Suntech restructuring takes new twist with probe into sale of main unit

HONG KONG Wed Dec 11, 2013 2:59am EST

HONG KONG Dec 11 (Reuters) - China's Suntech Power Holdings Co Ltd said its restructuring manager would investigate the planned sale of its main unit to Shunfeng Photovoltaic International Ltd for legal infractions - a move sources say could delay the $495 million deal.

Delays to the sale could in turn complicate the restructuring of Suntech, once's the world's biggest solar power manufacturer but which has since been crushed by a glut of solar panels as demand faltered after the global financial crisis.

After defaulting on a $541 million offshore convertible bond, Suntech is now locked in battle with some of the bond holders who want to liquidate the company. It was delisted by the New York Stock Exchange last month on concerns about its ability to file earnings reports.

PricewaterhouseCoopers, appointed in November to handle the company's financial restructuring and thwart the efforts of those bondholders, will look into whether the internal transfer of Suntech's Japan and Singapore subsidiaries to its main unit, the now bankrupt Wuxi Suntech Power Co Ltd, had violated any laws.

The restructuring managers of PWC may take necessary legal steps to "remedy any improper actions which have caused loss" to Suntech Power Holdings and its creditors, a statement by Suntech said.

The Japan and Singapore subsidiaries were owned by a separate unit of Suntech Power Holdings - Power Solar System Co Ltd (PSS), which is registered in the British Virgin Islands.

Two sources familiar with the matter said the transfer may have been conducted without any formal approval of PSS. PSS had been put into liquidation by PWC on Nov. 14, a day before the sale of Wuxi Suntech to Shunfeng was approved by a court in the eastern Chinese city of Wuxi, Suntech Power said on Wednesday.

Shunfeng has paid 500 million yuan as deposit on the acquisition of Wuxi Suntech and is due to pay the remaining 2.5 billion yuan by this Friday.

Representatives for Suntech Power and Shunfeng declined to comment. PWC could not be immediately reached for comment.

UNTIDY TRANSFER?

The transfer of the Japan and Singapore units - whose main assets are sales channels in Japan and Australia plus a research and development division - was largely dictated by a Chinese entity appointed by the Wuxi court to handle the restructuring of Wuxi Suntech's $1.7 billion in local debt, the sources said.

It was designed to make Wuxi Suntech more attractive to bidders, said the sources, who asked not to be identified as they were not authorised to openly discuss the matter.

The transfer was also backed by the investment arm of the Wuxi city government, Wuxi Guolian Development Co Ltd , which was bidding against Shunfeng for Wuxi Suntech, with an aim to restructure the whole of Suntech Power Holdings, the sources said.

Guolian lost the bid to Shunfeng, but has still expressed interest in restructuring Suntech Power Holdings by injecting $150 million in cash and assets. It has also called for a swapping of some of Suntech Power Holdings' debt into equity although it has not specified how much.

Suntech, a former green tech poster child, had a market capitalisation of around $100 million before it was delisted, down from over $10 billion at its peak.

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