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We like to think that when we deposit a dollar at the bank, it goes into a big vault and we can pull out that same dollar at any time. But that¿s not how the U.S. banking system works. Banks take that money and invest it to make money themselves, so cash gets spread around. This, naturally, leads to a big risk: What happens if those investments go sour? Well, you¿d be out of luck. You can¿t get your dollar back.
The Federal Reserve doesn¿t like that scenario, so it prohibits banks from putting all the cash it has on deposit on the line. In fact, the Fed forces banks to keep a portion of their assets at the Federal Reserve itself, to make sure that some of your assets won¿t get squandered if the bank¿s bets go south. These are called ¿reserves,¿ (hence, Federal Reserve. Got it? Good), and usually amount to 10% of the total cash kept in checking accounts.
These reserves are never exactly 10%, and banks like to keep a little extra in reserve ¿ not, as you might think, to make you more comfortable that they¿re in good financial shape, but rather so they can take that excess and lend it to other banks and make money off it. (They¿re banks, they can¿t help themselves.) The rate at which they make these loans is called the Federal Funds rate, which is set by the Federal Reserve¿s Federal Open Market Committee.
When you hear people chattering about how the Fed cut or hiked interest rates, this is what they¿re talking about: the interest rate banks can charge for lending money from their reserves. This begs the question: If these are essentially loans between banks, why is the Fed Funds rate so important for the rest of the economy?
Well, simply put, because loans make the financial world go round. Bank A lends Bank B $10,000 at a Fed Funds rate of 5%. Bank B then lends out $10,000 to a small business at 7%. The small business then takes that money and expands the business and hires new workers. Now someone is employed, Bank B has made interest off the loan, and Bank A is the richer for making it all happen. It¿s perhaps overly simplistic, but you get the idea. When you want the economy to thrive, you make lending cheaper.
Of course, sometimes you don¿t want the economy to thrive. In fact, you might want it to cool down, mostly to avoid money flooding the system and causing inflation. In that case, the Fed raises interest rates, making it difficult to lend or borrow.
Home / Markets / Industries / Energy
Wednesday, July 02, 2008
China Sunergy Announces Closing of Offerings of Convertible Senior Notes and American Depositary Shares
Comtex
NANJING, China, July 2, 2008 /Xinhua-PRNewswire via COMTEX/ ----China Sunergy Co., Ltd. (Nasdaq: CSUN) announces the closing on July 1, 2008 of its offering of 4.75% Convertible Senior Notes due 2013. The notes were offered to qualified institutional buyers pursuant to Rule 144A under the United States Securities Act of 1933, as amended. The initial purchaser of the notes exercised its option to purchase an additional US$4.5 million of notes from China Sunergy to cover overallotments, bringing the total size of the issuance to US$54.5 million. The notes are convertible into American Depositary Shares (''ADSs'') of China Sunergy.
China Sunergy also announces the closing at the same time of the concurrent offering of 4,431,000 ADSs. China Sunergy loaned the ADSs to an affiliate of the initial purchaser of the notes, the ADS borrower, which in turn sold the borrowed ADSs in the offering. The ADS borrower is using the short position resulting from its sale of the borrowed ADSs to facilitate the establishment of hedge positions by investors in the notes offering. The ADS borrower will be required to return the borrowed ADSs when the notes are no longer outstanding. China Sunergy does not receive any proceeds from the offering of the borrowed ADSs, but has received a nominal lending fee from the ADS borrower.
About China Sunergy Co., Ltd.:
China Sunergy Co., Ltd. (Nasdaq: CSUN) ("China Sunergy") is a leading manufacturer of solar cell products in China as measured by production capacity. China Sunergy manufactures solar cells from silicon wafers utilizing crystalline silicon solar cell technology to convert sunlight directly into electricity through a process known as the photovoltaic effect. China Sunergy sells solar cell products to Chinese and overseas module manufacturers and system integrators, who assemble solar cells into solar modules and solar power systems for use in various markets. For more information please visit http://www.chinasunergy.com .
Safe Harbor Statement
This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements, including but not limited to, the company's ability to raise additional capital to finance the company's activities; the effectiveness, profitability, and the marketability of its products; the future trading of the common stock of the company; the ability of the company to operate as a public company; the period of time for which its current liquidity will enable the company to fund its operations; the company's ability to protect its proprietary information; general economic and business conditions; the volatility of the company's operating results and financial condition; the company's ability to attract or retain qualified senior management personnel and research and development staff; future shortage or availability of the supply of raw materials and other risks detailed in the company's filings with the Securities and Exchange Commission. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the companies and the industry. The company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although the company believes that the expectations expressed in these forward looking statements are reasonable, they cannot assure you that their expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.
For further information contact: Financial Dynamics Julian Wilson Phone: +86-10-8591-1951 Email: julian.wilson@fd.com Peter Schmidt Phone: +86-10-8591-1953 Email: peter.schmidt@fd.com
SOURCE China Sunergy Co., Ltd.
http://www.chinasunergy.com
Copyright (C) 2008 PR Newswire. All rights reserved
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