(Refiles to correct amount of deposit in 12th paragrah, adds byline)
By Charlie Zhu
HONG KONG Oct 9 (Reuters) - Hong Kong-listed Chinese solar panel maker Shunfeng Photovoltaic International Ltd has submitted a bid for a stake in the main unit of troubled rival Suntech Power Holdings Co Ltd that is struggling under a mountain of debt.
In a filing with the Hong Kong stock exchange, Shunfeng said it had made a bid with the debt administrator of Wuxi Suntech Power Co Ltd on Tuesday for an equity stake in the unit as well as a proposal to restructure its $1.75 billion debt.
It made a 500 million yuan ($81.68 million) deposit for the bid, which is aimed at strengthening its solar cell and module manufacturing capability and aiding its diversification into the operation of solar power plants, Shunfeng said.
"The possible acquisition is in line with the group's expansion strategy and will enable the group to further strengthen its production capabilities of solar cells and modules," it said on Wednesday.
The restructuring of Suntech's domestic debt is being closely watched by overseas creditors, whom analysts say are expected to recover a fraction of their capital at best.
Amid a worsening glut in solar panels globally, Wuxi Suntech filed for bankruptcy protection in China in March, five days after its New York-listed parent company defaulted on a $541 million dollar convertible bond.
A March 21 Suntech Power statement said "the primary goal" of the court-appointed administrators of the company "is to restructure Wuxi Suntech's debt obligations while continuing production and operations".
Shunfeng is vying with a consortium formed by China's top polysilicon producer, GCL-Poly Energy and Wuxi Guolian, the investment arm of the city government of Wuxi where Suntech is headquartered, a source close to the matter told Reuters.
GCL-Poly and Wuxi Guolian officials could not be reached for comment.
Both Shunfeng and the consortium submitted their bids on Tuesday afternoon and Wuxi Suntech's debt administrator is still reviewing their proposals and expects to make a decision soon, said the source, speaking on condition of anonymity as he was not authorised to discuss the matter with media.
A Suntech spokesman declined to comment.
The winning bidder will be required to immediately pay down the debt at Wuxi Suntech and provide funding 1-2 billion yuan to sustain Wuxi Suntech's operations, the source said, adding that creditors will also suffer losses.
The source told Reuters in August that Wuxi Suntech had verified all debt claims filed by its creditors, including domestic banks and suppliers, and confirmed that its liabilities reached 10.7 billion yuan ($1.75 billion).
At the end of March 2012, New York-listed 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 International Finance Corp, the private sector arm of the World Bank. The listed firm has yet to publish its 2012 annual report and disclose its overall debt situation.
Suntech Power and others in the solar industry have been grappling with a global glut of solar panels that has sent prices into a tailspin and hammered their once high-flying stocks over the past two years. Suntech has also been hit by a series of departures of key executives in recent months, including former CEO David King.
But China's recent moves to prop up the ailing domestic solar industry has prevented a further deterioration in the sector and even sparked some fresh investment interest from companies like Shunfeng.
China announced in July that it aims to more than quadruple solar power generating capacity to 35 gigawatts by 2015 among many other incentives to support the industry.
($1 = 6.1211 Chinese yuan)
(Editing by Matt Driskill)