Chinese solar giant defaults on bonds because it can’t come up with $24 million

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Another debt-ridden Chinese photovoltaic manufacturer has defaulted on its bonds.

LDK Solar said today that it partially defaulted on $24 million in bonds “due to a temporary cash-flow shortage.” The default follows Suntech’s default in March on $541 million in convertible note and the subsequent bankruptcy of its Chinese operations and a move to seek protection from its European creditors. Suntech, which until 2012 ranked as the world’s largest solar panel maker, is carrying $2.2 billion in debt.

Compared to Suntech’s half-billion-dollar default, LDK’s obligation on $24 million in convertible notes seems minor. And that’s the problem. The company’s inability to come up with what is essentially pocket change does not augur well for its prospects. LDK is carrying $2.5 billion in debt and this morning the company had a market cap of just $134 million. Its American Depository Shares were trading at $1.05 on the New York Stock Exchange.

While Suntech remains China’s best-known global solar brand, LDK, which is registered in the Cayman Islands, is perhaps a more crucial company for the Chinese photovoltaic industry. The company is vertically integrated and makes everything from the polysilicon—the key ingredient of solar cells—to silicon wafers and finished photovoltaic modules.

But in recent months LDK has laid off more than 10,000 workers, sold 20% of its shares to a state-backed Chinese company, and obtained a $71 million loan from the government-owned China Development to upgrade a manufacturing facility.

LDK’s current financial situation remains murky, as it has not filed a financial statement since last August. But investors should get some insight on Thursday (April 18), when the company holds a conference call to discuss its fourth-quarter earnings.