Chaori Solar Shares Tumble as Huatesi Polymer Enters Bankruptcy

Apr 08, 2014 1:32 am ET

April 8 (Bloomberg) -- Shanghai Chaori Solar Energy Science & Technology Co. fell by the daily limit after its stock resumed trading for the first time since its bond default. A Chinese textile company with junk debt entered bankruptcy.

Shares in Chaori Solar, suspended since Feb. 19, slumped 5 percent to 2.46 yuan ($0.40) as of 1:13 p.m. in Shenzhen. Chaori Solar failed to make a full coupon payment on March 7, becoming the first company to default in China’s onshore bond market. Zhejiang Huatesi Polymer Technical Co.’s creditors will meet later this month after a local court accepted its bankruptcy reorganization application.

Investors are looking for further signs of stress in China’s debt capital markets after Chaori Solar’s non-payment and builder Zhejiang Xingrun Real Estate Co.’s collapse. Building-materials maker Xuzhou Zhongsen Tonghao New Board Co. averted a default in the nation’s private junk note market after its guarantor agreed to step in, the China Securities Regulatory Commission said April 4.

Chaori Solar said last week a bondholder is seeking to force it into a bankruptcy restructuring. The solar-cell maker received a letter on April 3 from Shanghai Yihua Metal Materials Ltd., saying the creditor had submitted a petition to Shanghai No. 1 Intermediate People’s Court, according to an April 4 stock exchange filing. Trade in its shares may be halted again if the court accepts Yihua Metal’s petition.

Huatesi Polymer’s creditors will meet on April 21 after its bankruptcy application was accepted, according to a March 7 statement posted on the website of Anji county court and a report today in the National Business Daily.

The manufacturer sold 60 million yuan of two-year 11 percent bonds in January 2013 at par via private placement, according to data compiled by Bloomberg.

The bankruptcy administrator said it wouldn’t comment on the case today when reached by phone because the review is ongoing. The telephone number listed on Huatesi Polymer’s website is no longer in service.

--With assistance from Huang Zhe in Beijing and Jing Jin in Shanghai.