Chinese solar panel maker LDK Solar Co. Ltd. (NYSE: LDK) missed a $24 million bond repayment last Tuesday, and on Thursday it turned in absolutely terrible numbers for its fiscal 2012 fourth quarter. The company said it had arranged a late payment of $16.6 million with the bond holders, but said nothing about the remaining $7.4 million shortfall.

The story only gets worse. According to a report at China’s caijing.com, LDK’s debt now totals $5.4 billion. Most of that is owed to the Chinese Development Bank (CDB), which in September of 2010 approved an $8.9 billion five-year loan package for LDK Solar. China’s state-controlled banks are famous for their forgiving attitude toward feckless borrowers and may yet ride to LDK Solar’s rescue.

But investors should not count on it. The CDB also pumped $7.3 billion in loans into Suntech Power at the same time it approved the LDK Solar loans and did nothing to prevent Suntech’s fall into bankruptcy earlier this year. LDK Solar, like Suntech, has no hope of repaying its massive debt.

Fourth-quarter sales at LDK Solar totaled just $136 million and gross margins rose to a negative 60.5%. The net loss came to $517 million. There is no hope that the company can turn that around enough to survive.

Solar panel maker Yingli Green Energy Holding Co. Ltd. (NYSE: YGE) scored a total of $165 million in new loans from the CDB last week, but that is not likely to have much impact on the company’s fortunes going forward. Yingli Green Energy could be the next in line for a nosedive into bankruptcy.

Can any of China’s solar energy companies survive? One likely possibility is JinkoSolar Holding Co. Ltd. (NYSE: JKS), which has less debt and is better capitalized than any of the others. But the CDB and other of China’s state-controlled banks, not the equity markets, will be picking the winners here. A word to the wise.

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