By staff reporter Li Qiyan

Guodian Power Development Co. Ltd. (SSE: 600795), one of China's major electricity and heat suppliers, said it has been approved by the China Securities Regulatory Commission to issue six-year bonds with attached warrants worth up to 3.99 billion yuan.

An investment bank insider told Caijing the bond issuance should help GD Power expand its business. Meanwhile, an analyst told Caijing that part of the capital would be used to improve the company's debt structure.

The company has grown rapidly in the past two years, reporting total installed capacity of 12.3 million kilowatts by the end of 2007, up 47 percent from 8.36 million kilowatts two years earlier. Moreover, power output last year surged to more than 65 billion kilowatt-hours.

However, the rapid expansion increased the company's debt burden. According to GD Power statement May 5, the company's debt totaled 4.56 billion yuan at the end of 2007, including 4.48 billion yuan in short-term debt and 75 million yuan in one-year debt.

The statement said capital raised through the bonds would be used to pay off short-term loans and finance investments in several power plants. Some 1.7 billion yuan would go toward short-term loans due in June, 1.2 billion yuan would be used to pay the company's revolving loans, and the remaining 1.1 billion yuan would be invested in power projects in Datong and Inner Mongolia.

The GD Power statement said the bonds would have a face value of 100 yuan, with coupon rates ranging from 1 percent to 2 percent. Caijing learned the company applied to issue the bonds at the beginning of this year, but had to postpone due to a reshuffle of top management in April.

GD Power last year expanded its capacity by buying stakes in other power suppliers, including Zhejiang Beilun Power Generation Co., Guodian Ningxia Shizuishan Power Generation Co. Ltd., Daduhe River-Basin Hydro Power Development Co. Ltd., Inner Mongolia Dongsheng Heat & Power Co. Ltd. and GD Jiantou Inner Mongolia Energy Co.

1 yuan = 14 U.S. cents

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