Suntech Seeks New Cash After China Bankruptcy, Liquidator Says

Apr 29, 2014 5:35 am ET

April 29 (Bloomberg) -- Suntech Power Holdings Co., the Chinese solar panel maker that’s in bankruptcy proceedings, is seeking as much as $150 million to revive its business, according to its court-appointed liquidators.

Suntech plans to seek $100 million to $150 million of working capital from a strategic investor over the next six to nine months, said David Walker, one of the company’s two provisional liquidators. The focus is to develop the retail solar business in the U.S., Japan and Europe after losing its main manufacturing assets in China, he said.

“The feedback from creditors is to pursue a restructuring to extract value from the company” instead of folding up, Walker, who is based in Cayman Islands, said in a phone interview today. “The focus is not necessarily solely on manufacturing. The best margin lies in the retail markets.”

Ryan Scott Ulrich, public relations and investor relations director at Suntech in China, declined to comment on the plan when reached by phone today.

Suntech’s troubles followed a slump in solar module prices as expansion in production capacity outpaced growth in demand. The solar industry shakeout also forced Q-Cells SE of Germany to sell itself and Solyndra LLC into liquidation. Shanghai Chaori Solar Energy Science & Technology Co. missed payment on its debt in March in China’s first onshore bond default.

Bond Default

Suntech, which is based in the eastern province of Jiangsu, defaulted on $541 million of convertible bonds in March 2013 and filed for Chapter 15 bankruptcy in Manhattan in February this year to seek protection from U.S. creditors.

The notes last traded at 6 cents on the dollar on April 15 compared with 11 cents at the end of 2013, according to Trace, the bond-price reporting system of the Financial Industry Reporting Authority. The securities fetched as much as 79.7 cents in March 2012.

Suntech’s main manufacturing unit in China, Wuxi Suntech Power Co., was pulled into onshore bankruptcy proceedings by Chinese banks after the bond default. Shareholders of Hong Kong- listed Shunfeng Photovoltaic International Ltd. this month approved its acquisition of Wuxi Suntech for 3 billion yuan ($479.7 million).

A creditors’ working group led by distressed debt funds Clearwater Capital Partners LLC and Spinnaker Capital Ltd. announced in August a plan to recapitalize the solar maker, the company said in a statement. The broader plan will likely entail a debt for equity swap, Walker said in today’s interview.

Walker, who is a director and partner at PwC Corporate Finance & Recovery (Cayman) Ltd., said Suntech’s plan is being evaluated by an internal liquidation committee.

Walker said he believes the bondholders aren’t expecting a dollar for dollar resolution.

“You have to be realistic,” he said. “I don’t know as to what they would accept.”