(Refiles to correct amount of deposit in 12th paragrah, adds
By Charlie Zhu
HONG KONG Oct 9 Hong Kong-listed Chinese solar
panel maker Shunfeng Photovoltaic International Ltd
has submitted a bid for a stake in the main unit of troubled
rival Suntech Power Holdings Co Ltd that is struggling
under a mountain of debt.
In a filing with the Hong Kong stock exchange, Shunfeng said
it had made a bid with the debt administrator of Wuxi Suntech
Power Co Ltd on Tuesday for an equity stake in the unit as well
as a proposal to restructure its $1.75 billion debt.
It made a 500 million yuan ($81.68 million) deposit for the
bid, which is aimed at strengthening its solar cell and module
manufacturing capability and aiding its diversification into the
operation of solar power plants, Shunfeng said.
"The possible acquisition is in line with the group's
expansion strategy and will enable the group to further
strengthen its production capabilities of solar cells and
modules," it said on Wednesday.
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.
Amid a worsening glut in solar panels globally, 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".
Shunfeng is vying with a consortium formed by China's top
polysilicon producer, GCL-Poly Energy and Wuxi
Guolian, the investment arm of the city government of Wuxi where
Suntech is headquartered, a source close to the matter told
GCL-Poly and Wuxi Guolian officials could not be reached for
Both Shunfeng and the consortium submitted their bids on
Tuesday afternoon and Wuxi Suntech's debt administrator is still
reviewing their proposals and expects to make a decision soon,
said the source, speaking on condition of anonymity as he was
not authorised to discuss the matter with media.
A Suntech spokesman declined to comment.
The winning bidder will be required to immediately pay down
the debt at Wuxi Suntech and provide funding 1-2 billion yuan to
sustain Wuxi Suntech's operations, the source said, adding that
creditors will also suffer losses.
The source told Reuters in August that Wuxi Suntech had
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).
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.
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. Suntech has also been hit by a
series of departures of key executives in recent months,
including former CEO David King.
But China's recent moves to prop up the ailing domestic
solar industry has prevented a further deterioration in the
sector and even sparked some fresh investment 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.
($1 = 6.1211 Chinese yuan)
(Editing by Matt Driskill)