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June 28 (Bloomberg) -- Suntech Power Holdings Co., the Chinese solar manufacturer involved in bankruptcy proceedings, extended a forbearance agreement with “a majority” of the holders of convertible bonds that went unpaid in March.

The new agreement will run until Aug. 30 and give bondholders the right to nominate two directors, the company said in a statement today. Wuxi, China-based Suntech said the deal also “contemplates an equitization of all major debt claims.”

Suntech was the world’s biggest panel maker by shipments in 2011, and has struggled to remain competitive as rivals with newer manufacturing equipment boosted production, said Jeffrey Osborne, an analyst at Stifel Nicolaus & Co. in New York. That triggered a global photovoltaic glut, dragging down prices and profits.

“I don’t see a light at the end of the tunnel for them,” Osborne said today in an interview. He stopped covering the company in December. “China wants to consolidate the industry but it’s difficult to sell a company with equipment that’s four years out of date. This is just a delay in their inevitable execution.”

The $541 million in 3 percent notes matured March 15. Four days before that deadline, Suntech reached a forbearance deal that ran until May 15, and then extended the agreement until today.

Equity Conversion

“I’d expect to see some kind of conversion to equity but these bondholders are subordinate to the senior secured and would probably be happy to get 25 cents on the dollar,” said Adam Krop, an analyst at Ardor Capital Partners LLC in New York, who has a sell rating on Suntech. “I wouldn’t call the company completely dead because they still have a strong foothold in China, which could be the biggest solar market this year.”

Eight Chinese banks pulled Suntech’s main unit into bankruptcy proceedings in China after the debt went unpaid in March. U.S. bondholders who haven’t agreed to the forbearance deal are suing the company in New York.

Chief Executive Officer David King said he’s working with bondholders to restructure the company and seek new investors.

“We now have a clear path and focused work plan,” King said in the statement.

Suntech’s American depositary receipts, each worth one ordinary share, fell 1 percent to $1.03 at the close in New York. They have slumped 33 percent this year.

To contact the reporter on this story: Christopher Martin in New York at

To contact the editor responsible for this story: Reed Landberg at

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