LDK confirms CDB loan for poly-plant

Under-pressure PV group LDK Solar has confirmed details of a 440m yuan, ($69.8m) loan from China Development Bank (CDB), which will be used to invest in its polysilicon operation.

The loan, which was trailed in the Chinese media earlier this week, will be used to finance a technology upgrade at LDK’s Mahong Polysilicon Plant.

A statement says: “The financing will primarily be used to invest in hydrochlorination technology, a critical technological improvement necessary to significantly reduce the manufacturing cost of silicon production at the plant.

“LDK Solar plans to drawdown the loan as market conditions improve and the necessary equipment is ready for its use.”

According to the company, the more than 12bn yuan it has invested in Mahong “has been the primary reason for LDK Solar's high debt ratio”.

LDK  has $3.1bn in debt on its books. It has already defaulted on loans, according to reports, and is struggling to replenish cashflow because of weak demand for its products, aggravated by its precarious financial position, say analysts.  

The company has previously received support from the Xinyu city government and has been selling stakes in itself over recent months, in moves thought to be aimed at appeasing its lenders.