Suntech Power Holdings Co. Ltd. says a group of eight Chinese banks has filed a petition for insolvency and restructuring of its Chinese subsidiary Wuxi Suntech Power Holdings Co. Ltd. in the Wuxi Municipal Intermediate People's Court in Jiangsu Province, China.
Wuxi Suntech is Suntech's principal operating subsidiary in China engaged in the manufacture of photovoltaic cells and PV modules. The company has notified the court that it will not file an objection against the petition and expects that the court will decide whether or not to accept the petition in the next few days.
Suntech says it has additional cell and module production facilities at wholly owned or partially owned subsidiaries in Wuxi, Shanghai and Luoyang. If the insolvency and restructuring of Wuxi Suntech is approved by the court, the company intends to continue production of solar products to meet customer orders.
In addition, management will work with any court-appointed administrators to ensure all of Suntech's product warranty obligations are met, the company notes. Suntech Power Holdings Co. Ltd., the ultimate parent company of Wuxi Suntech, has not commenced insolvency proceedings, nor have any of the company's other principal operating subsidiaries.
‘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,’ says David King, CEO of Suntech.
The insolvency and restructuring procedure is designed to facilitate an orderly restructuring plan for both Wuxi Suntech and its creditors. In such proceedings, the Chinese court will typically appoint administrators to Wuxi Suntech to administer the restructuring, including negotiations with existing bank lenders and other creditors. Wuxi Suntech will apply to the court to continue operations under the supervision of the administrators.
According to reports, Wuxi Guolian, a financial conglomerate controlled by the Wuxi city government, is expected to ultimately take over Wuxi Suntech. The situation is complicated by the absence of a bankruptcy filing by Suntech itself, the New York Times says. Foreign creditors may believe they are not being treated fairly compared to Chinese creditors.
‘It is rare for Chinese companies to file for bankruptcy, as the government has sometimes stepped in first to help them and avoid damaging the broader reputation of Chinese companies for creditworthiness,’ the New York Times adds.
Meanwhile, Suntech has made two new executive appointments. Philip Fan has been appointed an independent director on the board of directors, and Weiping Zhou has been appointed an executive director of the board and president of Suntech.
Fan was formerly an executive director and is now an independent non-executive director of Hong Kong Stock Exchange listed China Everbright International Ltd., a developer and operator of multiple waste-to-energy and wastewater treatment plants in China.
Prior to joining Suntech, Zhou served as chairman of Guolian Futures Co. Ltd. and finance department manager of Guolian Development (Group) Co. Ltd. Prior to that, he held management roles at Guolian Securities and Hengda Securities. As president of Suntech, he will manage business operations and work with King and the board to define the strategic direction of the company.