Saturday, March 9, 2013

Chinese Media Headline: "Suntech will officially launch bankruptcy protection" ($STP)

A correspondent wrote in with a link to this Chinese media news story from this evening (it's currently Sunday morning in China).

Here is the Google Translate version of what seem to be the highlights of the story, headline: "Suntech will officially launch bankruptcy protection".

"According to local politicians to disclose the "China Business" reporter, if nothing unexpected happens, Suntech, Suntech's core assets will be between March 15 to March 20, the official launch of the bankruptcy proceedings, Wuxi Guolian Development (Group ) Co., Ltd. (hereinafter referred to the Wuxi Guolian, was established on May 8, 1999, the Wuxi Municipal People's Government funded the establishment of investment subject qualification granted to state-owned assets of state-owned enterprises Group) will take over and led after the reorganization, it will Suntech to take full control of the parent company or its industry in the form of investment funds.

"Reporter learned exclusively that Wuxi Guolian reorganization Suntech There are two programs: one is from the existing assets cut out part of high-quality assets and its acquisition of additional assets may repay the debt by the sale of equipment to ; another overall to take over the Suntech assets, so nationalization. "Shi Zhengrong out is the first step, which also cleared the way for restructuring work.

"Suntech start bankruptcy proceedings, Zhengrong Shi is currently facing the biggest danger is that the related party transactions exposed before, because a thorough investigation of related transactions and the transfer of benefits will be a prelude to the reorganization of Suntech Suntech insider told reporters.

"No injection of new capital for the government and banks, and no investors willing takeover offer facilities in the hands of equity, Suntech then restructuring has been inevitable bankruptcy protection, the timetable for the end of March, the leading party is the background of the state-owned Wuxi Guolian. local politicians, an informed source told reporters.

"if the the Suntech start bankruptcy protection, Zhengrong Shi is currently facing the biggest danger is that the related party transactions exposed before, because a thorough investigation of related transactions and the transfer of benefits will be a prelude to the reorganization of Suntech."
No idea, of course, how reliable this source is or how good our translation is. 


effmanny said...

Hi everyone. I spoke to a native speaker who confirmed it says bk 3/15-3/20. The native speaker could not confirm if this website was a legit news source.

Great work Jason for finding this and great work CP for having a blog to have this discussed.

CP said...


Can you ask him to translate some of the other details a bit better...?

effmanny said...

CP! It's a girl hahaha.

I asked her for a little more color on the translation and if it mentions the bonds (again she is only reading this article, she is an architect with zero interest in securities)

“It will be taken over and restructured by wushe city-national development company. Only mention of the bonds due was that it has been a big concern by investors and the local govt, and is leading to the ousting of the current CEO”

To repeat, she is just reading this. Nothing else. Can't confirm this is a legit news source.

CP said...

Oops! Haha.

Having operations taken over by the government implies no $ to the U.S. holdco/creditors.

Agree that these Chinese media sources are super mysterious. It seemed to just quote "insiders"?

I guess we'll see whether Bloomberg/somebody picks it up tomorrow?

CP said...

No other media references yet...

GZ said...

It says Wuxi suntech is going bankrupt. Suntech Powers LTD is not.

CP said...

OK Great!

I'm sure it will be no problem for the holding company if it's primary operating subsidiary goes BK.

Anonymous said...

The majority of $STP Holding's cash and operating assets are held by Wuxi Suntech Power Co. Ltd. (and it's PRC subsidiaries) as of August 31 2012.

See slides 23 & 24:

If the report is accurate, $STP will remain training but its liabilities will substantially outweigh the assets it can book on its balance sheet.

How long will $STP last and when should put positions be closed?

CP said...

It's possible that the confusion is because everyone in China takes it for granted that the holding company is SOL and the political dispute there regards the operating subsidiaries and what will happen to the plants/jobs/managements.

China may not even care what happens to the Cayman Islands holding company with its naive U.S. investors. That situation would take care of itself, anyway, because bondholders would begin insolvency proceedings after a missed payment this Friday.

GZ said...

All these things can give time for the puts to expire worthless.

GZ said...

CP, not sure if you have seen the latest news. It looks like there is a big chance for both the puts and the bonds to expire worthless.

Steve said...

STP still meets all the requirements for inclusion in the Guggenheim Solar ETF 'TAN':

"securities eligible for inclusion in the Index must be listed on a developed market exchange, as defined above, have a minimum market capitalization greater than or equal to $150 million at the reference date preceding each reconstitution and have a minimum 3 month average daily trading value of $2 million at the reference date preceding each reconstitution. "

"if a company has filed for bankruptcy, the security will be deleted from the Index immediately and will not be replaced."

"The Index will be rebalanced and reconstituted quarterly on the third Friday of the last month of each calendar quarter"

'TAN' gets rebalanced this Friday, buying more STP for the passive ETF fools.

CP said...

Why does anyone think that 60% of bondholders have the power to bind the other 40%?

GZ said...

I was wondering the same thing too.

By the way I do hold the bond and no one asks me. Did my broker make a decision for me? And am I the 60% or 40%?

Anyway news like this gives [false] hope to equity holders and price might not drop enough for the March and even April puts. It's hard to say about June, but they might pull something like this again and June might be worthless too.

CP said...

This is from the Suntech indenture:

"Subject to certain exceptions, the holders of a majority in aggregate principal amount of the outstanding notes may waive our compliance with any provision of the indenture or notes. However, without the consent of the holders of each outstanding note affected, no amendment, supplement or waiver may: change the stated maturity of the principal of, or the payment date of any installment of interest or additional interest on, any note;"


"Except as provided in the indenture, the holders of a majority of the aggregate principal amount of outstanding notes may, by written notice to the trustee, waive any past default or event of default and its consequences, other than a default or event of default: in the payment of principal of, or premium, if any, or interest or additional interest, if any, on, any note or in the payment of the fundamental change repurchase price;"