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* Shi Zhenrong removed from executive chairman post
* Company faces $541 million convertible bond payment
* Solar-panel glut hammers industry prices, company stocks
* Options "limited", Suntech needs a "white knight"-analyst
By Charlie Zhu and Umesh Desai
HONG KONG, March 6 (Reuters) - Shi Zhenrong, the founder of Suntech Power Holdings Co Ltd, said on Tuesday his removal as executive chairman of the solar panel maker was "invalid" as the cash-strapped firm weighs its options to cover a $541 million convertible bond due this month.
"I am fully committed to continuing to serve the company as executive chairman to the best of my ability and to guide it through these difficult times," Shi said in a statement.
Suntech 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 shares, which peaked at $90 in 2008, closed at $1.21 Tuesday on the New York Stock Exchange.
It is not immediately clear whether Shi will take concrete action to fight his removal, but his call is adding to uncertainties surrounding the future of the heavily indebted China-based company, analysts say.
On Monday, Suntech issued a statement naming Susan Wang, a former chief financial officer of Solectron Corp, as chairman of the board. It said Shi would remain a director of the company.
"The call is a distraction for the board and for the whole situation from an investor point of view," said Nitin Kumar, an analyst at Nomura Securities, adding that Suntech was in urgent need of a bailout to avoid bankruptcy.
"The options in front of Suntech for paying back bondholders are very limited," Kumar said. "The only way for Suntech to repay is to find a white knight."
Suntech officials in China and the United States could not be reached for comment. Calls to Suntech's office in China went unanswered.
Suntech, which has a market value of $218 million, in October hired investment bank UBS to evaluate alternatives for its convertible notes due later this month.
Some industry analysts and financiers speculate that the Chinese government may bail out Suntech to avoid repercussions to China's solar sector.
"This sector relies heavily on government subsidies and policies. There are quite a number of issues that are going to mature this year. I haven't seen any panic among holders," said a convertible bonds analyst with a Singapore-based fund who asked not to be named as he was not authorised to speak to the media. "Maybe people are waiting for a government announcement. They think the government will step in to bailout."
There have been several instances of state support for the solar sector. In December, Bank of Beijing provided Hanwha SolarOne with a credit line of about $475 million, allowing it to repay its long-term debt after it reported losses for the last six quarters. At the time the company had total long-term debt of 2.76 billion yuan ($443.67 million), which was more than five times its market value.
Optimism for a bailout was reflected in Suntech's convertible bonds due on March 15 which have recovered to $43.5/$45.50 from their December level of $28.50.
China peer Trina Solar's convertible bond due July 2013 is trading just below par value. The conversion is set at $16.94 versus its share price $4.15.
Another peer, JA Solar's bonds due 2013 are trading at $94/$95 even as its shares trade below the conversion price.
For Suntech, one option for funding could be local Chinese banks that provide bridge financing that Suntech could later replace with a local bond issue, said a banker who asked not to be identified as he was not authorised to speak to the media.
At the end of March 2012, Suntech had total debt of $2.2 billion and a net debt-to-equity ratio of around 200 percent. The ratio must have increased sharply over the past year as the solar industry deteriorated further, analysts say.
Suntech, among the largest of the world's solar panel manufacturers, said late last year that it was defrauded by a partner in a solar development fund and as a result would reduce its 2010 net income by between $60 million and $80 million.