Suntech in line for US$150m injection

The mainland's troubled solar panel maker Suntech Power 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 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 mainland subsidiary, Wuxi Suntech Power, was forced into bankruptcy court in March after missing a US$541 million payment to bondholders.

Suntech had received an investment letter of intent from Wuxi Guolian Development, the company said on Wednesday. Chief executive Zhou Weiping said it was not a firm commitment but "an important step in restructuring of the company".

Beijing announced in December that it would encourage mergers and acquisitions among solar panel producers to reduce overcapacity and return the industry to profitability.

The government sees solar power as a strategic emerging industry that it wants to develop. Beijing encouraged the industry's expansion over the past decade with grants and low-cost loans. That prompted hundreds of small producers to spring up, flooding the market and depressing prices.

Guolian would inject its solar and other businesses into Suntech, the company said. Guolian said it had net assets of US$2.6 billion, including investments in solar, power generation, textiles, waste disposal and environmental protection.