Solar energy company Suntech Power Holdings Co. Ltd. (STP) said Wednesday that a group of eight Chinese banks filed a Court petition for insolvency and restructuring of Wuxi Suntech Power Holdings Co. Ltd., a subsidiary of the company.
Wuxi Suntech has notified the Court - Wuxi Municipal Intermediate People's Court in Jiangsu Province, China - that it will not file an objection against the petition.
The Court is expected to decide whether or not to accept the petition in the next few days, the company said.
Wuxi Suntech is engaged in the manufacture of photovoltaic (PV) cells and PV modules in China. The company's profit has taken a hit owing to lower prices, oversupply, as well as anti-dumping charges imposed on China by the US.
In the event of the insolvency and restructuring of Wuxi Suntech being approved by the Court, the company intends to continue production of solar products to meet customer orders. The company will also work with any Court-appointed administrators to ensure all of Suntech's product warranty obligations are met.
"While we evaluate restructuring initiatives and strategic alternatives, we are committed to continuing to provide high-quality solar products to our global customer base," said Suntech CEO David King.
Suntech recently defaulted on the payment of a $541 million bond. The default led to cross-defaults for Suntech's other outstanding debt.
The company said that the insolvency and restructuring procedure is designed to facilitate an orderly restructuring plan for both Wuxi Suntech and its creditors. The Chinese court would typically appoint administrators to oversee the restructuring, including negotiations with existing bank lenders and other creditors. Wuxi Suntech will apply to the Court to continue operations under the supervision of the administrators.
Suntech stock last traded at $0.59 on the Nasdaq.
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