By Karl-Erik Stromsta in London
Wednesday, March 20 2013
Updated: Wednesday, March 20 2013
A group of eight Chinese banks filed a petition for the insolvency and restructuring of Wuxi Suntech Power in the Wuxi Municipal Intermediate People’s Court, Jiangsu province, and Suntech says it will not object.
Wuxi Suntech is the company’s primary manufacturing entity, focused on cells and modules, although it owns a number of smaller subsidiaries in China.
Neither the parent company – Suntech Power Holdings – nor any of the smaller subsidiaries are being placed in administration.
Chief executive David King says Suntech’s other subsidiaries will allow it to continue meeting customer orders, and emphasized the company’s intention to meet its warranty obligations.
"While we evaluate restructuring initiatives and strategic alternatives, we are committed to continuing to provide high-quality solar products to our global customer base," says King, who replaced founder Shi Zhengrong as chief executive last autumn amid a management shake-up which is ongoing.
"During this period, we will continue to work closely with all of our stakeholders and take the necessary steps to put Suntech back on track for growth," King says.
Shares of New York-listed Suntech were down more than 40% in pre-market trading, to $0.59.
That the company has retained that much value is a reflection of the widely held belief that at least part of the company will be bailed out by the local government.
Late yesterday, Suntech named as its new president an executive at a developer backed by the local Wuxi government – heightening speculation that some sort of state takeover may be in the offing.
New president Weiping Zhou will work directly with King on “defining the strategic direction” of the company, Suntech says.
Prior to joining Suntech, Zhou served as chairman of Guolian Futures, a unit of Wuxi Guolian Development Co., which is partially owned by the municipal government of Wuxi city, where Suntech is based.
Last week the New York Times reported that an employee at the Wuxi Guolian holding company confirmed that a deal had been struck for a full or partial acquisition of Suntech. Suntech has not commented on that report.
On Friday Suntech defaulted on $541m of bonds, despite having struck a deal with holders of more than 60% of the notes that would give it a two-month reprieve to get its financial house in order. At least one group of US bondholders is reportedly preparing legal action against Suntech for the default.
Suntech was the world’s largest supplier of PV modules in 2011, but was overtaken last year by Chinese rival Yingli.
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