Suntech rises on buyout rumors

Reports say Buffett 'very likely' to purchase troubled solar panel firm

Shares in Suntech Power Holdings Co have rallied after a report that billionaire Warren Buffett is set to come to the troubled Chinese solar panel maker's rescue, igniting hope that it could find the capital it needs for a turnaround plan.

The New York-listed company rose 15.63 percent to $0.48 on Monday. Bloomberg reported that Suntech shares had jumped as much as 28 percent, after it said Buffett's MidAmerican Energy Holdings Co may buy the company's bankrupted Wuxi subsidiary. Both Suntech and MidAmerican Energy declined to comment on the market speculation.

"If the rumor turns out to be true, which I personally think very likely, it may create a win-win situation," said Cheng Peng, a partner with Adfaith Management Consulting.

The bankrupt Suntech subsidiary would be a great bargain for Buffett, Cheng added, assuming the parent company would be glad to get rid of the burden at a bargain-basement price.

Wuxi Suntech, analysts said, still holds some good-quality assets, including land, equipment, its workforce and also technology.

The proposed acquisition "is in accordance with Buffett's investment habits, which emphasizes long-term returns," Cheng said.

"For Suntech, Buffett's investment could not only quench its thirst for capital, but also strongly boost confidence of shareholders, clients, and customers."

Citing an insider in the Wuxi government, National Business News said that a restructuring plan for Wuxi Suntech is expected within six to nine months.

The insider said several strategic investors have shown interest in the business, focusing on the Suntech brand, its influence on the market, and the quality of its products.

A creditors' meeting will be held in late April, the insider added.

Earlier reports said the State-owned Wuxi Guolian Development (Group) Co was ready to acquire the company wholly or partially.

Suntech Power Holdings announced in late March that it had submitted a petition for the insolvency and restructuring of Wuxi Suntech, after it defaulted on a $541 million bond repayment.

A local court has appointed an administration committee, consisting of local government representatives and accounting and legal professionals to administer the restructuring.

The primary goal is to restructure Wuxi Suntech's debt obligations, while continuing production and operations, Suntech said in a recent statement.

Wuxi Suntech is Suntech's principal operating subsidiary in China engaged in the manufacture of photovoltaic cells and PV modules.

It will continue operations through the restructuring period, the company said.

Chinese solar companies have been severely hit due to a supply glut, alternative-energy subsidy cuts in Europe, and also the imposition of hefty anti-dumping and anti-subsidy duties in the US.