Wednesday 24 June 2009

GCL-Poly to Purchase Solar-Cell Parts Maker

By JEFFREY NG and YVONNE LEE

HONG KONG -- GCL-Poly Energy Holdings Ltd. plans to acquire a Chinese solar-cell parts maker from its controlling shareholder in a deal valued at HK$26.35 billion (US$3.4 billion).
GCL-Poly is looking to secure materials to expand its solar-energy business as the Chinese government is actively promoting the use of renewable energy to stem the effects of global warming and rising pollution in the country.
The Hong Kong-listed GCL-Poly said it will issue new shares at HK$2.20 each to its chairman, Zhu Gongshan, and connected parties to help fund the purchase of Jiangsu Zhongneng Polysilicon Technology Development Co.
Jiangsu Zhongneng produces polysilicon, which is the primary raw material used in the solar-power industry for solar wafers, cells, and modules that convert sunlight into electricity.
Mr. Zhu and the connected parties' combined stake in GCL-Poly will rise to 56.17% from 34.47%, the company said.
The offer price represents a 12% discount to the stock's closing price of HK$2.50 before trading was suspended June 4. GCL-Poly will also issue US$350 million in secured notes and seek a loan facility worth US$300 million to fund the purchase.
Mr. Zhu said he expects Beijing to continue to initiate more incentives or subsidy programs to encourage consumers to switch to solar power.
In March, Beijing said it will subsidize as much as 50% of the installation cost of rooftop solar panels. The country's economic planner plans to more than double renewable-energy consumption in China to 15% of total primary energy consumption by 2020.
Write to Jeffrey Ng at jeffrey.ng@dowjones.com and Yvonne Lee at yvonne.lee@wsj.com