* Creditors to take a haircut
* Liabilities total $1.75 billion-source
* Suntech unit talking to 3 private, 2 state-owned firms
By Charlie Zhu
HONG KONG, Aug 6 The main unit of troubled
Chinese solar panel maker Suntech Power Holdings Co Ltd
is in talks with five companies for strategic investments as
part of efforts to restructure its $1.75 billion debt, a source
familiar with the matter said on Tuesday.
The unit, Wuxi Suntech, has been seeking strategic
investments and is in negotiations with three privately-owned
companies and two state-owned enterprises, the source told
Reuters on condition of anonymity.
Wuxi Suntech has also verified all debt claims filed by its
creditors, including domestic banks and suppliers, and confirmed
that its liabilities reached 10.7 billion yuan ($1.75 billion),
he said, confirming a report in the state newspaper Economic
Daily on the latest of Wuxi Suntech's restructuring and talks
with potential strategic investors.
"The investors approaching Suntech include a domestic
industry peer - a major domestic solar panel producer," the
source said, but declined to give details.
A Suntech Power spokesman in Wuxi said the company had no
comment on the restructuring and the debts.
The newspaper on Monday quoted Huang Qin, vice mayor of
Wuxi, where Suntech is headquartered, as saying that the
restructuring was going smoothly and the local government backs
Wuxi Suntech and wants to preserve the "Suntech" brand. The
government has ruled out a liquidation of the unit.
The source said that creditors of Wuxi Suntech were expected
to take a "haircut" - or suffer losses - while the strategic
investor, when chosen, was expected to inject capital into the
company. He did not elaborate.
Wuxi Suntech filed for bankruptcy protection in China in
March, five days after its New York-listed parent company
defaulted on a $541 million dollar convertible bond.
A March 21 Suntech Power statement said "the primary goal"
of the court-appointed administrators of the company "is to
restructure Wuxi Suntech's debt obligations while continuing
production and operations".
The restructuring of Suntech's domestic debt is being
closely watched by overseas creditors, whom analysts say are
expected to recover a fraction of their capital at best.
Suntech Power 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.
At the end of March 2012, 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 the
International Finance Corporation, the private sector arm of the
World Bank. The listed company has yet to publish its 2012
annual report and disclose its overall debt situation.
Suntech Power is currently operating at 30-40 percent its
designed annual capacity of 2.4 gigawatts (GW), but expected
demand to pick up gradually as China has settled a solar panel
trade dispute with the European Union and has announced plans to
boost domestic demand for solar modules, the source said.
One EU source said it has been agreed that Chinese firms
could sell into Europe at a minimum price of 56 euro cents per
watt, with a total ceiling of 7GW a year, around half of the
EU's 2012 demand of about 15GW.
Suntech is expected to receive an annual government quota on
solar panel exports to the EU and the quota will likely be
tradeable, the source said.
($1 = 6.1247 Chinese yuan)
(Editing by Matt Driskill)