Expect Continued Canadian Solar Financing This Year

After the close Monday, Canadian Solar (CSIQ) announced plans to sell 3.5 million common shares, raising the company’s expected fully diluted share count to nearly 40 million shares, (32 million shares as of last report + 4 million shares from the forced conversion + 3.5 million shares from the announced secondary) and its enterprise value to nearly $1.6 billion.

Given our past discussion concerning the financing needs of several polysilicon-based module manufacturers, we were not taken aback by CSIQ’s latest secondary announcement, however we were somewhat surprised by the company’s financing method. We were expecting a larger convertible offering, instead of a direct placement of common shares. Arguably a convertible is a better means of long-term financing, since there is no immediate dilution to common shareholders.