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Chinese solar panel manufacturer Suntech announced today that it has defaulted on a $541 million bond payment.
Chinese solar panel manufacturer Suntech announced today that it has defaulted on a $541 million bond payment. It is the first company from mainland China to default on its bonds, Bloomberg News reported.
Failing to make the payment has triggered defaults on loans from International Finance Corp and Chinese domestic lenders, Bloomberg News reported.
Suntech, the world’s biggest solar panel maker as recently as 2011, has run short of cash after reporting losses in 2011 and 2012, the Associated Press reported.
The company is "exploring strategic alternatives with lenders and potential investors," Suntech CEO David King said in a statement, according to Bloomberg News.
Suntech said it 60 percent of the bond holders have agreed to not exercise their legal rights under the bonds' default terms until May 15, the AP reported.
But other bondholders have indicated they will sue, the Sydney Morning Herald reported. Scottsdale, Ariz.-based Trondheim Capital Partners Managing Director Colin Peterson told Reuters the hedge fund thought it was worthwhile to sue, according to the Herald.
According to Bloomberg News:
Chinese solar companies are struggling after taking on debt to expand supply, leading to a glut that forced down prices and squeezed profits.
Chinese solar panel companies have also been hurt by anti-dumping tariffs imposed by the US government to offset the improper tax breaks and subsidies it claims the Chinese government has given them, the AP reported.
More from GlobalPost: Chinese solar panels slammed with huge US tariffs
"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, note holders, lenders, customers, suppliers and employees," King's said, according to Bloomberg News.