ReneSola Ltd. (SOL) closed its offering of $175 million of convertible senior notes to qualified institutional buyers. The aforementioned notes are convertible into ReneSola’s American Depositary Shares (ADSs), at an initial conversion rate of 94.8114 ADSs per $1,000 principal amount of the notes (equivalent to an initial conversion price of approximately $10.55 per ADS).
The notes will accrue interest at an annual rate of 4.125%. Interest on the notes will be payable semi-annually in arrears on March 15 and September 15 of each year, beginning September 15, 2011. The notes will mature on March 15, 2018.
ReneSola, based in China, is a leading global manufacturer of solar wafers and producer of solar power products. Capitalizing on proprietary technologies, economies of scale, low-cost production capabilities and technological innovations and know-how, ReneSola leverages its in-house virgin polysilicon and solar cell and module production capabilities to provide its customers with high-quality, cost-competitive solar wafer products and original equipment manufacturing services.
The fortunes of ReneSola look greener with a geographically-diversified customer base, ongoing expansion programs, subsidy programs, improving operating efficiencies, rising margins and material cost savings through its vertically-integrated production structure.
Till date, ReneSola has over 20 long-term wafer contracts totaling 1.3 GW for 2011. To cater to the growing demand ReneSola expects to spend $350 million in fiscal 2011 to expand annualized wafer production capacity from the current 1.3 GW to 1.9 GW.
Simultaneously, the company plans to increase annualized module production capacity from the current 400 MW to 600 MW and polysilicon capacity from the current 3,000 MT to 8,500 MT.
ReneSola at the same time has been quite proactive on cost control. The company’s good raw material procurement skills coupled with increasing in-house polysilicon capacity has provided protection against rising polysilicon spot prices. In the fourth quarter of 2010 the company was able to reduce its non-silicon wafer processing cost per watt to 24 cents and keep its polysilicon raw material cost in the range $55/kg–$60/kg.
ReneSola also has developed a new multicrystalline wafer, the Virtus Wafer. The Virtus Wafer, which achieves an average cell conversion efficiency rate of 17.5%, more than 1% higher than the industry standard. The company expects to commence pilot production of the wafer in fiscal 2011 itself.
Due to above mentioned factors for the long term we are bullish on the company’s prospects with an Outperform recommendation. In the near-term (1 to 3 months) we feel the Zacks #3 Rank (Hold) stock would trade in-line with peers like First Solar Inc. (FSLR) and JA Solar Holdings Co. Ltd. (JASO).
FIRST SOLAR INC (FSLR): Free Stock Analysis Report
JA SOLAR HOLDGS (JASO): Free Stock Analysis Report
RENESOLA LT-ADR (SOL): Free Stock Analysis Report
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