Tuesday, April 2, 2013

"Suntech Unit Bankruptcy Had Roots in Deadbeat Customers" ($STP)

Great summary of what happened.

"Suntech’s vehicle for investing in new solar projects in the credit crisis was Luxembourg-registered Global Solar Fund, run by Javier Romero, who was once Suntech’s external sales agent in Spain.[...]

Global Solar Fund invested in seven solar projects, mostly in southern Italy. They became the Suntech customers that had difficulty paying their bills. One of them, Solar Puglia II S.ar.L, required the guarantee of a 554.2 million-euro bank loan from China Development Bank.

Suntech told the SEC that Global Solar Fund backstopped the guarantee with 560 million euros of German government bonds.

Romero assured Suntech that the bonds could be sold at any time to pay China Development Bank if the project defaulted on its debt, Suntech wrote to the regulator. Trouble was: The German bonds Romero promised as a backstop never existed, Suntech said in December after looking for them for four months."
Amazing.

16 comments:

Luke Smith said...

Revealing. What I am taking away from this is that when the Italian deal fell through it was basically impossible (for China Development Bank) to bailout Suntech with a larger loan. That and Mr. Romero was less than dependable.

CP said...

Good theory.

If you are going to pick industry survivors, would you pick one that stinks of fraud with a CEO that won't cooperate?

Jason said...

Great work CP...any thoughts on the current current share price? Probably won't move much until we get more clarity on lawsuits/involuntary bk petitions. Its almost three weeks since they missed bond payment, do you think we will hear something soon?

CP said...

1. I don't think we will ever hear anything from the company again.

2. Voluntary or involuntary bankruptcy petitions are filed by debtors or creditors (respectively) who are worried about a rush of asset seizures by creditors. No petitions means... everyone knows there are no assets to seize?

3. I don't know why anyone would pay>0 for bonds and certainly not shares.

Jason said...

Ok thanks...makes sense. I was thinking bondholders who held large short position would file involuntary bankruptcy to speed up the process...At some point the company would have to respond to this petition?

jws said...
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jHurt said...

Great call CP. Lets go find the next "worthless inefficiency stock"!

eahilf said...

So a Chinese company got scammed. Schadenfreude pur.

laterre said...

"Great call CP. Lets go find the next "worthless inefficiency stock"!"

Any ideas, then?

In the spirit of conversation: OSH

Sept and Dec maturities, declining metrics, but stock hasn't gotten the memo. What am I missing?

ECD Fan said...

Did you hear the latest? Warren Buffett buying Suntech common, but refusing to touch the bonds at 27c on the dollar! And Bloomberg radio even chimed in after the close. Human stupidity has no limits!

CP said...

yes, that article was total garbage

buffett buys a money losing company in a commodity industry to get a product that sells below cost? and does it without buying the bonds

laterre said...

What, no mad props on my OSH suggestion from a few days ago?

Who's next: CVO, TSL, RSH?

laterre said...
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Jason said...

laterre,

Nice call on OSH...wish I had seen idea before drop.

laterre said...

Maybe you'll get a second chance on OSH. My brother-in-law's hairdresser got a text from somebody she went to school with in Omaha, and word on the street is that Warren Buffett is getting interested into the hardware business ;)

Jason said...

laterre,

Haha, yeah I'll just wait until pumper websites push it up 100%...I wanted to ask you a couple questions about OSH debt...prob be easier through email...please email me at jasonjohnson835@yahoo.com if possible. thanks