Canadian Solar’s financial condition
Canadian Solar (CSIQ) had about $1.0 billion in cash, cash equivalents, and restricted cash as of March 31, 2016, compared to $1.1 billion as of December 31, 2015. The company had closer to $1.4 billion in the form of short-term debt on its books at the end of 1Q16 compared to nearly $1.2 billion at the end of 4Q15.
CSIQ’s long-term debt at the end of 1Q16 was $818.5 million, compared to $606.6 million at the end of 4Q15. The majority of its long-term debt will be due for repayment in the next two years.
Canadian Solar expects strong growth in demand for its solar products across various operating segments in the near future. As a part of its 2016 expansion plan, the company expects to more than double its existing wafer manufacturing capacity to 1 GW (gigawatt) by June 30, 2016.
The company expects to increase its cell manufacturing capacity to 3.9 GW by the end of 2016. Also, the company’s existing solar (TAN) module manufacturing capacity is set to reach 6.4 GW by the end of 2016. Interestingly, the majority of its new capacity additions are confined to Asia.
Available options to raise capital
Canadian Solar is relatively more leveraged than its peers First Solar (FSLR) and SunPower (SPWR), but it’s less leveraged than SunEdison (SUNEQ). According to company filings, Canadian Solar expects its debt to rise until the completion of its ongoing projects in the United States.
The company expects to recycle capital and reduce debt through the sale of its power plant assets in 2H16. According to company filings, CSIQ had approximately 438 MWp (megawatt peak) of solar power plants in operation as of March 31, 2016. The estimated resale value of these assets was ~$950 million.
The company believes that the current capital market situation is not favorable enough for a yieldco initial public offering. However, it’s planning to finance new projects through alternate options such as asset-backed securitization schemes.
Next, we’ll look at Canadian Solar’s project pipeline.