Suntech keeps power on after failure

PUBLISHED : Saturday, 23 March, 2013, 12:00am
UPDATED : Saturday, 23 March, 2013, 3:41am

A day after Suntech Power became the solar industry's biggest corporate failure, workers continued to load and unload trucks at its main factory in China, adding to the global oversupply of panels.

Seven staff and contractors passing through the gates at the facility in Wuxi said Suntech was operating after this main unit tipped into insolvency. The company, which is seeking local government aid and hired an executive from a state-backed firm in Wuxi, said it planned to continue working while a Chinese court restructured US$2 billion in debt.

For the industrial town of Wuxi, preserving about 10,000 jobs at Suntech is a priority of the local government and state-backed enterprise Wuxi Guolian Development. Maintaining the capacity and China's position as the world's leading solar supplier will exacerbate a supply glut that has dragged down panel prices 69 per cent in the past two years.

"It would be healthy for the market if its capacity would go offline, but that's probably not going to happen," said Henning Wicht, the lead solar analyst at energy consultant IHS in Munich. "They are a top-tier brand, and it seems the local government will step in."

In an e-mailed response to questions, Suntech said it "will continue operations through the restructuring period". Its spokesman, Ryan Ulrich, declined to comment. Officials at the Wuxi government and the development company were not available for comment.

"Wuxi officials would crawl through fire to avoid looking like failures in a technology sector that is so highly prioritised by Beijing," said Melanie Hart, a senior policy analyst at the Centre for American Progress in Washington.

Workers at the Wuxi plant said they had not been told of any changes since March 20, when the company said the unit that operated it was subject to insolvency proceedings initiated by eight Chinese banks. That was making customers wary, said Arno Harris, the president of Sharp's US solar-project development unit, Recurrent Energy.

"For any developer, it's pretty impossible to put that technology in a project now because lenders are going to want to see a financially stable entity standing behind the warranty," Harris said.

SAG Solarstrom, a German developer that bought Suntech panels in September, is now looking for other suppliers.

"We wouldn't buy Suntech components in the current condition," said Jutta Lorberg, a spokeswoman for the company.

Bankruptcy for Suntech's main unit may wipe out more than US$1.28 billion that Wall Street investors funnelled into the firm through two stock offerings. It also had US$1.44 billion in credit lines, including a US$50 million note to the International Financial Corp and credit lines with the China Development Bank.