Suntech Power Holdings Corp., the Chinese solar-panel maker that announced a forbearance agreement March 11 for $541 million in convertible debt, may be required to pay bondholders who haven’t agreed to the deal.
About 60 percent of the bondholders have agreed to wait until May 15 before exercising their rights, the company said in a statement.
Some of the remaining 40 percent of bondholders said they weren’t contacted by the Wuxi, China-based company about a forbearance and want to be paid on schedule March 15. Suntech is seeking to restructure its debt after reporting losses for the past two years. It may not be able to delay the bond payments, said Adam Cohen, the founder of Covenant Review, a research firm in New York.
The bondholders have an “absolute right” to be repaid the principal when the bonds mature, Cohen said in an interview yesterday. “It doesn’t matter that a majority or 60 percent wants to wait 60 days.”
Trondheim Capital Partners LP, a distressed-debt hedge fund, owns enough of the Suntech bonds “to make it worthwhile to file a petition to sue if they don’t pay us,” said Colin Peterson, the Scottsdale, Arizona-based company’s managing director. Suntech didn’t contact Trondheim before announcing the forbearance agreement, he said.
“I’m investigating what our remedies would be,” he said “I think a bondholder could file for involuntary bankruptcy or sue for payment.”
Bondholders who haven’t signed the forbearance agreement have “the right when that payment is missed on Friday to bring action in state court immediately or take steps toward an involuntary bankruptcy petition,” James Millar, a partner at the law firm Wilmer Cutler Pickering Hale and Dorr LLP in New York, said yesterday in an interview.
“Every piece of information that I’ve looked at suggests that they will default on Friday,” said Millar, who said he has been contacted by Suntech bondholders.