WUXI, China/HONG KONG (Reuters) - Local creditors of Wuxi Suntech, the bankrupt unit of Chinese solar panel maker Suntech Power Holdings Co Ltd, on Wednesday claimed the subsidiary owed them a combined $2.5 billion, at the start of a debt restructuring process expected to last months.
Wuxi Suntech, the biggest subsidiary of New York-listed Suntech Power STP.N, filed for bankruptcy protection in China in March, five days after its troubled parent company defaulted on a $541 million dollar convertible bond.
The restructuring of Suntech’s domestic debts is being closely watched by its overseas creditors, whom analysts say are expected to take a “haircut” - or suffer losses. Last week Suntech Power said it reached an agreement with some foreign creditors to further defer its obligations on the bond.
The claims for the domestic debts of 15.6 billion yuan ($2.5 billion) came from more than 500 creditors, including banks and some of Wuxi Suntech’s suppliers, but most of the claims have yet to be reviewed and verified by its court-appointed debt administrator, creditor representatives told Reuters.
The court held the first meeting of Wuxi Suntech’s creditors in the eastern Chinese city of Wuxi - where Suntech Power is headquartered - on Wednesday to brief creditors on the debt restructuring and the debt administrator vowed to protect creditors’ interest.
“We will complete the drafting of the restructuring plan and choose a strategic investor as soon as possible,” Yang Erguan, a spokesman for the debt administrator, said in a statement issued after the creditor meeting attended by 460 representatives.
So far, the administrator has confirmed debt claims amounting to a total of 3.3 billion yuan from 300 creditors, Yang said, adding that it hoped to complete all debt registration and verification by the end of June.
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 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 Wuxi government is trying to maintain Suntech’s production capacity - and the thousands of local jobs it supports. A March 21 Suntech 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”.
Wuxi Suntech has seen a gradual improvement in its business as the debt administrator has been pushing to recover accounts receivable and offload inventories, the statement said.
Both Washington and Brussels accuse Chinese solar panel makers of selling panels below cost. The United States last year slapped anti-dumping duties on solar cells imported from China. The European Commission said on May 8 it would take similar action. Europe accounts for half of the global demand for solar panels.
($1 = 6.1356 Chinese yuan)
Editing by Mark Potter