LDK Solar Owes Twenty Suppliers 600 Million Yuan

Debt-ridden Jiangxi LDK Solar has defaulted on at least 600 million yuan in unpaid bills for raw materials and equipment, twenty suppliers say.

“Starting from late last year, LDK Solar was delinquent on 15 million yuan to our company,” Liu Qingfeng, sales manager of a silica powder supplier, said July 25. “If it files for bankruptcy, hundreds of suppliers that have business relations with it will fall.”

LDK is in trouble because the solar industry has been beset by overcapacity and shrinking profits. Its creditors have been in talks with the Xinyu city government about repayments. The government has approached various companies that might be interested in buying the firm, with no success.

Pan Qifang, board secretary at Jiangxi Copper Corp., on July 26 denied a media report that his company would form a consortium to rescue LDK. “Our company is not familiar with the solar industry,” he said.

Liu said LDK’s factory, which makes silica materials, shut down in May or June. His is one of up to nine silica powder suppliers still owed more than 100 million yuan. In addition, he said, the company owes about 200 million yuan to ten suppliers of other raw materials.

LDK’s equipment suppliers have had similar problems. One supplier said the manufacturer was behind on 40 percent of its bills.

Xinyu Rural Commercial Bank has cut credit to LDK, said the bank’s governor, Liu Zhiwu. The same decision was made at a branch of China Construction Bank, a source said.

Jiangxi government officials have met to discuss the crisis, a source close to local banks said. Meanwhile, Liu said he and other suppliers could only wait and hope.

Yang Qiubo and Pu Jun are Caixin staff reporters.