Under terms of the agreement, the Investors agreed to subscribe to an aggregate amount of $240 million of series A redeemable convertible preferred shares of LDK Silicon & Chemical Technology Co., Ltd., a wholly owned subsidiary of LDK Solar incorporated in the Cayman Islands, which will, subject to the various PRC governmental approvals relating to foreign investments, hold and operate LDK Solar’s polysilicon business.
The preferred shares on an as-if-converted basis represent approximately 18.46% of the aggregate issued and outstanding share capital of the LDK Solar polysilicon subsidiary on a post-money basis. The preferred shares are convertible into the ordinary shares of the polysilicon subsidiary at the option of the holders at an initial conversion ratio of 1:1 basis, subject to customary anti-dilution provisions and to an investment internal rate of return of 23% for the fiscal year 2010 and 2011 as calculated by targeted net profit during such fiscal years.
LDK Solar will be required to compensate the Investors with cash if it fails to achieve such net income targets; and the Investors will waive such compensation if the polysilicon subsidiary achieves a qualified IPO during 2011. The Investors have a redemption right against LDK Solar and its polysilicon subsidiary within a two-year period of the consummation of the investment at a redemption price equal to 100% of the subscription price plus a 23% annual internal rate of return, if there occurs certain material events of breaches prior to its qualified IPO or the polysilicon subsidiary fails to consummate a qualified IPO within the two-year period.
The definitive agreement also gave the Investors certain veto rights over specified matters, right to access to certain information relating to the polysilicon business, and certain registration rights. The investment is subject to certain closing conditions, including governmental and corporate approvals of each party.
As a part of restructuring of the LDK Solar polysilicon business for the above-mentioned investment, LDK Solar has recently completed the repurchase of the 15% ownership stake in its 15,000-metric-ton polysilicon plant from Jiangxi International Trust and Investment Co., Ltd.
“We are very pleased with the continued support of our business from strong and reputable financial institutions,” stated Xiaofeng Peng, Chairman and CEO of LDK Solar. “Attracting this premier group of investors speaks to our success in growing our polysilicon business as we vertically expand our manufacturing capabilities and ramp polysilicon production. We remain optimistic about the continued growth in our polysilicon business.”
Mr. Zhang Xuguang, President of CDBC, said: “New energy revolution is a technology transformation marked by the wide applications of direct utilization of natural energy. A successful new energy company in the future must have the following characteristics: superiority in technology, economics of scale and the ability to lower costs. We believe LDK Solar is a company with such capabilities, and the $240 million investment in LDK Silicon led by CDBC will continue to strengthen LDK Solar’s leading position in the solar industry.”
Mr. Hu Zhanghong, CEO of CCB International, said: “The new energy sector has always represented a strong focus for CCB International, which has successfully completed numerous corporate finance, direct investment and financial advisory projects for companies in this sector over the years. Our investment in LDK Solar’s polysilicon business represents a very important investment decision. We believe our investment in this world leading solar company will procure its ongoing rapid development, which will in turn contribute generally to the development of the new energy sector and the environmental protection.”
LDK Solar Co., Ltd. (NYSE: LDK) is a leading vertically integrated manufacturer of photovoltaic (PV) products and the world’s largest producer of multicrystalline wafers. LDK Solar manufactures polysilicon, mono and multicrystalline ingots, wafers, modules, and engages in project development activities in selected segments of the PV market. Through its broad product offering of mono and multicrystalline solar wafers and modules, LDK Solar provides its customers with a full spectrum of solutions. LDK Solar’s headquarters and manufacturing facilities are located in Hi-Tech Industrial Park, Xinyu City, Jiangxi Province in the People’s Republic of China. LDK Solar’s office in the United States is located in Sunnyvale, California.
China Development Bank (“CDB”) is the largest and the most influential developmental financial institution in China. It is the only full service bank that provides the spectrum of investing, lending, bond issuing, leasing and brokerage nationwide. CDB is also the largest wholesale bank and the primary medium and long-term investment and financial services provider in China, with national economic development as one of its main business considerations. China Development Bank Capital Corporation Ltd. (“CDBC”) is a wholly-owned subsidiary of China Development Bank established in Aug 2009 with a registered capital of RMB35 billion, pursuant a special approval by the State Council. Currently CDBC is the only investment institution with a RMB investment license affiliated with Chinese banks and it maintains a unique and significant position within the CDB system.
Excel Rise Holdings Limited and Prosper East Limited are investment funds affiliated with CCB International Asset Management Limited and Shandong Peninsula Ocean Blue Economic Investment Company Limited. CCB International Asset Management Limited is a company incorporated in Hong Kong and wholly-owned by CCB International (Holdings) Limited. The entire issued share capital of CCB International (Holdings) Limited is beneficially owned by China Construction Bank Corporation. Shandong Peninsula Ocean Blue Economic Investment Company Limited is a company incorporated in the Cayman Islands as an exempted company and is jointly-owned by CCB International Asset Management Limited and Shandong Luxin High-Tech Industry Co., Ltd.