King will be replaced by Zhou Weiping, who takes over as CEO and chief financial officer on an interim basis, the Wuxi, China-based company said today in a statement. The board will first search for a new CFO. Zhou will keep his roles as president and director.
Suntech this month said it reached an “understanding” with creditors allowing for a conversion of debt to equity and the introduction of a strategic investor. It’s seeking to restore financial stability after China’s solar-panel industry became unprofitable amid a worldwide glut. Three directors quit in August, saying the company had no business plan.
“It’s a shame that it didn’t work out -- David had a lot of credibility with U.S. investors,” Jeff Osborne, an analyst at Stifel Nicolaus & Co. in New York, said in an interview today. “It’s been a difficult time. They’ve lost a lot of market share and are having a hard time renegotiating the debt.”
Suntech rose 9.2 percent to $1.30 at the close in New York.
Once the world’s biggest solar-panel maker, Suntech defaulted on $541 million of bonds this year, opening the way for bondholders to sue in the U.S. where its shares and notes trade.
“Given its bankruptcy, Suntech is being essentially supported by the government of Wuxi, and Chinese banks also have a lot of influence over what happens at the company,” said Pavel Molchanov, an analyst at Raymond James & Associates Inc. in Houston. “Under these circumstances, a CEO change seems entirely logical.”
King replaced CEO and founder Shi Zhengrong in August 2012, a month after the company said it may have been the victim of a $680 million fraud. Shi, once China’s richest man, remained chairman until March.
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