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UPDATE 2-LDK Solar struggles to meet debt payments, shares fall

Tuesday, 26 Nov 2013 | 11:47 AM ET

* LDK wins reprieve from interest payments on 2014 notes

* Co looking for consensual solution on interest payments

* JA Solar expects lower shipments to China in current quarter

* LDK shares fall 5.6 pct; JA Solar down 11 pct

(Adds executive, analyst comments, details on LDK's debt, updates shares)

Nov 26 (Reuters) - China's LDK Solar Co Ltd said it was unable to make interest payments on its bonds due to insufficient cash flow even after getting an extension on payments for the third time.

LDK shares fell as much as 5.6 percent in morning trade. Shares of rival JA Solar Holdings Co Ltd fell 11 percent after the company forecast lower shipments to China in the current quarter.

"Our cash flow is positive from an operations point of view. However, at this moment we are not able to service our debt," an LDK executive said on a conference call after the company reported a smaller quarterly loss.

"We have about $60 million of interest accrued in the quarter. We currently are rolling it over as principal to be serviced later on," he said.

LDK piled on debt to expand capacity, but has struggled to repay it as a more than 80 percent fall in panel prices over the past four years ate into its cash flows.

The company has about $2.7 billion of short-term borrowings, an executive said on the call.

LDK secured a 1.56 billion yuan ($256 million) credit facility from 11 banks last week but can use the funds to only ramp up operations within Jiangxi province, where the company is based, and not to repay debt.

The company on Tuesday said it won a two-week reprieve from having to pay interest on its 2014 senior notes.

The agreement expires on Dec. 10 and LDK said it was looking to find a "consensual" solution.

HIGHER SHIPMENTS

Both LDK and JA Solar forecast strong shipments for the current quarter as markets outside of Europe drive demand.

JA Solar said it expects total cell and module shipments to be between 500 megawatt (MW) and 550 MW in the fourth quarter, compared with 500.2 MW in the third quarter.

However, the company said shipments to China would drop in the current quarter and panel prices would dip by 2-3 percent from the third quarter.

JA Solar shipped only 38.7 percent of its products to China in the third quarter, down from 56 percent a year earlier.

China is turning out to be the biggest market for solar companies trying to shield themselves from soft demand and duties in Europe.

LDK, which primarily makes solar wafers used to build solar cells and panels, expects to ship 480 MW-520 MW of wafers in the current quarter, more than the 384.7 MW shipped in the third.

The company forecast cell and module shipments of 120 MW-160 MW in the fourth quarter, compared with 78.4 MW in the third.

LDK said net loss narrowed to $127 million, or 65 cents per American Depositary Share (ADS), in the quarter ended Sept. 30 from $136.9 million, or $1.08 per ADS, a year earlier.

JA Solar's net loss narrowed to $37.1 million, or $1.11 per ADS, in the third quarter from $59.1 million, or $1.56 per ADS, a year earlier.

LDK shares were down 1 percent at $1.58 in late morning trade on the New York Stock Exchange, while JA Solar shares were down 5.8 percent at $10.01 on the Nasdaq.

($1 = 6.09 Chinese yuan)

(Reporting by Swetha Gopinath and Aman Shah in Bangalore; Editing by Gopakumar Warrier, Joyjeet Das and Sriraj Kalluvila)

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