Friday, January 31, 2014

WSJ: "China's Suntech Power Plans U.S. Bankruptcy Filing"

"China's onetime solar-power giant Suntech Power Holdings Co. plans to file for bankruptcy protection in U.S. court as its leaders negotiate with the holders of more than $500 million in U.S. convertible bonds, according to people familiar with the matter.

Suntech plans to file for protection under Chapter 15, the section of the Bankruptcy Code that deals with international insolvencies. If recognized by a U.S. judge, the solar panel maker will receive the benefits of U.S. bankruptcy law, including the so-called automatic stay that halts lawsuits and prevents creditors from seizing assets. The filing is expected by Feb. 21, according to the people familiar with the matter."

9 comments:

Anonymous said...

What benefit comes out of giving Suntech extended time?

Anonymous said...

For whom?

Anonymous said...

The minority bondholders who pushed for chapter 7.

It's good for the equity holders, majority bondholders and the company.

Anonymous said...

The equity is a zero. Nothing helps the equity.

Anonymous said...

If your long the equity you can collect the borrow fee for being long.
Long holders are close to making money regardless if the stock gets cancelled and is a zero.
The more time they can collect, the better it is for them.
The opposite is true for short equity holders.

Anonymous said...

Only three percent of the float is short. Even if you exclude Shi's 33% that probably aren't being lent out, longs are not making very much money on lending. Especially since the cost to borrow has dropped sharply recently.

Anonymous said...

Sooo.. what was the benefit to the minority bondholders to give more time?

Anonymous said...

The company said in their most recent CI court filing that they are are going to argue to the NYSE that the current stock price is evidence that investors believe in the prospects of the company.

Obviously, one of the parties that is pushing for the relisting - could be the company, big bondholders, or Guolian - is painting the tape.

When they lose the relisting appeal, they'll have no reason to prop the price up any longer, will they?

Anonymous said...

Could they do a reverse split on the pink sheets and file their financials before the appeal is denied?

Seems like a long shot but why bother to "paint the tape" if that's the case?