Sept. 2 (Bloomberg) -- Suntech Power Holdings Co., the solar company whose main unit filed for bankruptcy, reached an “understanding” with creditors that will allow a conversion of debt to equity and the introduction of a strategic investor.
The company expects to enter a restructuring framework agreement “in the next week or so,” Wuxi, China-based Suntech said in a filing yesterday. It will immediately start preparing for recapitalization to bolster its balance sheet, it said.
Suntech is seeking to restore financial stability after China’s solar-panel industry, which supplies more than half the global market, became unprofitable amid a worldwide glut. Three directors quit in August, five months after Suntech’s biggest unit was forced into bankruptcy following a bond default.
The restructuring process, overseen by Clearwater Capital Partners and Spinnaker Capital Ltd., will see outstanding debt exchanged for equity and the introduction of an investor who will offer funds through buying new shares, the filing shows.
“The restructuring will allow us to cut our costs and optimize our margins and production,” President Zhou Weiping said in the statement. “These measures will put us in a better and stronger position to serve our current and future customers in China, Japan, the EU, USA and around the world.”
Suntech, once the world’s biggest solar-panel maker, 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. Former Chairwoman Susan Wang and two other directors resigned last month, saying the company had no business plan.
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