Suntech may get US$150m in revamp after debt default
Print Edition
China’s troubled solar panel maker Suntech Power Holdings said it was in line to receive a US$150 million investment from a company controlled by its hometown government as it restructures following a debt default.
The cash infusion could help to revive Suntech following financial trouble that saw it tumble from its status as a dominant solar panel manufacturer amid price-cutting wars triggered by a global production glut. Suntech’s main Chinese subsidiary, Wuxi Suntech Power Co, was forced into bankruptcy court in March after missing a US$541 million payment to bondholders.
Suntech has received an investment letter of intent from Wuxi Guolian Development (Group) Co, the company said in a statement on Wednesday. Suntech’s CEO said that it was not a firm commitment but “an important step in restructuring of the company.”
China’s Cabinet said in December it would encourage mergers and acquisitions among China’s solar panel producers to reduce overcapacity and return the industry to profitability.
China sees solar power as a strategic emerging industry. The country encouraged the industry’s expansion over the past decade.
Guolian will inject its solar and other businesses into Suntech, the company said. Guolian said it has net assets of US$2.6 billion, including investments in solar, power generation, textiles, waste disposal and environmental protection.
There will be “substantial dilution” for existing shareholders but the move should rebuild Suntech’s operating assets and global brand, said Chief Executive Officer Zhou Weiping.
“Even though the investment letter of intent is indicative only and is not a firm commitment, this is an important step in the restructuring of the company with key stakeholders,” Zhou said in the statement. He gave no other details.
Guolian bid for Wuxi Suntech but lost out to another company, Jiangsu Shunfeng Photovoltaic Technology Co. That deal awaits court approval.
Suntech’s financial trouble was a dramatic reversal for a company that was a leading force in China’s fast-growing renewable energy industry.
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