Chinese Solar Maker Buys Majority Share in Project Firm (LDK, SOPW, FSLR, SPWRA, WFR, TSL, JASO)

A Chinese supplier of solar PV products has purchased a 70% stake in a US project development firm, marking the first entry of a Chinese solar provider into the project development business. LDK Solar Co. Ltd. (NYSE: LDK) paid $33 million for its stake in Solar Power Inc. (OTC: SOPW).

LDK’s foray into project development follows similar acquisitions last year by First Solar Inc. (NASDAQ: FSLR), SunPower Corp. (NASDAQ: SPWRA), and MEMC Electronic Materials Inc. (NYSE: WFR). Solar wafer and cell makers have acquired project pipelines to guarantee a market for their devices in what is expected to be a down year in the solar panel market.

Other large Chinese makers like Trina Solar Ltd. (NYSE: TSL) and JA Solar Holdings, Co. Ltd. (NASDAQ: JASO) have been focused on expanding production, following receipt of huge loans from the Chinese government. These companies are surely banking on a jump in demand from China to soak up their increased production.

Solar Power Inc. provides engineering, procurement, and construction services, asset management, financing, and project development for its customers. The company listed total assets of about $25 million in its last quarterly report filed in November 2010. The company listed no long-term debt, but lists a $3.9 million loan due in 2020 as a current liability.

Solar Power also owns manufacturing assets in China that will now be controlled by LDK. The announcement notes that LDK’s ownership stake will “significantly” strengthen Solar Power’s balance sheet and allow the smaller company to accelerate development of its project pipeline. Solar Power’s business consists primarily of utility-scale projects and distributed generation systems for commercial and industrial customers. The company has completed rooftop solar installation projects at the Staples Center in Los Angeles and other large commercial projects around the US.

Neither company identified any projects currently in the Solar Power pipeline.

LDK’s shares have risen less than 0.5%, to $10.39 on the news. The company’s 52-week trading range is $4.97-$15.10 Shares of Solar Power are up more than 37%, to $0.51, still well off the high in its 52-week trading range of $0.15-$1.42. Solar Power’s shares are trading at nearly 30 times average daily volume.

Paul Ausick