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Bloomberg
A unit of GCL-Poly Energy Holdings Ltd defaulted on a $500 million bond after ending an exchange offer with existing bondholders.
GCL New Energy Holdings Ltd announced the default in a Monday exchange filing. The firm, which operates solar power plants, is majority owned by GCL-Poly, one of the world’s leading makers of solar-grade polysilicon, and whose shares have soared 700% since China announced plans to be carbon neutral by 2060.
The default on the three-year, 7.1% note was expected to trigger a cross default after the offer was terminated, GCL New Energy said. The cross default will have “a material negative impact†on the company’s business and financial position, it said.
GCL New Energy announced the exchange offer for the notes in December, saying its cash position and liquidity was deteriorating due to a delay of subsidy payments. As of June 30, the company had net current liabilities of $1 billion, which cast doubt about its ability to continue as a going concern, according to a statement on December 23.
“The default is not surprising to me, as the company has been struggling with its financial difficulties for years,†said Chuanyi Zhou, a credit analyst at Lucror Analytics in Singapore.