Beleaguered Suntech receives notice of default
Suntech Power Holdings has announced that it has received from the trustee of its 3% Convertible Notes a notice of default and acceleration relating to Suntech's non-payment of the principal amount of US$541 million that was due to holders of the Notes on March 15, 2013. Such event of default has also triggered cross-defaults under Suntech's other outstanding debt, including its loans from International Finance Corporation and Chinese domestic lenders.
As previously announced, Suntech has entered into a forbearance agreement with holders of over 60% of the Notes, one of the terms of which is that the forbearing Note holders will cooperate with Suntech in addressing certain legal proceedings that may be initiated against it. Suntech understands that those Note holders have also requested the trustee under the Notes not to take any further action as consensual restructuring discussions continue. Suntech is thus far unaware of any legal proceedings initiated by any Note holders against the Company. Suntech intends to continue to engage with holders of the Notes and other lenders with a view to achieving a consensual restructuring.
Suntech is also continuing its efforts to restructure and increase the cost-efficiency of its operations, maintain business relationships with its existing customers and suppliers, and seek additional sources of capital to meet its ongoing operational requirements and debt repayment obligations. In addition, Suntech is in discussions with certain of its suppliers and lenders relating to various other claims for non-payment or non-performance, which the Company hopes to resolve in a timely manner.
David King, Suntech's CEO, stated, "It is currently a very difficult time for our company and our industry, but the management and board of Suntech are committed to finding a way forward that will take into account the rights and interests of all of its constituents, including shareholders, noteholders, lenders, customers, suppliers and employees. We are currently exploring strategic alternatives with lenders and potential investors, which could help to set us on a path towards longer term success. We appreciate the support and understanding of our various stakeholders as we undertake efforts to implement these measures."
