Suntech reaches new deal with bondholders, may turn debt to equity

Jun 28, 2013 - Suntech Power Holdings Co Ltd (NYSE:STP) may turn into equity all major debt claims by certain holders of its 3% notes, on which the Chinese firm defaulted in March, under a new accord expiring in August.

In a statement on Friday the solar panel maker unveiled a third forbearance agreement with most of the holders of the notes, giving it time until August 30 to carry out the debt restructuring. The latest agreement contemplates the equitisation of all major debt claims. Also, bondholders will appoint two additional members to Suntech’s board to oversee and guide the restructuring process.

The bondholders and the company aim to reach a framework agreement to include the terms of a debt restructuring and equitisation. They will also seek new strategic and financial investors for Suntech. “We remain optimistic that a mutually acceptable consensual restructuring of the Company is achievable,” chief executive David King said.

Earlier this month two of Suntech’s investors initiated legal action against the Chinese company for USD 550,000 (EUR 421,000) due on senior notes plus interest, court expenses and other costs. In March, the solar cell maker failed to repay USD 541 million of notes due March 15. The company said at the time that investors holding over 60% of the notes had agreed not to take any measures until May 15 under the first forbearance agreement. The second such deal gave Suntech until June 28 to reach a "consensual restructuring".

(USD 1 = EUR 0.766)

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