Suntech Power fails to repay US$541m bond
Solar panel maker the first Chinese company to default on notes as a glut in the industry depresses prices and puts squeeze on profits
Suntech Power yesterday became the first company from the mainland to default on its bonds after failing to repay US$541 million of notes due on March 15.
The move pushed what was once the world's biggest solar panel maker into default on credit lines it had with the International Finance Corp and mainland lenders, Suntech said yesterday in a statement from its headquarters in Wuxi.
China Development Bank also has loans to Suntech.
The move opens the way for Suntech noteholders to sue the company in the United States, where its shares and bonds trade.
Last week, Suntech obtained an agreement of holders of 63 per cent of the notes to delay exercising their rights until May 15, allowing executives to press ahead with restructuring payments.
Some noteholders not involved in those talks are organising a rival group and have threatened to sue.
"For a US solar company, bankruptcy under such circumstances would indeed be inevitable," said Raymond James analyst Pavel Molchanov. "For Suntech, however, it is plausible that bankruptcy [and the associated stigma in the industry] could be avoided - but only if the Wuxi government [or other public authorities] provide enough near-term liquidity support."