Polysilicon maker GCL-Poly on Sunday announced it will be the majority partner in a RMB18 billion (US$2.79 billion) project to develop a new factory in Inner Mongolia.

The announcement came despite the fact the manufacturer recently suffered a cross default and on Friday was forced to slash the price of concessional shares offered as incentives to employees, because of the travails of its stock price.

GCL said it will hold a 65% stake in a planned joint venture with PV applications company Shangji Automation Co Ltd to develop a 300,000-ton-annual-production-capacity facility in the Chinese autonomous region.

Schedule

The fab will developed in three stages, starting with a RMB3.6 billion first phase. GCL-Poly stated the 65-35 split in the JV would not necessarily indicate how the projected investment would be weighted. Such ratios would require RMB2.34 billion from GCL for the first phase of an eventual RMB11.7 billion commitment.

The announcement was made on the same day the company revealed details of a further RMB1.95 billion of commitments related to the development of a 60,000-ton-capacity poly production line in Leshan City, Sichuan.

An update published on the Hong Kong Stock Exchange on Sunday, and dated Friday, explained a complex workaround which will involve GCL-Poly subsidiary Zhongneng Polysilicon Technology Development Co Ltd surrendering majority ownership of the project company associated with that planned fab–Sumin New Energy Technology Co Ltd. GCL also made fresh commitments to the Zhongping Polysilicon Photovoltaic Information Industry Investment Fund Partnership (Limited Partnership) of which it is a partner.

Under the arrangement, GCL subsidiary Zhongneng will raise RMB600 million from selling 3.848% of its 9.623% stake in polysilicon business Zhonghuan-GCL to the fund–to which it has already agreed to contribute RMB1.5 billion. As part of the deal, the fund can require the GCL unit to buy back the stake if Zhonghuan-GCL is not sold off to a third party within five years.

GCL-owned Leshan polysilicon fab project company Sumin New Energy will see 86.67% of its ownership pass to the fund for a nominal RMB1 (US$0.15) as part of the arrangement. The fund will, in return, raise its contribution to Sumin New Energy's registered capital from RMB1.3 billion to RMB1.9 billion. At the same time, GCL-owned Zhongneng agreed to raise its contribution to Sumin New Energy from RMB200 million to RMB1 billion. The Guangyang Technology Development Partnership held on behalf of Zhongneng by two of the latter's employees, also agreed to contribute RMB245 million to the polysilicon project company.

Share price

GCL's heavily-indebted solar project business GCL New Energy on Friday announced the proposed cancellation of 214 million share options, provided the non-director grantees who have thus far failed to take up the options agree. The company has already secured agreement from grantees to cancel a separate 141 million of share options because the prices at which employees could have bought the stock–HK$1.1798 (US$0.15) or HK$0.606 (US$0.08)–were significantly more costly than the price available on the open market.

GCL New Energy has instead issued 381 million new share options at a discount price of HK$0.00416 (US$0.0005).

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