| March 27
March 27 China-based Trina Solar Ltd and
JA Solar Holdings Co Ltd said they will be able to pay
for their U.S. bonds that mature in the next few months, days
after rival Suntech Power Holdings Co Ltd defaulted on
$541 million of its bonds.
Most Chinese solar companies piled on debt over the past two
years to expand manufacturing operations, eventually leading to
a glut that sent prices down sharply.
Suntech's default and the subsequent insolvency proceedings
for its main manufacturing unit have raised worries that U.S.
bondholders of Chinese companies may be left high and dry in
case of defaults.
Such concerns are not unfounded as China's bankruptcy laws
give preference to domestic lenders.
"We are extremely cautious in the space ... and are
uncomfortable with our legal standing in the event of default,"
said James Dinsmore, a portfolio manager at Dinsmore Capital
Management in Morristown, New Jersey. The firm owns Trina bonds.
A Suntech bondholder, Trondheim Capital Partners LP, had
told Reuters that it would sue the company for the bond default.
However, executives at Trina and JA Solar said they have the
cash to meet bond obligations in the United States.
JA Solar has to pay $123 million on its 4.5 percent
convertible bonds that mature on May 15, while
Trina Solar owes $83.5 million on its 4 percent senior note
due July 15, according to Thomson Reuters data.
"We are well prepared to pay off the convertible notes due
in May," JA Solar Chief Operating Officer Xie Jian told Reuters
in an email.
"Going forward, we'll maintain our focus on stringent cash
management and cost reduction, and we'll continue to explore
further financing options as appropriate."
The company, which has a market value of about $151 million,
had cash and equivalents of 3 billion yuan ($482.8 million) as
of Dec. 31.
Bigger rival Trina's cash and equivalents and restricted
cash was $918.2 million, more than three times its market value.
"We have the option to pay from these cash balances, or
examine one or more refinancing options which we have yet to
announce," spokesman Thomas Young said.
Dinsmore Capital's Dinsmore believes Trina would be able to
meet the debt payment due in July.
LDK Solar Co Ltd, which has $21 million due on April
15 on its 4.75 percent notes as per Thomson Reuters
data, did not respond to calls and emails seeking comment on its
imminent bond maturity.
The company said in December it was in talks with creditors
regarding the terms of its offshore debt.
"The cash LDK is generating is not sufficient to support the
debt loads they have," said Patrick Chovanec, chief strategist
at investment firm Silvercrest Asset Management in New York.
"But there is the issue of how politically important it is
to meet the offshore debt payment."
The local government in Suntech's home town of Wuxi is
looking to bail out the solar panel maker, though a group of
Chinese lenders want the company main unit declared insolvent.