Suntech, one of the world's biggest solar panel manufacturers, ended up in bankruptcy court yesterday, becoming the latest casualty of a slump in the global solar industry.
Suntech Power Holdings Ltd said eight Chinese banks asked a court to declare Wuxi Suntech, its major subsidiary, insolvent after the company missed a US$541 million payment to bondholders last week. Suntech said it would not oppose the petition.
In accordance with China's Bankruptcy Law, the Wuxi City Intermediate People's Court approved Wuxi Suntech's bankruptcy and restructuring following a joint application issued by the company's creditor banks on Monday, Xinhua news agency reported.
Wuxi Suntech supplies more than 95 percent of Suntech Power's products, with its production capacity reached 2.4 gigawatts last year, Xinhua said.
This was a dramatic reversal for a company that had been a leading force in China's fast-growing renewable energy industry. Its founder, Shi Zhengrong, has seen much of his multibillion-dollar fortune evaporate.
"While we evaluate restructuring initiatives and strategic alternatives, we are committed to continuing to provide high-quality solar products to our global customer base," Suntech CEO David King said in a statement. "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."
Solar panel makers have suffered huge losses over the past year after rapidly growing production capacity outstripped demand and prices plunged. Germany's Q-Cells filed for bankruptcy last April.
Suntech, which has its headquarters in the eastern city of Wuxi, was also hurt by a revelation last July that a business partner faked US$680 million in collateral for a loan Suntech had guaranteed.
On Monday, the company said it was looking for new financing and negotiating with creditors in the hope of restructuring its debt.
The company had said owners of 60 percent of the bonds agreed last week not to exercise their rights under the notes until May 15. But it said the bonds' trustee declared a default, which triggered defaults on other debts owed to Chinese lenders and the International Finance Corp.
Shi, who has a PhD in physics, founded Suntech in 2001. He had gone to Australia in 1988 and got into solar power by chance when he needed a job after a university fellowship ended.
Shi, who has become an Australian citizen, was lured back by officials in Wuxi who wanted to develop high-tech industry and put up US$6 million to start Suntech. Shi later bought out his state backers with help from a group led by Goldman Sachs and went public on the New York Stock Exchange in 2005.
Shi's success made him one of China's most prominent entrepreneurs. Forbes magazine estimated his fortune at US$2.9 billion at its peak in 2008 but that had tumbled to about US$500 million last year as Suntech's share price plunged.
Other major Chinese producers such as Yingli Green Energy Ltd, LDK Solar Co and Trina Solar Ltd have reported heavy losses.
Chinese producers have also been hit with US anti-dumping tariffs imposed to offset what Washington says are "improper subsidies" from Beijing. European solar producers have also filed anti-dumping complaints.
Last week, Suntech announced the closure of its US factory in Goodyear, Arizona, and the loss of 43 jobs to cut costs.
