Suntech (STP) Slumps as Potential Government Intervention/Takeover Likely
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Suntech Power (NYSE: STP) has sees some rough times recently as speculation surrounds whether demand for solar modules will pick up in key markets. Currently breaking below the $1 price level, shares are well off the mid- to high-$2 range hit during the same period last year. The lack of growth has all but tapped the company of any cash reserves.
According to the NY Times and a statement from officials, Suntech might be partially or entirely taken over by the municipal holding company of Wuxi, China. One rep for the Wuxi Guolian holding company told the Times that a deal had already been reached, though no executives from Suntech would comment on market chatter.
Suntech has about $541 million in obligations to convertible bondholders due this week, though the Times said it reach a deal with over half of the holders for a two month reprieve. Much of the trouble started following a report from the company that it invested $690 million into German bonds that might prove fraudulent. The company's cash reserves have been dwindling and Chinese state banks are said to be reluctant to lend any more to the firm.
Some bondholders said they weren't even approached with the offer, noted the Times.
No specific terms on what would be offered to bondholders and shareholders were released.
Shares of Suntech are down 11.3 percent Wednesday.
According to the NY Times and a statement from officials, Suntech might be partially or entirely taken over by the municipal holding company of Wuxi, China. One rep for the Wuxi Guolian holding company told the Times that a deal had already been reached, though no executives from Suntech would comment on market chatter.
Suntech has about $541 million in obligations to convertible bondholders due this week, though the Times said it reach a deal with over half of the holders for a two month reprieve. Much of the trouble started following a report from the company that it invested $690 million into German bonds that might prove fraudulent. The company's cash reserves have been dwindling and Chinese state banks are said to be reluctant to lend any more to the firm.
Some bondholders said they weren't even approached with the offer, noted the Times.
No specific terms on what would be offered to bondholders and shareholders were released.
Shares of Suntech are down 11.3 percent Wednesday.
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