) and includes partially defaulted US bonds.
The company has to obtain approval of the banking syndicate for any draw downs, which may apply additional conditions that could include early repayment clauses.
The bank syndicate was also said to have designated a working group to monitor the use of the funds and controlled bank accounts arrangements would also be implemented.
LDK’s founder, Peng Xiaofeng and his wife have personally had to guarantee the loans that also are attributed to LDK’s Jiangxi, China based subsidiaries, Jiangxi LDK PV Silicon Technology Co., Ltd., Jiangxi LDK Solar Polysilicon Co., Ltd., LDK Solar Hi-Tech (Xinyu) Co., Ltd. and LDK Solar Hi-Tech (Nanchang) Co., Ltd.
The credit facility is planned to terminate on November 10, 2016.