JA Solar Holdings Co., China’s largest solar-cell maker, said it’s prepared to repay debt maturing in May as the price of its bonds fell after Suntech Power Holdings Co. said it won’t resist a bankruptcy petition.
“Our bonds don’t have default risks,” Chief Operating Officer Xie Jian said in an interview in Shanghai today. The money needed to repay about $120 million of its convertible notes maturing on May 15 has been prepared, he said.
Suntech, the world’s largest solar panel maker in 2010 and 2011, said yesterday that eight Chinese banks are seeking a restructuring of its main solar manufacturing unit under a court insolvency process and that it won’t object. That announcement and Suntech’s default on $541 million of bonds last week sparked concern that other Chinese solar companies may have trouble repaying debt and will make financing “more difficult” for others producers, JA Solar’s Xie said.
There will be “negative effects on solar companies from public opinion to bank recognition,” Xie said of Suntech, based in Wuxi, in the eastern province of Jiangsu. “I believe Jiangsu-based banks or even all domestic banks will be very nervous of whether other solar companies will also have risks.”
The price of JA Solar’s convertible bonds due in May fell to 95.5 cents on the dollar yesterday. Xie said he expects banks will reduce financing for solar companies to reduce risk. “Even if solar companies can get financing, their costs will be higher,” he said.
China has supported solar companies through credit lines from state-backed lenders such as China Development Bank Corp., prompting panel makers to expand factories. Suntech more than quadrupled its annual production capacity to 2,400 megawatts in 2011 from 2007, according to data compiled by Bloomberg.
Four of the world’s six biggest panel manufacturers are based in China. Suntech fell to fifth in production capacity last year behind China’s Trina Solar Ltd. and Yingli Green Energy Holding Co., Tempe, Arizona-based First Solar Inc. and Canadian Solar Inc., according to Bloomberg New Energy Finance.
“We should learn how to maintain sustainable and stable operations rather than pursue shipments,” Xie said.
JA Solar will maintain its market share this year and keep its solar module production capacity at 2.1 gigawatts annually, Xie said. The company will seek to improve gross profit margins and cash flow in 2013, he said.