* Shares of Shunfeng suspended pending an announcement
* Shungeng to put 2-3 billion yuan into Wuxi Suntech initially-source
* Creditors to vote on deal mid-November - sources
By Charlie Zhu
HONG KONG, Oct 25 (Reuters) - China's Shunfeng Photovoltaic International Ltd has signed a preliminary deal to buy the main China unit of Suntech Power, two sources close to the matter said on Friday.
The framework agreement with Wuxi Suntech's administrator brings the closely watched restructuring of the firm's $1.75 billion debt closer to completion after Suntech Power defaulted on a $541 million dollar convertible bond in March.
Crushed by a global glut of solar panels following the global debt crisis, Wuxi Suntech filed for bankruptcy protection five days after its parent company's default - one of the biggest by a Chinese company.
Creditors of Wuxi Suntech will vote on the restructuring proposal at a meeting around mid-November, the sources told Reuters. They requested anonymity as they were not authorised to discuss the matter with media.
"A framework agreement has been signed. But it remains uncertain whether it will be approved by creditors who will meet around mid-November for this," one source said.
Shares of Shunfeng were suspended from trading on Friday pending an announcement related to a proposed acquisition by the company, Shunfeng said in a filing with the Hong Kong bourse.
Under the framework deal signed in Wuxi on Thursday, Shunfeng is expected to pump around 3 billion yuan ($493.26 million) into Wuxi Suntech as initial investment, and another 2-3 billion yuan to sustain its operation, one of the sources said.
The second source declined to comment on the financial terms of the restructuring, but said the floor price set by the debt administrator for the auction of Wuxi Suntech was 2.5 billion yuan.
Spokespeople for Shungfeng and Wuxi Suntech could not immediately be reached for comment.
Analysts say creditors for Suntech's domestic debt are likely to recover only a fraction of their capital. What happens to them will have wide implications for investors who have flocked to Chinese dollar-denominated debt in search of yield.
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.
The Wuxi Suntech case will also be a rare test of a bankruptcy law introduced in 2007. Local government officials generally mediate between creditors behind closed doors and Beijing has used the law cautiously, fearing the failure of large firms and widespread layoffs could lead to social unrest.
China's recent moves to prop up the ailing domestic solar industry has prevented a further deterioration in the sector and even sparked fresh 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.