Solar Industry Financial News. LDK Solar Submits Proposals to Offshore Creditors

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 Solar Industry Financial News.

LDK Solar Co., Ltd. (“LDK Solar”; NYSE: LDK) announces that it executed confidentiality agreements  in December 2013 with certain unaffiliated holders of the Renminbi-denominated US$-settled 10% Senior Notes due 2014 issued by LDK Solar (such holders, collectively, the “Holders”), to facilitate discussions with the Holders concerning LDK Solar’s potential restructuring of its offshore liabilities. Pursuant to the terms of the Confidentiality Agreements, LDK Solar agreed that it would, immediately following the expiry of a period of time agreed with the Holders, disclose publicly the discussions between LDK Solar and the Holders and other confidential information concerning LDK Solar that was disclosed to the Holders. The information included in this announcement is being furnished to satisfy LDK Solar’s public disclosure obligations under the Confidentiality Agreements.Discussions with Holders


As a part of an ongoing liability management program commenced in September 2013, LDK Solar has explored ways to restructure its highly leveraged balance sheet and reduce its significant cash flow requirements. Following execution of the Confidentiality Agreements, LDK Solar and the Holders have further discussed LDK Solar’s capital structure and various restructuring options proposed by LDK Solar in an effort to achieve a consensual restructuring and to prevent or forestall a liquidity crisis.  For the purpose of these discussions, LDK Solar has provided the Holders with the following draft restructuring proposal (the “Proposal”) setting out two options for the Holders, an exchange of securities or a cash-out:

Exchange of Securities
Claim: Senior Notes principal plus accrued interest through June 3, 2013
Equity: 8.736% of the claim to be paid in LDK Solar ordinary shares at US$1.586 per share, subject to lock-up
Convertible Bonds: Remaining 91.264% of the claim to be paid in convertible bonds to be issued by LDK Solar with the following principal terms, subject to feasibility discussions among advisors:• Rate. 90% of Shanghai Inter-Bank Offered Rate (“SHIBOR”) fixed at issuance; payable-in-kind (“PIK”) by crediting or adding the interest installment to the then outstanding principal amount or in LDK Solar ordinary shares at option of bondholders• Term. December 31, 2018, to be cross-defaulted if holders of convertible notes exchanged by holders of Series A Redeemable Convertible Preferred Shares (the “Preferred Obligations”) of LDK Silicon & Chemical Technology Co., Ltd. (“LDK Silicon”) fail to elect at maturity on June 3, 2016 to either extend their convertible notes, or receive LDK Solar ordinary shares in lieu thereof, or a combination of both

• Conversion Feature. Exercise price of the convertible bonds will be (i) US$20 per share through the earlier of March 31, 2015 or one year from the issuance, (ii) the volume weighted average price (“VWAP”) for the 20-trading-day period prior to conversion during the first one-year period thereafter, with the conversion limited to 25% of the aggregate principal amount of the convertible bonds during the year and to 10% of the aggregate principal amount of the convertible bonds during any quarter in the year, and (iii) thereafter, the VWAP for the 20-trading-day period prior to conversion without any limitation on the amount of conversion

Cash-out
Claim: Senior Notes principal plus accrued interest through December 31, 2013
Cash-out: US$.20 per each US$1.00 of claim

LDK Solar has discussed the terms of the Proposal with holders of approximately 40% in aggregate principal amount of the outstanding Senior Notes and their financial and legal advisors. But the Holders have not signed any agreement with LDK Solar to memorialize any agreed restructuring terms, and the negotiations are continuing. Unless and until the Holders execute a restructuring support agreement with LDK Solar incorporating the terms of the Proposal, they are not contractually bound to support and consummate the Proposal and may continue trading in the Senior Notes, subject to applicable laws.

LDK Solar intends to continue discussions with the Holders on the terms of the restructuring support agreement. There can be no guarantee, however, that LDK Solar will successfully negotiate any restructuring support agreement or, if a restructuring support agreement has been reached, that it will reflect the terms of the Proposal, or achieve all or any of the stated objectives of the proposed restructuring.

Financial Information

LDK Solar does not generally disclose detailed prospective financial information.  However, in connection with the discussions with the Holders and their advisors, LDK Solar disclosed certain financial information, consisting largely of forecasts and projections, to the Holders and their advisors pursuant to the Confidentiality Agreements.  LDK Solar’s management prepared the forecasts and projections based on certain internal financial projections and their reasonable expectations, beliefs, opinions, and assumptions at the time such forecasts and projections were prepared. The forecasts and projections were not prepared with a view toward public disclosure and were not prepared in accordance with generally accepted accounting principles or published guidelines established by the American Institute of Certified Public Accountants or any other agency for preparation and presentation of “prospective financial information.” Neither LDK Solar’s independent auditor nor any other independent accountants have examined, compiled or performed any procedures with respect to the financial information. Such forecasts and projections were as follows:

For Fiscal Year Ending December 31,
Metric 2014 2015 2016 2017 2018
Shipments:
Polysilicon (MT) 10,350 18,000 18,000 18,000 18,000
Wafer (MW) 3,300 3,840 3,840 3,840 3,840
Cell (MW) 272 288 288 288 288
Module (MW) 781 1,151 1,351 1,406 1,406
Revenue (US$ Million):
Polysilicon & Wafer $ 660 $ 770 $ 770 $ 773 $ 780
Cell & Module 492 725 851 886 886
EPC 91 136 176 189 180
Total Revenue $ 1,243 $ 1,631 $ 1,797 $ 1,849 $ 1,846
EBITDA (US$ Million) $ 107 $ 193 $ 244 $ 284 $ 317
Capital Expenditures (US$ Million) $ 68 $ 16 $ 16 $ 16 $ 16
Change in Net Working Capital (US$ Million) $ (199) $ (55) $ (67) $ (23) $ 1

The inclusion of the forecasts and projections in this announcement should not be regarded as an indication that LDK Solar or any other person considered, or now considers, this information to be necessarily predictive of actual future results, and does not constitute an admission or representation by any person that such information was or is material, or that the expectations, beliefs, opinions, and assumptions underlying such forecasts and projections remain the same as of the date of this announcement or will remain the same at any time in the future, and you readers are cautioned not to place undue reliance on such forecasts and projections.

About Gordon Smith
Gordon's expertise in the area of industrial energy efficiency and alternative energy. He is an experienced electrical engineer with a Masters degree in Alternative Energy technology. He is the co-founder of several renewable energy media sites including Solar Thermal Magazine.