ReneSola signs non-binding pact for sale of manufacturing arm

China’s ReneSola Ltd (NYSE:SOL) has entered into a term sheet for the potential sale of the company’s solar products manufacturing and LED distribution businesses to chairman and CEO Xianshou Li.

Under the terms of the non-binding pact, the solar projects developer will carve out its polysilicon, solar wafer and solar module manufacturing business along with the LED distribution operations. These activities, plus four entities engaged primarily in the solar power project business, will be transferred to ReneSola Singapore Pte Ltd (SGP). The latter will then be sold to Li and his affiliates.

The company’s chairman and CEO has warranted that following the consummation of the restructuring and the subsequent asset sales, the company and its subsidiaries will no longer be liable under bank debt totalling CNY 3.8 billion (USD 572m/EUR 479.5m).

Also, in exchange for issuing American Depositary Shares (ADSs) to SGP, a majority or substantially all of the payables owed by ReneSola to the carved businesses will be canceled. The company currently estimates this indebtedness to stand at about USD 200 million (EUR 168m).

CEO Li made his initial non-binding proposal for ReneSola’s manufacturing businesses on June 13, after which the company’s board of directors formed a Special Committee to consider the proposal. ReneSola stressed that the Special Committee continues to evaluate other alternatives available to the company.