Suntech nearing debt restructuring deal

Sep 2, 2013 - Suntech Power Holdings Co Ltd (NYSE:STP) is close to sealing a debt restructuring framework agreement with its creditors, only a few days after three of its independent directors left, saying the company had no business plan.

The Chinese solar photovoltaics (PV) maker said on Friday it expects to strike the agreement this week with its creditor working group led by Clearwater Capital Partners and Spinnaker Capital Ltd.

Suntech plans to immediately begin preparations for a recapitalization programme that is seen to enhance its balance sheet and make it “well positioned to continue as a major worldwide supplier in the solar industry”. As part of the restructuring plan, the it will identify the main assets it will keep, exchange outstanding debt into Suntech equity, establish maximum debt levels for its operating units and introduce new a new strategic investor who will offer financing by purchasing newly-issued shares in the company.

According to Suntech’s president Zhou Weiping, the restructuring scheme will enable the firm to reduce its costs and strengthen margins and productions. He added that the measures will put the company “in a better and stronger position to serve current and future customers in China, Japan, the EU, the US and around the world."

Suntech and its creditors will cooperate in finding a full-time executive who will help in the restructuring process.

In mid-March, Suntech failed to make the principal payment on a USD-541-million bond (EUR 409.8m), touted as the first bond default for a China-based company. A few days later Wuxi Suntech, the company's main subsidiary in China, entered insolvency proceedings and restructuring. According to a Reuters report from earlier in August, the Wuxi unit is discussing strategic investments from three private and two state-controlled companies.

(USD 1.0 = EUR 0.757)

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