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

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company in connection with any increase or decrease of capital, transfer of shares, merger, division, equity investment or creation of any security interest over any assets located in China. If any PRC shareholder of an offshore special purpose company fails to make the required SAFE registration and amendment, the PRC subsidiaries of that offshore special purpose company may be prohibited from distributing their profits and the proceeds from any reduction in capital, share transfer or liquidation to the offshore special purpose company. Moreover, failure to comply with the SAFE registration and amendment requirements described above could result in liability under PRC laws for evasion of applicable foreign exchange restrictions. Our current beneficial owners who are PRC residents have registered with the local SAFE branch as required under the SAFE notice. The failure of these beneficial owners to amend their SAFE registrations in a timely manner pursuant to the SAFE notice or the failure of future beneficial owners of our company who are PRC residents to comply with the registration procedures set forth in the SAFE notice may subject such beneficial owners to fines and legal sanctions and may also result in restrictions on our PRC subsidiary's ability to distribute profits to us or otherwise materially and adversely affect our business. Risks Relating to This Offering The market price of our ADSs may be volatile. The market price of our ADSs is likely to be highly volatile and subject to wide fluctuations in response to factors such as: ‚ actual or anticipated fluctuations in our results of operations; ‚ announcements of new products by us or our competitors; ‚ technological breakthroughs in the solar and other renewable power industries; ‚ reduction or elimination of government subsidies and economic incentives for the solar industry; ‚ news regarding any gain or loss of customers by us; ‚ news regarding recruitment or loss of key personnel by us or our competitors; ‚ announcements of competitive developments, acquisitions or strategic alliances in our industry; ‚ changes in earnings estimates or recommendations by financial analysts; ‚ potential litigation or regulatory investigations; ‚ general market conditions or other developments affecting us or our industry; ‚ the operating and stock price performance of other companies, other industries and other events or factors beyond our control; and ‚ release of lock-up or other transfer restrictions on our outstanding ADSs or equity securities or sales or perceived sales of additional equity securities or ADSs. You should note that the stock prices of companies in the solar power sector have experienced wide fluctuations. Such wide market fluctuations may adversely affect the market price of our ADSs. In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our ADSs. There has been no prior public market for our ADSs or equity securities, and you may not be able to sell your ADSs at or above the initial public offering price. Before this initial public offering, there has been no public market for our ADSs or equity securities. We cannot assure you that an active public market for our ADSs will develop or that the market price of our ADSs will not decline below their initial public offering price. The initial public offering price of our ADSs will be determined by negotiations among us, the selling shareholders and the underwriters and may not be indicative of prices that will prevail in the trading market. You may be unable to resell your ADSs at a price that is attractive to you. 26
We may not be able to pay any dividends on our ordinary shares and ADSs. Under Cayman Islands law, we may only pay dividends out of our profits or our short premium account subject to our ability to service our debts as they fall due in the ordinary course of our business. Our ability to pay dividends will therefore depend on our ability to generate sufficient profits. We cannot give any assurance that we will declare dividends of any amounts, at any rate or at all in the future. We have not paid any dividends in the past. Future dividends, if any, will be at the discretion of our board of directors and will depend upon our future operations and earnings, capital expenditure requirements, general financial conditions, legal and contractual restrictions and other factors that our board of directors may deem relevant. You should refer to the ""Dividend Policy'' section in this prospectus for additional information regarding our current dividend policy and the risk factor entitled ""Ì Risks Relating to Business Operations in China Ì Our primary source of funds in the form of dividends and other distributions from our operating subsidiary in China is subject to various legal and contractual restrictions and uncertainties, and our ability to pay dividends or make other distributions to our shareholders are negatively affected by those restrictions and uncertainties'' above for additional legal restrictions on the ability of our PRC subsidiary to pay dividends to us. Future financing may cause a dilution in your shareholding or place restrictions on our operations. We may require additional funding to meet our working capital or capital expenditure requirements or in connection with any acquisition we may make in the future. If we raise such funding through issuance of new equity or equity-linked securities it may cause a dilution in the percentage ownership of our then existing shareholders. Alternatively, if we meet such funding requirements by way of additional debt financing, we may have restrictions placed on us through such debt financing arrangements which may: ‚ limit our