LDK Solar Co., Ltd. (NYSE: LDK) is still facing liquidity issues. The Chinese solar player said on Wednesday that it has engaged Citigroup to assist in discussions with creditors.

Its press release said, “We continue to work to address the liquidity and working capital concerns previously disclosed in our Annual Report on Form 20-F for the year ended December 31, 2011, originally filed with the SEC on May 15, 2012. In order to achieve a positive result, we have entered into discussions with certain creditors to obtain additional flexibility with respect to the terms and conditions of our existing offshore indebtedness. We have engaged Citigroup to assist us in this process.”

What is interesting is that the ADRs of LDK are surging on the news. A gain of 15% should be a good thing. Still, this just highlights the fundamental risks here in the Chinese solar sector (and the broader solar sector for that matter).

Our issue is that LDK is only at $1.20 per share, and that is even after its 15% gain. Its market cap has also dwindled down to $152 million. If you consider that the 52-week trading range has been $0.71 to $6.92 for this ADR, you will realize how bad things have been.

If you consider that the ADR traded above $50 almost five years ago, you will realize that things are dire here at LDK. Maybe another Chinese check-writing bailout is coming.

JON C. OGG

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