China's LDK Solar (NASDAQOTH: LDKSY ) defaulted on a scheduled payment on $23.8 million in convertible senior notes yesterday, sending shares of the vertically integrated solar power company tumbling.
In a press release today, LDK blamed "a temporary cash-flow shortage" for its decision to make less than full payment on the principal and interest that came due on the notes on April 15. However, the company says it has reached an out-of-court agreement with two holders of the notes, holding in aggregate $16.6 million of its debt, to make a partial cash payment on the notes and to postpone repayment of the balance.
LDK says it is "ready and willing" to discuss a similar arrangement with its other creditors. Meanwhile, its shares were down 5.8% in Tuesday trading, after falling below $1 earlier in the day. They are trading at $1.08 at the time of publication.
Although occasionally cash-flow positive, LDK has never had a year as a publicly traded company, in which it generated positive free cash flow.