Saturday, June 29, 2013

Suntech Announces New Forbearance Agreement with Holders of 3% Convertible Notes ($STP)

Suntech Power Holdings Co., Ltd. today announced that it has reached an accord with holders of a majority of the 3% Convertible Senior Notes (the "Bondholders") for a new forbearance agreement that sets forth the next steps in the debt restructuring process. The new forbearance agreement provides further time to implement the restructuring and will expire on August 30, 2013.

In particular, the new agreement contemplates an equitization of all major debt claims held by the Bondholders. In addition, the Bondholders will nominate two additional members to the Company's Board of Directors who will provide guidance and assist in the Company's ongoing restructuring efforts.

In the coming weeks, the Bondholders and the Company will work toward a framework agreement regarding the specific terms of a debt restructuring and equitization. The Company and the Bondholders will also work together to identify strategic and financial investors to bring in new capital to Suntech.
Hello! More and more obvious that the equity is way, way overpriced relative to the bonds.


John said...

Chinese news story about new forbearance...

RJ said...

This will never end...

With borrow rates at -100%, it has been an expensive short to say the least..
Only people making money here are the stock loan desks...

RJ said...

Has anyone heard anything from the Ad Hoc group or updates from the lawyers?

Looking at the options trading, seems like Sept is the earliest time we hear something..

In the meantime, continue to pay .15/month to be short and have the buy in risk..

This has been fun

John said...

Yeah RJ, this thing has really dragged out..Its annoying paying borrow fees but we should get some news in the next 30-40 days.

Does anyone know how long it would take for bondholders to receive shares after a debt/equity deal is announced?

Anonymous said...


There are 3 scenarios if a debt for equity swap were to be implemented:

1) Immediate conversion (if bondholders convert 100% into equity, then the equity would likely get wiped out)

2) Conversion before the date bondholders can force STP into bankruptcy (if STP can find a way to pay bondholders ~25% or more, then bondholders would likely convert ~75% or less to equity)

(3) Conversion after the date bondholders can force STP into bankruptcy (if a strategic investor(s) acquires STP assets or puts up capital to invest in a swap, then a conversion may be delayed further)

The other alternatives the company has would be to 1) declare bankruptcy, 2) organize a pre-packaged insolvency, or 3) do nothing and face involuntary bankruptcy

If STP does not convert before August 30, then it seems that more than 3 bondholders would join the NY lawsuit to transform their convertible bonds claim into a "judgement lien." STP is contesting the action in NY, although it seems that a judge will issue a ruling in this case on or before August 30. My understanding of NY law is that after the creation of a judgement lien in NY, STP would have 90 days to 1) appeal, 2) settle, or 3) face involuntary bankruptcy under Caymen Islands law.

Did you see the SEC filing STP made today? Apparently, the European subsidiaries contribute an additional $1 billion USD of inter-company debt to STP's debt pile. Also, Japan and Singapore have been reorganized from BVI holding co. to Wuxi Suntech.

Does STP really think it can either spin off Wuxi Suntech and/or EU assets while it also is negotiating a swap in less than 5 weeks?

RJ said...

Seems like we will see a USU style squeeze before STP heads lower.

Anonymous said...

It seems like the local and regional government won't be able to rescue Wuxi Suntech: