China’s one-time leader in the production of solar panels has officially been notified by its trustee that the company is in default on a $541 million bond payment and that payment has been accelerated. Suntech Power Holding Co. Ltd. (NYSE: STP) has teetered precariously on the brink of default for the past week and now the firm has gotten the final push.
As we noted earlier this morning, this could lead to a forced bankruptcy of the solar panel maker. But that has not happen yet, according to Suntech’s announcement:
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.
It is pretty clear that neither the Chinese central government nor the local government is about to ride to Suntech’s rescue. Postponing the inevitable for another two months, as some noteholders have agreed to do, is not likely to lead to a different outcome.