Shunfeng named preferred bidder for troubled Suntech unit; shares surge

Solar panel maker Shunfeng Photovoltaic International has been chosen as the preferred bidder for a stake in the main unit of troubled rival Suntech Power Holdings, according to a notice from the mainland's Wuxi government.

The Hong Kong-listed shares of Shunfeng ended more than 22 per cent higher yesterday, adding to the over 20 per cent gain they enjoyed on Wednesday.

A source close to the situation said the success of the bid would depend on whether Shunfeng could strike a debt restructuring deal with Wuxi Suntech's creditors.

Amid a worsening glut in solar panels globally, Wuxi Suntech filed for bankruptcy protection in the mainland in March, five days after its New York-listed parent company defaulted on a US$541 million convertible bond. The unit has US$1.75 billion in debt.

Shunfeng won the auction by beating out its only rival bidder - a consortium led by Wuxi Guolian, the investment arm of the city government of Wuxi, where Suntech is headquartered - according to the government notice.

The value of the bid is not known. Shunfeng has made a 500 million yuan (HK$631 million) deposit on the offer, which is aimed at strengthening its solar cell and module manufacturing capability and aiding its diversification into the operation of solar power plants.