ability to pay dividends or require us to seek consents for the payment of dividends; ‚ increase our vulnerability to general adverse economic and industry conditions; ‚ limit our ability to pursue our business strategies; ‚ require us to dedicate a substantial portion of our cash flow from operations to service our debt, thereby reducing the availability of our cash flow to fund capital expenditure, working capital requirements and other general corporate needs; and ‚ limit our flexibility in planning for, or reacting to, changes in our business and our industry. Future sales or issuances, or perceived future sales or issuances, of substantial amounts of our ordinary shares or ADSs could adversely affect the price of our ADSs. If our existing shareholders sell, or are perceived as intending to sell, substantial amounts of our ordinary shares or ADSs, including those issued upon the exercise of our outstanding stock options, following this offering, the market price of our ADSs could fall. Such sales, or perceived potential sales, by our existing shareholders might make it more difficult for us to issue new equity or equity-related securities in the future at a time and place we deem appropriate. The 17,384,000 ADSs representing 17,384,000 ordinary shares (assuming no exercise of the over-allotment option) or 19,991,600 ADSs representing 19,991,600 ordinary shares (assuming full exercise of the over-allotment option) offered in this offering will be eligible for immediate resale in the public market without restrictions, and those held by our existing shareholders may also be sold in the public market in the future subject to the restrictions contained in Rule 144 and Rule 701 under the Securities Act and the applicable lock-up agreements. If any existing shareholder or shareholders sell a substantial amount of ordinary shares after the expiration of the lock-up period, the prevailing market price for our ADSs could be adversely affected. See ""Underwriting'' and ""Shares Eligible for Future Sale'' for additional information regarding resale restrictions. In addition, we may issue additional ADSs or ordinary shares for future acquisitions or other purposes. If we issue additional ADSs or ordinary shares, your ownership interests in our company would be diluted and this in turn could have a material adverse effect on the price of our ADSs. You will experience immediate and substantial dilution in the book value of the ADSs you purchase. The initial public offering price per ADS is substantially higher than the net tangible book value per ADS prior to the offering. Accordingly, if you purchase our ADSs in this offering, you will incur immediate dilution 27
Page 1: PROSPECTUS 17,384,000 American Depo
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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 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
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Page 76 and 77: Because we are a pure-play solar wa
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our revenue and customer base to ta
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‚ Our agreement with E'mei Semi-c
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photovoltaic cell or modules, and w
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A breakdown of our employees by are
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tax treatments to foreign-invested
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On September 21, 2006, the CSRC pub
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Gang Wang is a non-executive direct
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directors on our audit committee wi
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monies of or belonging to us may be
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(10) Vests on July 31, 2007. Brilli
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Securities (USA) LLC, which is a re
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interest-bearing loans directly to
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person, by its duly authorized repr
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History of Securities Issuances The
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persuasive authority in the Cayman
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making any sale by public or privat
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Reports and Other Communications Wi
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Amendment and Termination How may t
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‚ deliver distributions on any AD
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SHARES ELIGIBLE FOR FUTURE SALE Upo
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TAXATION The following summary of m
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individual, up to $3,000 of capital
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person and on sales of ordinary sha
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The estimated offering expenses pay
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Pricing of the Offering Prior to th
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ADS with a view to selling it to th
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EXPENSES RELATING TO THIS OFFERING
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‚ no new admissible evidence rele
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WHERE YOU CAN FIND ADDITIONAL INFOR
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REPORT OF INDEPENDENT REGISTERED PU
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LDK SOLAR CO., LTD. AND SUBSIDIARIE
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