UPDATE 1-Suntech hires UBS to advise on convertible notes

Tue Oct 9, 2012 6:52pm EDT

LOS ANGELES Oct 9 (Reuters) - Chinese solar panel maker Suntech Power Holdings Co Ltd said on Tuesday it hired UBS to evaluate alternatives for its convertible notes due in March of next year.

The announcement comes as Suntech and others in the industry grapple with a sharp decline in panel prices that has hurt margins for nearly two years. Panel prices have dropped about 30 percent so far this year after falling 50 percent in 2011.

In a statement, the cash-strapped company said it is "committed to extending the maturity of credit facilities and continuing to reduce total debt and related interest expense."

At the end of 2011, Suntech had $580.9 million in convertible notes outstanding and $492.4 million in cash.

Also on Tuesday, Suntech said it would slash production capacity, cut non-silicon module costs by 30 percent from the end of 2011 and reduce operating costs by 20 percent this year.

"I am confident that we can return to positive operating cash flow in 2013," Chief Executive David King said in the statement.