LDK raising cash after SEC drops investigation

Xinyu, China-based LDK Solar (NYSE: LDK) announced today that it would issue $300 million in convertible notes to help fund the construction of a polysilicon manufacturing plant and a capacity expansion of its wafer production facilities.

The move comes a day after the solar wafer maker said it was informed by the U.S. Securities and Exchange Commission that the agency would not recommend action against the company.

Last October, LDK disclosed that it was being questioned by the SEC over allegations that it overstated its polysilicon inventories.

LDK maintained that the allegations from its former financial controller "lacked merit" (see LDK audit committee finds no material errors).

The company has continued to make deals amid the investigation, including an agreement announced earlier this month to supply solar wafers to Moser Baer Photo Voltaic, a subsidiary of Moser Baer India (see LDK Solar to supply wafers to Moser Baer).

Under the terms of the ten year contract, LDK said it would deliver 640 megawatts of multicrystalline solar wafers to Moser Baer Photo Voltaic starting in the middle of this year and running through 2017.

For the notes offering, LDK said today it plans to use half of the proceeds to repurchase approximately $150 million of its American depositary shares.

The company said approximately 75 percent of the remaining cash would go toward a polysilicon plant, with 20 percent to be used to expand wafer production.

LDK said the remaining 5 percent would fund general corporate activities.