ReneSola Ltd. (SOL) entered into a share purchase agreement with Dynamic Green Energy Limited to acquire 100% of its shares in consideration of 26.8 million ordinary shares and issue $10 million in convertible promissory notes. The transaction has already been approved by the boards of both companies.
Dynamic Green manufactures solar products ranging from ingots to photovoltaic modules, through its wholly-owned unit Jiawei Solarchina Co. Ltd. and other Chinese operating units. The company also provides original equipment manufacturing services for leading solar manufacturers like Evergreen Solar (ESLR) and SunPower Corporation (SPWRA).
ReneSola’s acquisition of Dynamic Green is in line with the company’s focus on becoming a fully integrated solar company and will significantly increase its exposure in original equipment manufacturing capabilities.
ReneSola will also issue 14.4 million American Depositary Shares, each representing two shares of the company. The company intends to grant the underwriters an option to purchase up to an additional 2.2 million ADS. The company will utilize the proceeds towards funding capital expenditure, working capital and repurchases and redemptions of its U.S. dollar settled 1% convertible bonds due 2012.
Separately ReneSola revised its third quarter revenue outlook to the $130 million – $140 million from its earlier guidance range of $276.8 million – $294.1 million. Similarly the revenue outlook for fiscal 2009 was also revised downward to $470 million – $500 million from earlier guidance range of $500 million – $550 million. Although the company estimates its margins to remain intact, volumes will affect the numbers.
ReneSola is engaged in the manufacturing and sale of solar wafers and related products. Initially, the company also used to sell solar modules. However, in April 2006, the company discontinued the sale of solar modules and concentrated on solar wafers instead.
Even in solar wafers, the company moved from its initial focus on manufacturing monocrystalline to producing multicrystalline wafers in the third quarter of 2007. We maintain our market Neutral recommendation on the shares.
Read the full analyst report on “SOL”
Read the full analyst report on “SPWRA”
Read the full analyst report on “ESLR”
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