Defaulting on bonds is 1st for mainland firm
Source: Bloomberg News |
March 19, 2013, Tuesday
|
Print Edition
Print Edition
SUNTECH Power Holdings Co became the first company from the Chinese mainland to default on its bonds after failing to repay US$541 million of notes due last Friday, breaching terms of other outstanding loans.
The move pushes what was once the world's biggest solar panel maker into default on credit lines it has with International Finance Corp and Chinese domestic lenders, Suntech said yesterday in a statement from its headquarters in Wuxi. China Development Bank has loans to Suntech.
The move opens the way for Suntech noteholders to sue the company in the US, where its shares and bonds trade. Last week, Suntech obtained an agreement of holders of 63 percent of the notes to delay exercising their rights until May 15, allowing executives to press ahead with restructuring payments. Some note holders not involved in those talks are organizing a rival group and have threatened to sue.
Suntech is seeking "a way forward that will take into account the rights and interests of all of its constituents, including shareholders, note holders, lenders, customers, suppliers and employees," Chief Executive David King said in the statement. "We are currently exploring strategic alternatives with lenders and potential investors, which could help to set us on a path towards longer term success."
UBS AG is advising Suntech. Chinese solar firms are struggling after taking on debt to expand supply, leading to a glut that cut prices and squeezed profits. LDK Solar Co, the second-biggest solar wafer maker, in December hired Citigroup Inc to help renegotiate its liabilities and obtain "additional flexibility" from creditors.
China has supported solar companies through credit lines from local government or state-backed agencies. Suntech, LDK, Trina Solar Ltd, Yingli Green Energy Holding Co, Hanwha SolarOne Co and Jinko Solar Holding Co were among 12 companies that obtained over US$43.2 billion in credit pledges from CDB, according to data compiled by Bloomberg News.
LDK, which got a bailout in July for part of its debt from the local authority in Xinyu, said on January 31 that it got approval for a 440 million yuan (US$71 million) loan from CDB. Suntech has been talking with the Wuxi government about the possibility of financial support.
The move pushes what was once the world's biggest solar panel maker into default on credit lines it has with International Finance Corp and Chinese domestic lenders, Suntech said yesterday in a statement from its headquarters in Wuxi. China Development Bank has loans to Suntech.
The move opens the way for Suntech noteholders to sue the company in the US, where its shares and bonds trade. Last week, Suntech obtained an agreement of holders of 63 percent of the notes to delay exercising their rights until May 15, allowing executives to press ahead with restructuring payments. Some note holders not involved in those talks are organizing a rival group and have threatened to sue.
Suntech is seeking "a way forward that will take into account the rights and interests of all of its constituents, including shareholders, note holders, lenders, customers, suppliers and employees," Chief Executive David King said in the statement. "We are currently exploring strategic alternatives with lenders and potential investors, which could help to set us on a path towards longer term success."
UBS AG is advising Suntech. Chinese solar firms are struggling after taking on debt to expand supply, leading to a glut that cut prices and squeezed profits. LDK Solar Co, the second-biggest solar wafer maker, in December hired Citigroup Inc to help renegotiate its liabilities and obtain "additional flexibility" from creditors.
China has supported solar companies through credit lines from local government or state-backed agencies. Suntech, LDK, Trina Solar Ltd, Yingli Green Energy Holding Co, Hanwha SolarOne Co and Jinko Solar Holding Co were among 12 companies that obtained over US$43.2 billion in credit pledges from CDB, according to data compiled by Bloomberg News.
LDK, which got a bailout in July for part of its debt from the local authority in Xinyu, said on January 31 that it got approval for a 440 million yuan (US$71 million) loan from CDB. Suntech has been talking with the Wuxi government about the possibility of financial support.
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