LDK Wants $300M

The Chinese solar giant will use money from convertible notes to support expansion plans and give investors first-quarter guidance.
by: Rachel Barron
April 08, 2008

Chinese solar-wafer manufacturer LDK Solar (NYSE: LDK) said Tuesday it would issue $300 million in convertible notes to help build its silicon plant and expand its wafer production.

The announcement was not a surprise. Last week, Chief Financial Officer Jack Lai warned that LDK could fall $200 million to $300 million short of the capital it needs and analyst Jesse Pichel predicted that that the financing probably would come in the form of convertible notes.

"Shareholders are going to get diluted from this thing," he said Friday.

LDK will use some of the money to buy back $150 million of its American Depository Shares, according to the announcement. It will then spend 75 percent of the remaining cash to help build its polysilicon factory -- expected to have the capacity to produce 15,000 tons per year -- 20 percent to expand its wafer production and 5 percent for other "general corporate activities."

Also on Tuesday, LDK raised its guidance for revenues for the first quarter of 2008, but slightly lowered its earnings-per-share expectation.

The company said it is now expecting revenues of between $225 million to $235 million, compared with previous guidance of about $195 million to $210 million for the quarter.

The company also shaved a penny from its earnings, which are expected to be between 39 cents and 44 cents per share for the quarter. Previously, earnings per share ranged from 40 cents to 44 cents.Analysts polled by Thomas Financial were betting the company would pull a profit of 41 cents per share on revenue of $214.7 million.