Suntech Power Holdings, a China-based solar firm, has announced that it has received from the trustee of its 3% convertible notes a notice of default and acceleration relating to Suntech's non-payment of the principal amount of US$541 million that was due to holders of the convertible notes on March 15, 2013. The default has also triggered cross-defaults under Suntech's other outstanding debts, including its loans from International Finance Corporation and China-based domestic lenders, according to the firm.
Suntech has entered into a forbearance agreement with holders of over 60% of the convertible notes, one of the terms of which is that the forbearing note holders will cooperate with the firm in addressing certain legal proceedings that may be initiated against it. The firm stated the understanding that those note holders have also requested the trustee under the convertible notes not take any further action as consensual restructuring discussions continue. Suntech is thus far unaware of any legal proceedings initiated by any note holders against the firm. Suntech intends to continue to engage with holders of the convertible notes and other lenders with a view to achieving a consensual restructuring, said the firm.
Suntech stated it is waking efforts to restructure and increase the cost-efficiency of its operations, maintain business relationships with its existing customers and suppliers, and seek additional sources of capital to meet its ongoing operational requirements and debt repayment obligations. In addition, the firm added that it is in discussions with certain of its suppliers and lenders relating to various other claims for non-payment or non-performance, which the firm hopes to resolve in a timely manner.
David King, Suntech's CEO, stated, "It is currently a very difficult time for the company and the industry, but the management and board of Suntech are committed to finding a way forward that will take into account the rights and interests of all of its constituents, including shareholders, noteholders, lenders, customers, suppliers and employees. The firm is currently exploring strategic alternatives with lenders and potential investors, which could help to set the firm on a path towards longer term success. Suntech appreciates the support and understanding of the firm's various stakeholders as the firm undertakes efforts to implement these measures."
