GCL, a Chinese polysilicon company, raises capital to support supply-side reform

GCL Technology, a Chinese company, announced on Tuesday its intention to issue shares in order to raise funds for supply-side changes to polysilicon. Polysilicon is a component of solar cells.

GCL said it would use the estimated HK$3.505billion ($450.66m) proceeds from the share issuance to "establish a capital reserves for reforming the supply side in order to promote structural adjustment of the polysilicon production capability", as well for growing other business areas, according to a Hong Kong Stock Exchange filing.

GCL announced plans in late July by China's biggest polysilicon producers. The fund will be created to buy and close at least one million metric tonnes of lower-quality capacity. This is part of an effort to reduce overcapacity and increase prices. Analysts warned that the heavily indebted industry could have difficulty raising the required financing.

GCL will invest some capital in its silane business. The demand for silane is increasing due to the switch to back-contact cells. These solar cells have all the electrical contacts on their rear surface, allowing the front of the cell to be fully exposed to the sun.

The company will also raise an additional HK$1.887billion for working capital and loan repayment.

(source: Reuters)