Distressed capital management firms, Clearwater Capital Partners and Spinnaker Capital are working with Suntech Power Holdings to prepare a major restructuring plan for the ailing PV module manufacturing, including downsizing through asset sales and a recapitalisation that could mean majority share takeover by unidentified investors.
The company said in a statement that a recapitalisation plan would be implemented immediately that depended on a new strategic investor providing the capital via a debt to equity swap to initialise the restructuring plan.
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Suntech said that it expected to initiate an agreement with an unidentified investor or investors in the next week or slightly later.
Zhou Weiping, Suntech's new president said, “Important steps forward are being taken towards a new Suntech. During this restructuring period, Suntech has continued to maintain its production and warranty obligations. The restructuring will allow us to cut our costs and optimise our margins and production. Although there is expected to be substantial dilution for our existing shareholders, we believe that these measures will put us in a better and stronger position to serve our current and future customers in China, Japan, the EU, USA and around the world.”
The restructuring plan includes the following:
• Identifying the key assets to be retained by the company to allow it to continue its operations at a rationalised scale
• The exchange of outstanding debt into the company's equity
• The setting of maximum debt levels for the company's operating subsidiaries
• The introduction of a new strategic investor that will provide the necessary funding through the purchase of newly issued equity to complete the restructuring process. This will permit the company to substantially improve its balance sheet and to be well positioned to continue as a major worldwide supplier in the solar industry
The announcement offers the first clear understanding of Suntech's intended plans to deal with its main operating arms bankruptcy in Wuxi, China since its main banks force the company into receivership in March 2013.
The company had been working with some of its bondholders via Clearwater Capital Partners and Spinnaker Capital to enable a debt for equity swap since defaulting on its US$541 million convertible in March this year.
Rumours had recently surfaced that Yingli Green and Trina Solar were interested in investing in Suntech.