Chinese banks back LDK Solar's spin-off plans, at a price

Two Chinese banks have taken minority interests in LDK Solar's polysilicon business with a view to floating the subsidiary within two years. The China Development Bank and China Construction Bank's subsidiary funds, Excel Rise Holdings and Prosper East, along with Apollo Asia Investment, have put in USD240 million.

LDK Solar, which is listed on the New York Stock Exchange, sold the investors 240 million Series A convertible preferred shares in LDK Silicon & Chemical Technology, which are conditional on the company making an IPO in the next two years.

It is written into the deal that the shares are redeemable in full if LDK Silicon fails to complete an IPO by mid-2013. LDK Solar is also be required to pay cash compensation to the investors if the consolidated net profit the silicon business and its subsidiaries fails to achieve a target net profit of $190m in fiscal 2011.

LDK Solar is a manufacturer of photovoltaic (PV) products including making polysilicon, mono and multicrystalline ingots, wafers, cells, modules, systems, power projects and solutions and has its main manufacturing facilities in Hi-Tech Industrial Park, Xinyu City, Jiangxi, China.