JA Solar sinks after unit secures $425 million debt-for-stock swap and capital raise

(Yicai Global) Mar 31 – JA Solar Technology’s stock fell after it said a unit would get a 2.7 billion yuan ($425 million) investment in the form of a debt-for-equity swap. equity and a capital increase. Investors are worried about the financial situation of the solar equipment giant, which has already unveiled several ambitious investment plans.

After an almost flat opening this morning, the JA Solar stock price [SHE:002459] started to sink and closed down 6.3% at CNY78.68 ($12.40).

Wholly-owned subsidiary JA Yangzhou Solar Technology will receive the funds, which will mainly be used to repay debt and support operations, its Hebei province-based parent company said in a statement late last night.

Asset manager China Orient Asset Management will incur CNY 1.5 billion in debt in exchange for a stake in the unit, and an additional CNY 500 million ($78.78 million) will be contributed to participate in the recapitalization .

In addition, JA Solar and ABC Financial Asset Investment, a branch of the Agricultural Bank of China, and an investment fund in which Central Huijin Investment has an indirect stake, will participate in the cash recapitalization.

Upon completion of the transaction, JA Solar’s indirect ownership of the unit will decrease from 100% to approximately 69%, while Orient Asset Management will hold approximately 23%, ABC Financial Asset Investment approximately 5.8% and the fund investment 2.3%.

Since January last year, JA Solar, one of China’s leading solar module suppliers, has announced four solar industry chain investment plans worth a total of 10 billion yuan, including the production of wafers and solar modules and solar power plants, resulting in a great need for Capital.

But the price of silicon, the upstream raw material, has risen sharply since the beginning of last year, putting greater pressure on costs for JA Solar, which is in the middle and bottom of the industry chain.

Although revenue jumped 56% in the first three quarters of last year to 26.1 billion yuan, net profit was only 1.3 billion yuan, a mere increase of 1 .6 compared to the previous year.

Despite revenue of CNY 2.06 billion in the first half of 2021, JA Yangzhou Solar recorded a net loss of CNY 71.27 million. The debt-to-net worth ratio at the end of June last year was 95%, according to data provided in the announcement.

Due to strong demand, domestic solar silicon prices in China jumped 177% last year, and there have been another 10 consecutive weeks of gains this year, pushing prices up another 7% over the past few years. first three months, according to industry data.

Publisher: Tom Litting

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