A long running saga between China Development Bank, LDK Solar and its EPC subsidiary in the US, SPI Solar, over withheld project finance agreements due to LDK Solar’s distressed financial situation has been resolved.

SPI Solar said that an agreement involving US-based commercial PV developer, KDC Solar and CDB, had finally unlocked the project finance to KDC Solar, via a cash payment to SPI Solar.

However, an unspecified amount also came directly from LDK Solar. In total, SPI Solar said that the agreement removed US$28.5 million of construction loan liability from SPI’s balance sheet, which related to a KDC Solar project called Imclone in New Jersey, USA.

The Imclone project financing had originally been arranged back in December, 2011 according to SPI Solar SEC filings. LDK Solar had announced separately in January, 2012 that CDB had approved KDC Solar’s project finance needs for two projects, Imclone and White Rose, totalling 14.7MW.

“CDB’s financing for the Imclone project enables SPI’s collection of the EPC loan for the project, which allows SPI’s on–time delivery of the loan payments to CDB,” said Charlotte Xi, president and global chief operating officer and interim chief financial officer for SPI Solar. “This successful execution will significantly improve our balance sheet position while leveraging our company strategies in partnering on solar project developments.”

The original deal would require PV modules for the project to be supplied by LDK Solar to SPI Solar. However, due to LDK Solar’s financial position last year, SPI Solar had to arrange for customers to pre-pay LDK Solar’s module plants before orders would be accepted, produced and shipped.

The acquisition of SPI Solar by LDK Solar was initially intended to support plans to push into the downstream PV project business and an important gateway for the company for module sell through and improve its modules bankability.

SPI Solar had been severely constrained in its ability to develop projects in 2013 and had cash and cash equivalents of only US$0.2 million in mid-2013.

“We are hopeful that our stronger balance sheet and the successful financing of the Imclone project will lead to SPI securing future financing for our other projects, which will further deleverage our balance sheet,” added Xi.

However, LDK Solar remains unable to pay outstanding interest payments on a partially defaulted bond in the US. The company has separately announced that it has secured a further short-period of time to negotiate with some of the bondholders over receiving payments through to January 23.

The company has also offered bondholders two options in an effort to refinance US$280 million of debt, which would see a significant dilution to bondholders investments.