Another Million Dollar loan for LDK Solar

Zombie LDK Solar (LDK) continues to produce panels and wafers and make gargantuan losses. The company is bankrupt with $3 billion of debt and no profitability in the last 2 years. The company has been making large operating losses consistently and there is little hope that that the company will ever be able to make a profit under the current debt load. The company got RmB 1.5 billion loan from a syndicate of 11 Chinese banks, but with a condition that no part of this loan can be used to make a payment for any of its offshore liabilities or debt. This is Chinese style capitalism, in which no company goes bankrupt and corporate law and rules go for a toss. I am not sure about the legality of such a scheme and what collateral will back these loans.

LDK Solar shipped nearly 400 MW of wafers and modules as surging demand in the global solar market helped the company to show sequential and yearly growth. However, the company remains a shadow of its former self and continued to show massive losses on both the operating and net income lines.

LDK also defaulted for a third time on its bond payments. Still the company continues due to the absence of a robust bankruptcy law in China.  Even Suntech is facing unique problems in bankruptcy, as its Chinese factories have been sold to another Chinese entity, however the Caymans holding arm of Suntech is disputing the disposal of its Chinese assets. Note Suntech too has massive debt which it cannot ever hope to repay. Selling off the assets of the Chinese companies without repaying the debt holders seems to be the option that the Chinese government is taking. This way it will lead to foreigner losses without the factories being closed in China.

Read more LDK bankruptcy stories:

Zombie LDK fires thousands and stops polysilicon production