LDK Solar (LDK) Plunges Again After Postponing Bond Offering, Updating Guidance

LDK Solar (LDK) finished last week with a resounding thud and looks like it’s on a fast track to test the 2010 lows.  The company reiterated its guidance for Q1 and the full year, but announced it is postponing a bond offering to raise cash.  The company will report official earnings results on Tuesday after the bell.

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They are reiterating Q1 revenue guidance of $745 – $755 million, wafer shipments of 625 – 635MW, module shipments of 109 – 114MW and gross margins of around 30%.  The full year guidance remains at $3.5 – $3.7 billion in revenues, wafer shipments of 2.7 – 2.9GW, module shipments between 800 – 900MW and gross margins between 24 – 29%.

However, short term liquidity concerns are being raised again following news that the company has postponed a bond offering due to an increase in interest rates.  The CEO remains optimistic though saying, “Despite the postponement of this bond offering, we still expect to generate sufficient operating cash flow to support our business plan.  We believe this action will enable our management team to remain focused on the day-to-day operations of our business.”

Kaufman Bros slashed the price target from $24 to just $8 on the news and cut the rating from Buy to Hold.   The firm said that the postponed debt offering highlights current investor “angst” about the solar industry and that the deal likely could have been done, but would have required a higher interest rate than the company could tolerate.  They believe that unless general sentiment changes, LDK could face liquidity issues.

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