Suntech, lenders reach pact on $541 million bond repayment

Mon Mar 11, 2013 10:57am EDT

A man walks past Suntech Power Holdings headquarters in Wuxi, Jiangsu province March 26, 2010. REUTERS/Stringer

A man walks past Suntech Power Holdings headquarters in Wuxi, Jiangsu province March 26, 2010.

Credit: Reuters/Stringer

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(Reuters) - Solar panel maker Suntech Power Holdings Co Ltd STP.N reached an agreement with some of its lenders to defer its obligations on a $541 million loan due this Friday by two months, providing the company more time to restructure the debt.

Suntech said holders of more than 60 percent of the 3 percent convertible notes have agreed not to exercise their rights until May 15, if the company fails to make payments due on March 15.

The China-based company's shares fell 9.5 percent to $1.14 at open on the New York Stock Exchange on Monday.

Suntech, which had debt of $2.2 billion at the end of March 2012, has been losing money, hurt by a steep fall in panel prices. The company has not released quarterly results since the second quarter of 2012, but reported losses for the four quarters before that.

Suntech is planning to release results in April, a company spokesperson told Reuters last week.

"If there is eventually no bailout of some kind, this would be simply 'kicking the can down the road', but at this point, a two-month reprieve is certainly better than nothing," said Raymond James analyst Pavel Molchanov.

Analysts are speculating that the Chinese government may eventually bail out Suntech. Chinese lenders and government organizations have supported heavily indebted solar players amid a general reluctance to allow credit defaults.

Bank of Beijing in December provided Hanwha SolarOne Co Ltd (HSOL.O) with a credit line of about $475 million, allowing it to repay its long-term debt.

Suntech last week settled a dispute over a partner's claim that it held German bonds as collateral for its investment in a solar development fund.

The company hired investment bank UBS in October to evaluate alternatives for the notes.

Shares of the company, which has a market capitalization of about $228 million, were down 6 percent at $1.18 in morning trade.

(Reporting by Swetha Gopinath in Bangalore; Editing by Sriraj Kalluvila)

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