LDK Solar to raise capital, faces cash crunch

Thu Dec 17, 2009 10:12am EST* Liquidity crunch threatens company

* To sell $50 mln-$80 mln in convertible preference shares

* Stock falls 8 pct in early trade

NEW YORK, Dec 17 (Reuters) - Chinese solar company LDK Solar (LDK.N) said on Thursday it planned to raise capital and was considering selling assets as it faced a cash crunch that threatened its ability to survive, sending its shares down 8 percent.

The company said VMS Investment Group Ltd and its affiliates had agreed to buy $50 million to $80 million in convertible preference shares of a new subsidiary that will hold its polysilicon business, which it plans to restructure.

"If we do not successfully execute our liquidity plan, we face the risk of not being able to continue as a going concern," the company said in a filing to the U.S. Securities and Exchange Commission.

Solar companies struggled this year as the financial crisis choked off funding for new projects, creating a glut of solar panels that eroded profit margins for the nascent industry.

LDK said it had a working capital deficit of $1.15 billion and an accumulated deficit of $8.5 million as of Sept. 30.

Through the first nine months of 2009, it incurred a net loss of $209.9 million.

Shares in LDK fell 8 percent to $8.46 in early trading on the New York Stock Exchange.

(Reporting by Matt Daily, editing by Dave Zimmerman)