• Sat
  • Oct 25, 2014
  • Updated: 8:02am
BusinessCompanies
SOLAR ENERGY

China unlikely to bail out Suntech

Indebted solar-panel maker may go bankrupt, with government reluctant to provide support

PUBLISHED : Friday, 15 March, 2013, 12:00am
UPDATED : Friday, 15 March, 2013, 5:46am

The mainland will not rescue Suntech Power from its creditors because the former biggest solar-panel maker needs to retrench along with the rest of the industry, two advisers to government agencies said.

Officials in Beijing want to pare excess manufacturing capacity and consolidate the US$25 billion global industry that's led by China, said Li Junfeng, director of the climate-change strategic research division at the government's National Development and Reform Commission.

"The government won't intervene and shouldn't," Li said.

The government won't intervene and shouldn't

Meng Xiangan, vice-chairman of the China Renewable Energy Society, a liaison between the industry and the state, said Suntech should "not rely on government assistance".

The comments from advisers with knowledge of the mainland government's thinking cast doubt on whether Suntech, the largest solar panel manufacturer in 2011, can avoid bankruptcy. The company said on March 11 that it had obtained an agreement from more than 60 per cent of bond holders to delay repayment for two months on US$541 million of notes due today.

The central government wants to avoid a default, which would be the first for a bond issued by a company based on the mainland. Restructuring the solar industry is one of the first issues confronting Premier Li Keqiang as his administration takes over from Wen Jiabao this month.

Suntech's best course would be to "file for bankruptcy for some assets and let a state-owned power enter to protect certain interests," Meng said. "The entire company won't go bankrupt. Its brand will remain alive."

Two calls to Suntech's Wuxi headquarters in Jiangsu province and an e-mail to a company spokesman went unanswered. A spokesman for the firm in San Francisco declined to comment.

The New York Times yesterday reported that Suntech is close to being taken over partially or entirely by Wuxi Guolian Development, a holding firm part-owned by the municipal government.

Suntech executives are negotiating with bondholders about how to restructure payments on the US$541 million of notes that are convertible into shares as soon as tomorrow.

The company is also in talks with the government of Wuxi about financial assistance, though it is not clear how much support the local authority is prepared to give. Suntech got a US$32 million loan from Wuxi in September. In November, LDK Solar, China's second-biggest supplier of wafers for solar cells in 2011, sold a 19.9 per cent stake for about US$21.8 million to Heng Rui Xin Energy, which is partly owned by the Xinyu government, where it has a factory.

Share

Related topics

For unlimited access to:

SCMP.com SCMP Tablet Edition SCMP Mobile Edition 10-year news archive
 
 

 

 
 
 
 
 

Login

SCMP.com Account

or