LDK Solar Co., Ltd. - Asia Europe Clean Energy (Solar) Advisory Co ...

More documents

Recommendations

Info

LDK SOLAR CO., LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued) FOR THE PERIOD FROM JULY 5, 2005 TO DECEMBER 31, 2005 AND THE YEAR ENDED DECEMBER 31, 2006 (Amounts in US$ thousands, except share and per share data) issuance because the Series A Shares were convertible at issuance date. In addition, under the provisions of EITF Issue No. 00-27 ""Application of Issue No. 98-5 to Certain Convertible Instrument'', the Company determined that the contingent beneficial conversion feature relating to the Conversion ratio adjustment will be recognized only when the 2006 and 2007 audit reports are delivered and the contingency is resolved, and with respect to the Series A Dilution Adjustment, upon the issuance of additional ordinary shares. To the extent that the audited net earnings, as defined, of the Group for 2006 and for 2007 is below US$28,500 or US$95,000 respectively, or the Company issues additional ordinary shares at a price less than the then prevailing Series A Shares' conversion price, the intrinsic value that results from such contingent beneficial conversion feature would be recognized as an addition to paid-in capital with a corresponding charge to net income available to ordinary shareholders at the earliest conversion date, which is the later of the issuance date or the date the contingency is resolved. With reference to the definition of 2006 audited net earnings as set out in the Series A Agreement, management has determined that its 2006 audited net earnings, as defined, exceeds US$28,500 and accordingly the conversion ratio adjustment based on the 2006 audited net earnings was not triggered. As the contingency relating to the 2007 audited net earnings was not resolved as of December 31, 2006, management has not considered the 2007 conversion ratio adjustment when preparing the consolidated financial statements for the year ended December 31, 2006. Voting rights Each Series A Share has voting rights equivalent to the number of ordinary shares into which such Series A Share is then convertible. Registration rights The Series A Shares holders have registration rights similar to the ordinary shareholders. These registration rights include demand, F-3 or equivalent, and piggyback rights. The specific terms of registration rights would include at least the following: (i) starting three years after the Closing Date, the holders of majority of the outstanding Series A Shares may request a Form F-1 registration statement to be filed; (ii) starting one year after the Qualified IPO, two (2) demand registrations upon request of holders of majority of the outstanding Series A Shares on Form F-3 or equivalent if listed on a non-US stock exchange; (iii) unlimited piggyback registrations in connection with registrations of shares for the account of the Company (other than the Qualified IPO) or selling shareholders exercising demand rights; and (iv) cut-back provisions providing that registrations (other than the Qualified IPO) must include at least 25% of the shares requested to be included by the holders of registrable securities, and the ordinary shareholders, management, employees, directors and consultants of the Company must be cut back before the holders of registrable securities would be cut back. The registration rights agreement does not provide for liquidated damages in the event that the Company fails to have the registration statement declared effective or if the effectiveness is not maintained. Dividends The Series A Shares holders shall be entitled to receive dividends out of any funds legally available for this purpose, when and if declared by the Board of Directors of the Company. No dividends shall be declared or paid on any of the ordinary shares unless they shall also be declared or paid on all the outstanding preferred share pro rata treating the preferred shares as the greatest whole number of shares of ordinary shares then issuable upon conversion of such preferred shares. F-26
LDK SOLAR CO., LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued) FOR THE PERIOD FROM JULY 5, 2005 TO DECEMBER 31, 2005 AND THE YEAR ENDED DECEMBER 31, 2006 (Amounts in US$ thousands, except share and per share data) Liquidation preference In the event of any liquidation, dissolution or winding up of the Company, the holders of Series A Shares shall be entitled to receive, prior to any distribution of any of the assets or surplus funds of the Company to the holders of ordinary shares, an amount equal to 130% of Series A issue price plus all declared but unpaid dividends and interests as of the liquidation date. (b) Series B redeemable convertible preferred shares Pursuant to the Series B redeemable convertible preferred shares purchase agreement dated September 15, 2006 (""Series B Agreement''), the Company issued 8,000,000 Series B redeemable convertible preferred shares (""Series B Shares'') on September 28, 2006 to a group of unrelated investors at US$6 per share (the ""Series B issue price'') for total cash consideration of US$48,000. Pursuant to the Series B Agreement, as amended by the third amended and restated memorandum of association dated December 19, 2006, the holders of Series B Shares have the right to redeem the Series B Shares after 36 months of the date of issuance of Series C redeemable convertible preferred shares at the option of the holders of Series B Shares then outstanding if a Qualified IPO shall not have occurred. In the event of a redemption under this right, the Company shall redeem all of the outstanding Series B Shares at a redemption price equal to 150% of the Series B issue price, plus any declared, accrued but unpaid dividends and interest thereon, (the ""Series B Preference Amount'') proportionally adjusted for share subdivisions, share dividends, reorganizations, reclassifications, consolidations or mergers. The