China’s Suntech Power Holdings defaults on $541M bonds
Shanghai, China (4E) – The trustee that administers Suntech Power Holdings Co. Ltd.’s $541mn bonds sent the Chinese solar firm a default notice as the redemption deadline passed, according to sources familiar with the matter.
Bondholders can now file a lawsuit against the company in U.S. courts, according to a person who declined to be named because the information has yet to be publicly disclosed. It would be the first default by a mainland Chinese company. The company said 63 percent of bondholders have agreed to postpone their rights to redeem the notes until May 15.
Reports out of China indicate that control of Suntech’s multiple subsidiaries including Wuxi would be transferred to a local government through selective bankruptcies, although the company has not confirmed or denied this.
In a statement released by the company’s public relations in Shanghai, it states that Suntech believes that reaching an agreement for consensual restructuring is in the best interest of all bondholders and encourages other bondholders that have not signed to such agreement to join.
On March 14, Suntech declared that it would not be able to meet the deadline in making the final payment. Falling costs of solar cells has hurt the margins of the company, which has not reported a profit since the first quarter of 2011.