UPDATE 1-Suntech says three directors resign over cash flow concern

Wed Aug 28, 2013 3:42am EDT

* Resigning directors say advice has not been followed

* Also cite concerns about lack of business plan

* Suntech main unit filed for bankruptcy protection in March

* Parent company defaulted on a $541 mln covertible bond

HONG KONG, Aug 28 (Reuters) - Chinese solar panel maker Suntech Power Holdings Co Ltd said on Wednesday three directors had resigned due to concerns about a "severe cash flow drain" and the company's failure to implement their advice.

Hit by a global glut in solar panels, Suntech Power's main subsidiary, Wuxi Suntech, filed for bankruptcy protection in China in March, five days after its New York-listed parent company defaulted on a $541 million convertible bond.

Suntech said Susan Wang, Julian Worley, and Zhizhong Qiu resigned as directors on Aug. 21, also noting that they felt they were not being provided with enough information to fulfill their duties.

Other concerns cited by the departing directors included unclear prospects for securing new capital, lack of a clear business plan, loss of critical talent and failure to pay outside legal counsel.

Industry watchers have said Suntech's overseas creditors are only expected to recover a fraction of their capital at best.

A source familiar with the matter told Reuters this month that the Wuxi unit was in talks with five companies about strategic investments as part of efforts to restructure its $1.75 billion debt.

Suntech Power has been operating at 30-40 percent its designed annual capacity of 2.4 gigawatts (GW), but expects demand to pick up gradually as China has settled a solar panel trade dispute with the European Union and has announced plans to boost domestic demand for solar modules, the source said.

At the end of March 2012, Suntech Power had total debt of $2.2 billion, including the convertible bond, loans from China Development Bank, and a $50 million convertible loan from the International Finance Corporation, the private sector arm of the World Bank.

It has yet to publish its 2012 annual report and disclose its overall debt situation.

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