Suntech gets more time to repay bonds
Source: Bloomberg News |
March 13, 2013, Wednesday
|
Print Edition
Print Edition
SUNTECH Power Holdings Co, once the world's biggest solar-panel maker, said it received a two-month forbearance on repaying US$541 million of bonds as negotiations to restructure the debt continue.
More than 60 percent of the holders of the notes, which are convertible into stock, agreed not to exercise their rights until May 15, the Wuxi-based company has said in a statement. The bonds were due to mature on Friday and Suntech hired UBS AG last year to advise it on extending the deadline.
The decision marks a temporary reprieve for Suntech's management after it ousted founder Shi Zhengrong as chairman on March 4. Suntech hasn't reported a profit since the first quarter of 2011 as a global slump in panel prices hit earnings. Bondholders may have few options besides granting the extension, said Vicki Bryan, a bond analyst at Gimme Credit LLC in New York.
"Bondholders have little choice but to agree to this delay given the pronounced weakness of their unsecured claims amid Suntech's heavy debt load," she said in an e-mail.
Owners of Suntech's debt face "an acute risk they won't get repaid at all unless the company continues as a going concern outside of bankruptcy," she said.
Not all bondholders approved the deal. Colin Peterson, who said he's a bondholder through his distressed debt-focused hedge fund, Trondheim Capital Partners LP, in Scottsdale, Arizona, said he wasn't aware of the forbearance agreement until it was announced.
"There are many people who own several million in bonds that are flabbergasted by this forbearance claim," he said.
Suntech faces an increasing risk of bankruptcy, said Gordon Johnson, an analyst at Axiom Capital Management Inc.
Bondholders are "effectively equity holders," he said. "There is a risk that US equity holders could be devalued significantly."
Bondholders who haven't agreed to extend the date yet are unlikely to file involuntary bankruptcy, Amit Jain, analyst at SJS Markets Ltd, said.
More than 60 percent of the holders of the notes, which are convertible into stock, agreed not to exercise their rights until May 15, the Wuxi-based company has said in a statement. The bonds were due to mature on Friday and Suntech hired UBS AG last year to advise it on extending the deadline.
The decision marks a temporary reprieve for Suntech's management after it ousted founder Shi Zhengrong as chairman on March 4. Suntech hasn't reported a profit since the first quarter of 2011 as a global slump in panel prices hit earnings. Bondholders may have few options besides granting the extension, said Vicki Bryan, a bond analyst at Gimme Credit LLC in New York.
"Bondholders have little choice but to agree to this delay given the pronounced weakness of their unsecured claims amid Suntech's heavy debt load," she said in an e-mail.
Owners of Suntech's debt face "an acute risk they won't get repaid at all unless the company continues as a going concern outside of bankruptcy," she said.
Not all bondholders approved the deal. Colin Peterson, who said he's a bondholder through his distressed debt-focused hedge fund, Trondheim Capital Partners LP, in Scottsdale, Arizona, said he wasn't aware of the forbearance agreement until it was announced.
"There are many people who own several million in bonds that are flabbergasted by this forbearance claim," he said.
Suntech faces an increasing risk of bankruptcy, said Gordon Johnson, an analyst at Axiom Capital Management Inc.
Bondholders are "effectively equity holders," he said. "There is a risk that US equity holders could be devalued significantly."
Bondholders who haven't agreed to extend the date yet are unlikely to file involuntary bankruptcy, Amit Jain, analyst at SJS Markets Ltd, said.
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