Lacking market relief, Suntech investors hope the municipal government of Wuxi, where Suntech is based and where many of its more than 10,000 workers were employed, might come to the company’s aid. According to a Chinese news report, fewer than 3,000 of the workers are still on the job. (Suntech would not comment for this report.) For Wuxi’s municipal government, a rescue would require a lot of money without support from the central government, which wants, at least in principle, a consolidation in the industry.
The China Development Bank has stepped in to help solar firms before. JinkoSolar, which posted a loss of $248 million last year, said the Guangdong branch of the China Development Bank agreed in December to lend it $1 billion over five years. In April, the bank gave JinkoSolar a 15-year loan for nearly $60 million.
(Brendon Thorne/GETTY IMAGES) - From right, Actor Cate Blanchett, Suntech CEO Zhengrong Shi, an unidentified woman and actor Andrew Upton celebrate the “switch-on” of the Sydney Theatre Company’s rooftop solar panels in Sydney, Australia, in 2010.
Suntech’s solar market woes are affecting the bottom line.
In January, the bank gave a $71 million lifeline to another Chinese solar firm, LDK.
Suntech is thought to still owe more than $400 million to the China Development Bank. But the bank, whose rates were never terribly low, hasn’t stepped forward, and LDK is scrambling to find an investor.
Suntech’s woes have fed on one another. Solar demand is strong in new markets such as the Middle East, Thailand and Australia, as well as the United States. But when a company’s survival is uncertain, that hurts business. Solar panels typically carry 20-year warranties, which won’t be worth anything if the company goes out of business. That might be one reason that Suntech’s sales fell 18 percent in the third quarter compared with a year earlier, according to its Securities and Exchange Commission filing, while most other companies’ sales were rising.
Shi’s replacement, David King, a financial expert with experience at PriceWaterhouseCoopers, Bechtel and Walt Disney Imagineering, is trying to engineer a restructuring but would not comment. The company will meet with creditors in Wuxi on May 22 and separately in Europe.
So far, however, no reorganization plan has emerged, and the company’s future remains dim.