Suntech may seek bailout as debt deadline draws near

Suntech Power Holdings Co, the world's leading solar panel producer, is currently seeking a government bailout. An announcement concerning the matter may be released in the next few days, a local government official told the Global Times Thursday.

The company, based in Wuxi in East China's Jiangsu Province, now has a debt burden of $575 million worth of convertible notes. Suntech said Monday it had signed a forbearance agreement with holders representing over 60 percent of the notes to extend the repayment deadline from Friday to May 15.

However, analysts said that the cash-strapped company is not likely to resolve the debt load by itself.

In the first quarter of 2012, Suntech reported net losses of $133 million, its fourth consecutive quarterly loss, and the company has not released its quarterly figures since.

Zhu Ying, an official in the Wuxi government publicity department, told the Global Times Thursday that a related announcement will be made in the next few days.

Tao Maosheng, a spokesperson for Suntech, also told the Global Times that an official announcement on the matter may come soon.

Meng Xian'gan, deputy director of the China Renewable Energy Society, told the Global Times Thursday that overall China's solar industry should fully embrace market competition and phase out some of its less competitive firms.

"However, in the case of Suntech, the local government should show some support, as the company played an important role in the development of China's solar industry. And the Suntech brand should also be protected," Meng said.

Media reports said that Suntech is very likely to be taken over by a holding company under he Wuxi government.

Suntech's shares fell by 44.6 percent to 46 cents a share in New York as of 10:24 am local time on Thursday on bankcruptcy concerns.

The loss-making company is also suffering from unstable management, as the company's former president Shi Zhengrong has been sued in the US for alleged insider trading and was dismissed from the board on March 4.