Suntech Power Holdings will now move forward to implement a recapitalization plan that contemplates a scheme of arrangement as part of a holistic restructuring of the Suntech Group now that an understanding has been reached with the creditor working group. Suntech’s insolvency has been dominating the headlines in recent months.The restructuring scheme has the following principle components:
- Identifying the key assets to be retained by the company to allow it to continue its operations at a rationalized scale
- The exchange of outstanding debt into the company’s equity
- The setting of maximum debt levels for the company’s operating subsidiaries
- The introduction of a new strategic investor that will provide the necessary funding through the purchase of newly issued equity to complete the restructuring process
The measures are in the hope to improve the company’s balance sheet and to enable Suntech to continue its role as major global PV supplier. The restructuring framework to document the understanding is expected to be concluded this week. This will then give Suntech ample time to execute the restructuring.
Suntech is now taking decisive steps to re-emerge as a stable global player. Only last week the company suffered top-level resignations. Now the company’s board of directors has been reconstituted to a smaller and more geographically focused board. It is hoped that this board will execute the restructuring plan successfully. Zhou Weiping, Suntech’s President said, "Important steps forward are being taken towards a new Suntech. During this restructuring period, Suntech has continued to maintain its production and warranty obligations. The restructuring will allow us to cut our costs and optimize our margins and production. Although there is expected to be substantial dilution for our existing shareholders, we believe that these measures will put us in a better and stronger position to serve our current and future customers in China, Japan, the EU, USA and around the world."