Shunfeng $491m for Wuxi Suntech

Shunfeng Photovoltaic International (SPI) confirmed it has struck a deal for the 3bn yuan ($491m) acquisition of Wuxi Suntech – the insolvent main Chinese unit of struggling PV manufacturer Suntech.

The agreement, which has been mooted for several weeks, means Hong Kong-listed SPI has emerged from relative obscurity to take a central role in the painstaking rescue of one of the biggest names in the global solar industry.

Under the terms of the deal with Wuxi Suntech’s administrator, SPI will also pay $25m to Wuxi Guolian, a company part-owned the municipal authorities in the city where Suntech is based which has been instrumental in the process.

Guolian was one of the other bidders for Wuxi Suntech and last week agreed to pump $150m into Suntech Power Holdings – the parent group of the stricken solar business, which saw its world begin to unravel in March when it defaulted on $541m of bonds.

The default, swiftly followed by the insolvency of Wuxi Suntech, raised the prospect of one of China’s national champions – and just two years ago the world’s number-one module supplier – crashing and burning.

Shunfeng said it will work with the administrator on a detailed restructuring plan for Wuxi Suntech, with details to follow later.

Shunfeng said the acquisition offers “high-level synergies” with its recent expansion into PV plant operation, as well as chiming with Chinese government support for solar.

It told investors: “With Wuxi Suntech’s production capacity and technology in production of solar cells and modules, the board believes that the acquisition represents an opportunity to expand its market position in an industry that presents growth opportunities and favourable government policies and the Group believes it is well positioned to capture such growth in demand for clean energy.”

The acquisition is subject to approval by Shunfeng's shareholders and the relevant Chinese authorities.

Under its terms Shunfeng said it will bear Wuxi Suntech’s losses for the last seven months and inject funds to upgrade the company’s assets within two years.

Along with the announcement of the agreement, Shunfeng disclosed businessman Cheng Kin Ming as a “significant shareholder”. Cheng has also built a 25% stake in LDK Solar, another struggling Chinese PV giant.

The Suntech parent group is preparing to fight a bid by a group of bondholders to force it into bankruptcy in the US.