* Says in talks with lenders and suppliers
* Says unaware of any legal proceedings by any note holder
March 18 China-based solar panel maker Suntech
Power Holdings Co Ltd said it defaulted on $541 million
of its bonds due on Friday, triggering cross-defaults on loans
from International Finance Corp and Chinese lenders.
The failure to pay the principal amount on the 3 percent
convertible notes could lead to lawsuits against the company.
Suntech bondholder Trondheim Capital Partners LP told Reuters
last week it would sue the company in case of a default.
"For a U.S. solar company, bankruptcy under such
circumstances would indeed be inevitable," said Raymond James
analyst Pavel Molchanov.
"For Suntech, however, it is plausible that bankruptcy (and
the associated stigma in the industry) could be avoided - but
only if the Wuxi government (or other public authorities)
provide enough near-term liquidity support."
The government of the city of Wuxi, China's solar technology
hub, has been in talks with the company regarding a bailout,
people with knowledge of the matter told Reuters last week.
The solar panel maker said in a statement on Monday it was
unaware of any legal proceedings by any note holders and that it
was in talks with certain suppliers and lenders regarding other
claims for non-payment or non-performance.
Suntech's public relations adviser, Weber Shandwick in
Shanghai, declined to comment beyond the statement.
Suntech had total debt of $2.2 billion as of March 2012,
including loans from China Development Bank and a $50
million convertible loan from the IFC, the private arm of the
Holders of more than 60 percent of the 3 percent notes had
agreed not to exercise their rights until May 15, and Suntech
said that those lenders would cooperate with it in addressing
certain legal proceedings that might be initiated.
Suntech said it understands that those note holders have
requested the trustee for the notes, Wilmington Trust Co, not to
take any action as restructuring discussions continue.
The company is exploring strategic alternatives with lenders
and potential investors, Chief Executive David King said.
"I see this as a protracted affair," Himanshu Shah, chief
investment officer of Shah Capital, told Reuters on Friday.
"There could be some compromise with the bond holders, but the
damage has already been done."
Shah Capital exited Suntech in early January.
Suntech, which has been losing money for almost two years
due to a steep fall in prices of solar panels as result of an
oversupply, said it was seeking additional sources of capital.
Suntech shares rose nearly 3 percent in early trading to 72
cents. They rose 27 percent on Friday.
Volatility in Suntech's stock is to be expected until there
is more clarity on how the Wuxi government's effective takeover
of the company will work, Molchanov said on Friday.