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

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We were incorporated in the Cayman Islands on May 1, 2006. Our principal operating subsidiary, Jiangxi LDK Solar Hi-Tech Co., Ltd., or Jiangxi LDK Solar, was incorporated in China on July 5, 2005. Since we made our first commercial sale of multicrystalline wafers in April 2006, we have experienced significant growth. Our net sales increased from $12.1 million for the three months ended June 30, 2006 to $31.5 million for the three months ended September 30, 2006, $61.9 million for the three months ended December 31, 2006 and $73.4 million for the three months ended March 31, 2007. Our net income increased from $1.3 million for the three months ended June 30, 2006 to $5.0 million for the three months ended September 30, 2006, $24.3 million for the three months ended December 31, 2006 and $24.5 million for the three months ended March 31, 2007. Our Strengths We believe that our rapid growth and strong market position are largely attributable to our following competitive strengths: ‚ pure-play multicrystalline solar wafer manufacturer; ‚ cost-effective production; ‚ large-scale manufacturing utilizing state-of-the-art equipment; ‚ strong relationships with suppliers and customers; and ‚ experienced management team. Our Strategies Our principal objective is to strengthen our position as a global leader in the manufacturing of multicrystalline solar wafers by increasing our production capacity and strengthening our cost competitiveness. We intend to achieve this objective by pursuing the following strategies: ‚ expand our production capacity to meet customer demand and enhance economies of scale; ‚ continue to improve our research and development to reduce manufacturing costs, improve production yield and pursue technological innovation; ‚ secure supplies of polysilicon feedstock; ‚ broaden our geographic presence and strengthen our customer relationships; and ‚ consider selective alliances and acquisitions. Our Challenges We face challenges in our business operations, including: ‚ our short operating history; ‚ uncertainties in acquiring sufficient quantities of polysilicon feedstock at reasonable prices; ‚ possibility of reduction or elimination of governmental support for the solar industry; ‚ uncertainties in implementing our expansion plan; ‚ increasing competition in the solar wafer manufacturing business; ‚ difficulties in recruiting sufficient technical and professional personnel; and ‚ possible elimination of preferential PRC tax treatment. See ""Risk Factors'' for a detailed description of these and other risks and uncertainties that we face. Our Corporate Structure Our principal operating subsidiary, Jiangxi LDK Solar, was incorporated in China on July 5, 2005 by Suzhou Liouxin Industry Co., Ltd., or Suzhou Liouxin, a company incorporated under the laws of China, and Liouxin Industrial Limited, a company incorporated under the laws of Hong Kong, each beneficially and wholly owned by Mr. Xiaofeng Peng, our founder, chairman and chief executive officer. We were incorporated in the Cayman Islands on May 1, 2006 by LDK New Energy Holding Limited, or LDK New Energy, a British 2
Virgin Islands company wholly owned by Mr. Peng, to acquire all of the equity interests in Jiangxi LDK Solar from Suzhou Liouxin and Liouxin Industrial Limited. On July 10, 2006, upon approval of the relevant PRC government authorities, Jiangxi LDK Solar became our wholly owned subsidiary. On September 5, 2006, we incorporated LDK International Solar Co., Ltd. in Hong Kong as our wholly owned subsidiary. On January 31, 2007, we incorporated LDK Solar USA, Inc. in California as our wholly owned subsidiary. In 2006, we issued an aggregate of 15,580,000 redeemable convertible preferred shares, with a par value of $0.10 each, or preferred shares, which are convertible into 15,580,000 ordinary shares. We are currently 82.8% beneficially owned by Mr. Peng. Upon consummation of this offering, we expect Mr. Peng to own 72.1% (assuming the underwriters do not exercise their over-allotment option) or 70.4% (assuming the underwriters exercise their over-allotment option in full) of our company. As a result, Mr. Peng maintains effective control over our business and corporate matters that require shareholders' approval. See ""Principal and Selling Shareholders'' for more information. Our Corporate Information Our principal executive offices are located at Hi-Tech Industrial Park, Xinyu city, Jiangxi province 338032, People's Republic of China, and our telephone number is (86 790) 686-0171. Our website is www.ldksolar.com. Information contained on our website is not a part of this prospectus. Conventions Applicable to This Prospectus Unless otherwise indicated, information in this prospectus assumes (i) each ordinary share we issued with a par value of $1.00 each was split into 10 ordinary shares with a par value of $0.10 each on its original issue date, and (ii) the automatic conversion of all our outstanding Series A, Series B and Series C preferred shares into an aggregate of 15,580,000 ordinary shares immediately upon the consummation of this offering. The number of our ordinary shares outstanding immediately after this offering excludes: ‚ ordinary shares underlying any additional ADSs issuable upon exercise by the underwriters of their over-allotment option; ‚ 6,093,900 ordinary shares, 2,065,900 ordinary shares and 550,900 ordinary shares issuable upon exercise of our outstanding stock options and additional ordinary shares reserved for issuance under our 2006 stock incentive plan; and ‚ ordinary shares issuable upon conversion of any Series A preferred shares issuable upon exercise of the warrants issued to our Series A preferred shareholders. The terms of our outstanding Series B and Series C preferred shares provide that the respective ratios at which they are convertible into our ordinary shares are subject to adjustment based on our net earnings for the 12 months ending June 30, 2007 or the year ending December 31, 2007. For descriptions of these conversion ratio adjustment provisions, see ""Description of Share Capital Ì History of Securities Issuances Ì Series A preferred shares,'' ""Ì Series B preferred shares'' and ""Ì Series C preferred shares'' in this prospectus. In April 2007, we agreed with the holders of our preferred shares that, if we publicly file our F-1 registration statement covering this offering on or before May 31, 2007, these conversion ratio adjustments would be determined based on our net income for the nine months ended March 31, 2007 with respect to our Series B preferred shares and the three months ended March 31, 2007 with respect to our Series C preferred shares. The holders of our Series B and Series C preferred shares have confirmed, after their review of our consolidated interim financial statements as of, and for the three months ended, March 31, 2007 included in this prospectus, that no adjustments to the conversion ratios of the preferred shares need be made. For more information on our warrants and convertible preferred shares, see ""Description of Share Capital Ì History of Securities Issuances Ì Series A preferred shares,'' ""Ì Series B preferred shares'' and ""Ì Series C preferred shares'' in this prospectus and notes (15) and (16) to our audited consolidated financial statements beginning on page F-1. We measure our wafer production capacity in megawatts, representing 1,000,000 watts, a unit of powergenerating capacity. For purposes of this prospectus, we have assumed an average photovoltaic conversion efficiency rate of 15.3% for cells using our wafers. The conversion efficiency rate of a photovoltaic cell is the 3
Page 1: PROSPECTUS 17,384,000 American Depo
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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
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Page 24 and 25: Compliance with environmental regul
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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
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2006 and February 6, 2007. During t
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value of the our business. Under th
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Year Ended December 31, 2006 (in th
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""Exchange Rate Information'' in th
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ended September 30, 2006, net incom
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For additional information relating
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The non-cancelable purchase obligat
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previously deemed material, but are
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module production will increase fro
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The following diagram illustrates t
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Because we are a pure-play solar wa
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Wafering. After passing inspection,
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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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