September 13, 2013 / 4:32 PM / 4 years ago

Suntech CEO David King follows three directors out the door

(Reuters) - China’s Suntech Power Holdings Co Ltd STP.N said Chief Executive David King had resigned from the company with immediate effect, weeks after three directors left amid the solar panel maker’s efforts to restructure its debt.

Shares of Suntech, whose main unit filed for bankruptcy protection in China in March, rose as much as 9 percent.

The stock was up because shareholders felt the CEO’s departure signals a resolution to Suntech’s bankruptcy as there has been very little news from the company about the process, said Morningstar analyst Stephen Simko.

Suntech’s Chinese lenders dragged its unit Wuxi Suntech into insolvency proceedings after it defaulted on $541 million in bonds after the business was hit by a glut in solar panels.

Through the restructuring process, Suntech is being helped by the Wuxi government and Chinese banks, who, analysts say, wield influence over what happens in the company.

“Whoever pays the piper picks the tune,” said Raymond James analyst Pavel Molchanov, adding that under these circumstances, a CEO change was logical.

King, who joined Suntech in 2011, was also the acting chief financial officer. He took up the CEO post in August last year, replacing founder Zhengrong Shi.

Zhou Weiping, president and director, will take over King’s positions temporarily while keeping his present roles.

The company did not give a reason for King’s departure and Suntech representative could not be immediately reached.

Suntech said in August that three directors had resigned due to concerns about a “severe cash flow drain” and the company’s failure to implement their advice on restructuring.

At the end of March 2012, Suntech had total debt of $2.2 billion. It is yet to publish its 2012 annual report and disclose its overall debt situation.

The departing directors had also raised concerns about Suntech’s unclear prospects for securing new capital and lack of a clear business plan, among other things.

The company on Friday said it will first begin looking for a new chief financial officer.

Suntech shares were up 8.4 percent at $1.29 on the New York Stock Exchange in afternoon trading.

Reporting by Garima Goel in Bangalore; Editing by Maju Samuel

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