Suntech Power Holdings Co., the Chinese solar manufacturer whose main unit was pulled into bankruptcy earlier this year, said three directors including the former chairwoman quit saying the company had no business plan.
Susan Wang, Julian Worley and Zhizhong Qiu resigned on Aug. 21, saying they weren’t provided with information they needed to fulfill their responsibilities, the Wuxi, China-based company said today in a statement. Michael Nacson replaced Wang, who took the post of chairwoman in March, Suntech said.
The resignations highlight the divisions among the company’s management after a $541 million bond default and follow the ouster of Suntech founder Shi Zhengrong less than six months ago. China’s solar-panel industry, which supplies more than half the world market, is unprofitable amid a global glut and slower economic growth.
“Rather than the incapability of the management team, the more intrinsic difficulty the company is facing is the huge debt compared with its value,” said Wang Xiaoting, a Beijing-based analyst at Bloomberg New Energy Finance. Suntech’s major advantages, including an established reputation for quality and high-efficiency panels, “cannot provide enough competitiveness to guarantee a survival,” she said by e-mail.
Suntech, once the world’s biggest panel maker by shipments, fell 7.3 percent to $1.01 yesterday in New York. The shares have lost 34 percent this year, battered by insolvency proceedings against its biggest unit, Wuxi Suntech Power Co.
The former directors cited concern about negotiations with bondholders, cash flow and a lack of clear business plan, Suntech said in the statement. They were also concerned about the potential erosion of internal controls and the impairment of employees’ ability to function effectively.
The concerns are “demonstrative of disharmony and issues of communication between the executive management and the resigning directors that decreased the efficiency of the board’s decision-making process,” the remaining independent directors Philip Fan, Nacson and Kurt Metzger, said in the statement. Nacson was appointed to the board last month by Suntech’s bondholders.
Suntech’s biggest unit was forced into bankruptcy in March after the company missed a debt repayment, opening the way for bondholders to sue the company in the U.S. where its shares and bonds trade. Suntech extended a forbearance agreement with a majority of bondholders until Aug. 30, the company said in June.
“The large size and geographic dispersion of the board as previously constituted was not ideal for the company involved in a debt restructuring process because of the need for frequent in person board meetings to discuss and analyze complex issues,” Fan, Nacson and Metzger said in the statement. They see progress being made in regards to the issues raised by the resigning directors.
Nacson, Fan, Metzger, Weiping Zhou, Shi and David King continue to serve as directors of the company, Suntech said in the statement.