accretion to the redemption value is reflected as a reduction to net income to arrive at net income available to ordinary shareholders in the accompanying consolidated statement of operations and amounted to US$1,799 for the year ended December 31, 2006. Total direct external incremental costs of issuing the security of US$78 was charged against the proceeds of the Series B Shares. The significant terms of the Series B Shares are as follows: Conversion The holders of Series B Shares have the right to convert all or any portion of their holdings into ordinary shares of the Company at the then applicable conversion ratio (the ""Conversion ratio'') at any time after the date of issuance to the closing of a Qualified IPO. In addition, each Series B Share is automatically convertible into one or more ordinary shares, subject to the Conversion ratio adjustment as described below upon the consummation of a Qualified IPO. Each Series B Share is convertible into one ordinary share where the conversion price is equal to the Series B share issue price, except in the following events that the initial conversion ratio is adjusted upon the delivery of the audited report for the period from July 1, 2006 to June 30, 2007 and if the audited net earnings, as defined, (""2006/2007 net earnings'') is lower than US$57,000. The Conversion ratio will be adjusted to the ratio of US$60,000 divided by the 2006/2007 net earnings, as defined. If the Qualified IPO takes place before June 30, 2007, the net earnings, as defined, will be adjusted on a pro-rata basis. The Conversion price shall initially be equal to the applicable Series B issue price for each of the outstanding preferred shares, subject to adjustments for dilutions (""Series B Dilution Adjustment'') as follows if any of the events listed below occur prior to the conversion of the preferred shares: a) The Company shall pay a dividend or make a distribution on its ordinary shares in ordinary shares, subdivide or reclassify its outstanding ordinary shares into a greater number of shares or combine or reclassify its outstanding ordinary shares into a smaller number of shares; F-27
Page 1:
PROSPECTUS 17,384,000 American Depo
Page 4 and 5:
(This page intentionally left blank
Page 6 and 7:
We were incorporated in the Cayman
Page 8 and 9:
percentage of light energy from the
Page 10 and 11:
Listing ÏÏÏÏÏÏÏÏÏÏÏÏÏ
Page 12 and 13:
(1) Gross profit for the year ended
Page 14 and 15:
RISK FACTORS Investment in our ADSs
Page 16 and 17:
Reduction or elimination of governm
Page 18 and 19:
capacity or to increase our manufac
Page 20 and 21:
delivery or failure to meet deliver
Page 22 and 23:
specifications or product defects.
Page 24 and 25:
Compliance with environmental regul
Page 26 and 27:
operations or the price of our ADSs
Page 28 and 29:
tax rates and other measures. Forei
Page 30 and 31:
company in connection with any incr
Page 32 and 33:
of approximately $22.05 in the net
Page 34 and 35:
outside the United States. As a res
Page 36 and 37:
The forward-looking statements cont
Page 38 and 39:
CAPITALIZATION The following table
Page 40 and 41:
DILUTION If you invest in our ADSs,
Page 42 and 43:
DIVIDEND POLICY We have never decla
Page 44 and 45:
SELECTED CONSOLIDATED FINANCIAL AND
Page 46 and 47:
MANAGEMENT'S DISCUSSION AND ANALYSI
Page 48 and 49:
polysilicon prices will decline in
Page 50 and 51:
listed public company in the United
Page 52 and 53:
increase. See ""Risk Factors Ì Ris
Page 54 and 55:
subjective. The assumptions used in
Page 56 and 57:
2006 and February 6, 2007. During t
Page 58 and 59:
value of the our business. Under th
Page 60 and 61:
Year Ended December 31, 2006 (in th
Page 62 and 63:
""Exchange Rate Information'' in th
Page 64 and 65:
ended September 30, 2006, net incom
Page 66 and 67:
For additional information relating
Page 68 and 69:
The non-cancelable purchase obligat
Page 70 and 71:
previously deemed material, but are
Page 72 and 73:
module production will increase fro
Page 74 and 75:
The following diagram illustrates t
Page 76 and 77:
Because we are a pure-play solar wa
Page 78 and 79:
Wafering. After passing inspection,
Page 80 and 81:
our revenue and customer base to ta
Page 82 and 83:
‚ Our agreement with E'mei Semi-c
Page 84 and 85:
photovoltaic cell or modules, and w
Page 86 and 87:
A breakdown of our employees by are
Page 88 and 89:
tax treatments to foreign-invested
Page 90 and 91:
On September 21, 2006, the CSRC pub
Page 92 and 93:
Gang Wang is a non-executive direct
Page 94 and 95:
directors on our audit committee wi
Page 96 and 97:
monies of or belonging to us may be
Page 98 and 99:
(10) Vests on July 31, 2007. Brilli
Page 100 and 101:
Securities (USA) LLC, which is a re
Page 102 and 103:
interest-bearing loans directly to
Page 104 and 105:
person, by its duly authorized repr
Page 106 and 107:
History of Securities Issuances The
Page 108 and 109:
persuasive authority in the Cayman
Page 110 and 111:
making any sale by public or privat
Page 112 and 113: Reports and Other Communications Wi
Page 114 and 115: Amendment and Termination How may t
Page 116 and 117: ‚ deliver distributions on any AD
Page 118 and 119: SHARES ELIGIBLE FOR FUTURE SALE Upo
Page 120 and 121: TAXATION The following summary of m
Page 122 and 123: individual, up to $3,000 of capital
Page 124 and 125: person and on sales of ordinary sha
Page 126 and 127: The estimated offering expenses pay
Page 128 and 129: Pricing of the Offering Prior to th
Page 130 and 131: ADS with a view to selling it to th
Page 132 and 133: EXPENSES RELATING TO THIS OFFERING
Page 134 and 135: ‚ no new admissible evidence rele
Page 136 and 137: WHERE YOU CAN FIND ADDITIONAL INFOR
Page 138 and 139: REPORT OF INDEPENDENT REGISTERED PU
Page 140 and 141: LDK SOLAR CO., LTD. AND SUBSIDIARIE
Page 194: (This page intentionally left blank
show all

LDK Solar Co., Ltd. - Asia Europe Clean Energy (Solar) Advisory Co ...

Create successful ePaper yourself

Delete template?

Save as template?