Dr Zhengrong Shi has called Suntech Power Holdings’ decision to remove him as Executive Chairman of the board “misconceived” and “unlawful”.
This week, the Chinese module manufacturer appointed Susan Wang as Chairwoman of its board of directors, replacing Dr Zhengrong Shi who has been demoted to board director level.
Dr Shi said in a statement that the Suntech board had "no legal basis" for removing him and that the decision was "invalid and of no effect".
"The actions taken at this time by the rest of the board show that they are not focused on the issues most important at hand and are not acting in accordance with the best interest of the company," he said.
“I will take all steps necessary to protect the company from being harmed by unlawful actions such as the above. I am fully committed to continuing to serve the company as Executive Chairman to the best of my ability and to guide it through these difficult times.”
In response, Suntech said it was “confident its appointment of Susan Wang is valid and effective by law”.
Speaking separately to Bloomberg, Dr Shi is claimed to have said that Suntech’s Board has no plans to refinance the US$541 million convertible bonds due 15 March.
In October last year, Suntech employed UBS Investment Bank to find alternative ways to avoid defaulting on the buyback of bonds. At the end of the first quarter of 2012, Suntech had short-term bank borrowings of US$1.55 billion but had short-term credit facilities valued at US$3.9 billion, of which US$1.75 billion had been drawn down.
“The problem is they don’t have a solution,” said Dr Shi told Boomberg. “They need a viable business plan. They need to talk to all the bondholders and suppliers and government. All the stakeholders want to talk to me. All the bank CEOs want to talk to me. They want to know why Dr Shi didn’t show up [to meetings].”
He added: “I have good terms with all stakeholders, including the government, banks and suppliers,” he said, adding that after his removal was announced “banks started to worry that the company was going into bankruptcy”.
Dr Shi said he was unaware as to whether his removal was related to the bond payment due this month.
A spokesman for Suntech said the company was not commenting further on the bonds.
Nitin Kumar, Analyst at Nomura Singapore, told Bloomberg: “Our best guess is that Suntech is preparing for ceding control to a third party. Management change at Suntech was sorely needed given the execution missteps over the last five to six years.”
Last summer an Italian court had reportedly filed a lawsuit against the company’s Global Solar Fund (GSF). The lawsuit alleged that the investment fund illegally built solar farms in the country in order to exploit Italy’s subsidies.
If convicted, the charges may lead to the removal of €80 million worth of subsidy-backed solar farms, an Italian prosecutor said as cited by Reuters.
According to a Reuters article at the time, since this discovery on 30 July, Suntech had lost more than 40% of its market value.
Furthermore, Schott Solar Wafer filed a lawsuit in December 2012 against Suntech for breaching a long term supply agreement. Schott Solar is demanding €13.6 million (US$18 million) to compensate for the supply of 220MW of multicrystalline wafers per annum to Suntech.
One bit of good news for Suntech was the threat of delisting from the New York Stock Exchange was averted after its stock price regained compliance in January this year.