North Coast Solar Stocks

November 17, 2009

LDK Solar sells 15 pct stake in plant for $219 mln

Filed under: LDK — Tags: , , , , , , — Jason @ 5:58 pm

Tue Nov 17, 2009 5:58pm EST

* To sell stake to Jiangxi International Trust

* To use proceeds to strengthen financial position

* Shares up 13 pct in after-hours trade

LOS ANGELES, Nov 17 (Reuters) – Chinese solar wafer maker LDK Solar Co Ltd (LDK) said on Tuesday it agreed to sell a 15 percent stake in its Chinese polysilicon plant to Jiangxi International Trust and Investment Co Ltd for about $219 million, lifting its shares as much as 14 percent after hours.

LDK makes silicon wafers for the solar power industry and is working to ramp up a plant for polysilicon, a prime commodity in the solar industry, as part of its strategy to reduce costs.

Prices for polysilicon and for solar panels have tumbled in the last year.

Needham and Co analyst Edwin Mok said the deal helps LDK “in terms of alleviating their liquidity concerns given that the company’s cash flow is pretty tight on that end.”

Mok said that he does not expect the deal to impact the plant’s operations, but it could signal that the company may sell more stakes in the facility.

Xiaofeng Peng, the company’s chief executive and chairman, said in a statement that the sale would “significantly strengthen our financial position and increase our near-term operating flexibility.”

The news follows the sudden departure in October of the company’s head of manufacturing, who was in charge of ramping up the plant in China.

LDK is also facing a contract dispute with Germany’s Q-Cells, among the world’s largest makers of solar cells, that could prompt other customers to renegotiate their contracts.

Shares of LDK Solar were up 13 percent at $7.59 in trading after the bell. They closed at $6.71 on Tuesday on the New York Stock Exchange.

(Reporting by Laura Isensee in Los Angeles and Arundhati Ramanathan in Bangalore; Editing by Deepak Kannan, Leslie Gevirtz)

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