3 Min Read
(Reuters) - Chinese solar panel maker Suntech Power Holdings Co Ltd said it intended to contest a bankruptcy petition filed against it in the United States by some bondholders.
U.S.-listed Suntech's shares fell as much as 8 percent to a low of $1.30.
A group of four U.S. bondholders, holding about $1.6 million of the debt-laden company's 3 percent convertible senior notes due 2013, made the filing under Chapter 7 of the U.S. Bankruptcy Code.
In a Chapter 7 bankruptcy, or liquidation, a trustee is appointed to oversee the sale of a company's assets to raise money to repay creditors.
Suntech defaulted in March on a principal payment on its $541 million convertible bonds, prompting its main manufacturing unit, Wuxi Suntech, to file for bankruptcy protection in China five days later.
Suntech, once the largest panel maker in the world, has not been able to recover after a global glut of panels depressed selling prices and the withdrawal of subsidies in top European solar markets. Its stock price has collapsed since touching a life-high of $86.28 in December 2007.
One of the four U.S. bondholders is Trondheim Capital Partners LP. Colin Peterson, a managing director at the distressed-debt firm, told Reuters in March that he would sue Suntech if it failed to make the payments.
Analysts have long warned that Suntech's overseas bondholders had slim chances of recovering their money, though the company has continued to enjoy government support while under bankruptcy proceedings in China.
Suntech said on Wednesday that Wuxi Guolian, the investment arm of the city government of Wuxi where the company is headquartered, could invest at least $150 million to support a restructuring of the company.
The closely watched restructuring is moving forward with China's Shunfeng Photovoltaic International Ltd potentially buying Wuxi Suntech, according to sources.
Suntech has repeatedly struck deals with its U.S. bondholders to defer payment on the $541 million loan, but the company said on Thursday that a judgment had been ruled in favor of certain bondholders with respect to repayment of their notes.
Suntech said it had until November 6 to respond to the Chapter 7 filing made in the U.S. Bankruptcy Court in the Southern District of New York.
Suntech shares were down 4.3 percent at $1.24 in late morning trading on the New York Stock Exchange. The stock price has collapsed since touching a life-high of $86.28 in December 2007.
Reporting by Swetha Gopinath in Bangalore; Editing by Kirti Pandey and Saumyadeb Chakrabarty