Update: Rumors rife that Suntech unit will file for bankruptcy11. March 2013 | Top News, Global PV markets, Industry & Suppliers, Investor news | By: Max Hall, Wenjing Feng
Speculation is mounting that the Wuxi Suntech Power Company unit of Suntech Power Holdings Company Limited will file for bankruptcy protection this month. The company has declined to comment. Update: Suntech has announced a preliminary solution with its bondholders.
A report in today’s China Business Journal newspaper predicted the unit’s core assets will be bought by state-owned Wuxi Guolian Development (Group) Company, which will lead a restructuring.
The rumors have surfaced in light of the US$541 million in convertible bonds owed by the company. Originally, it had to repay them by March 15. However, in a statement issued today, Suntech announced the signing of a forbearance agreement with the holders of over 60% of its 3% convertible notes. As such, if Suntech fails to make the repayments, the aforementioned bondholders have said they will not exercise their rights under the notes until this May 15.
CEO, David King commented, "The forbearance agreement demonstrates bondholders' support for Suntech and provides an excellent platform to further discussions towards a mutually agreeable restructuring of the Notes. We are making progress and are working to find a resolution soon."
The rumors of bankruptcy come less than a week after Suntech founder and former CEO Zhengrong Shi was ousted as chairman of the company in a corporate coup which he branded "misconceived and unlawful".
Chinese newspaper the 21St Century Business Herald additionally reported that the decision to replace Shi with Susan Wang came at the behest of a group of lenders led by the Bank of China, who threatened to close lines of credit unless there was a change at the top of the Wuxi-headquartered solar giant.
pv magazine has been unable to contact Wuxi Guolian Development Group for further detail. Meanwhile, a spokesperson for Suntech has refused to comment on the speculation.
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