Monday, January 13, 2014

Suntech Short Interest Keeps Falling

At November 15, Suntech short interest was 12 million shares. By the end of the year 2013, 5.6 million of those had covered leaving 6.4 million short.

That was 29 trading days which means 193,000 per day were being covered.Volume during that time period was averaging about 0.75mm shares per day, of which short covering has apparently been an appreciable fraction.

It almost looks as though someone impatient has decided to cover their short at 50 cents, and their bid is fueling their impatience because it is propping the price up.

35 comments:

Anonymous said...

It's an expensive short to carry, especially with the stock price being rounded up to the nearest dollar and a very high negative interest rate. Add the fact it trades on the pink sheets and the possibility for this to grind higher on no real news.

Who would have thought there would be a decent chance STP stock would be higher this year then when if originally defaulted back in March of '13?

There was also two option expirations during that time period where shorts must have covered as well.

Anonymous said...

Activity in the bonds has dried up since the news of Zhou's departure.

Anonymous said...

One thing of note is that Zhengrong Shi indirectly owns a 30.2% stake in STPFQ in the BVI; this is makes it hard to borrow as well as hard to cover for US investors. In the event D&M Technologies Ltd does not sell it stake, then shorts may be unable to close their positions. However, if the trust which owns D&M decides to sell STPFQ, it will drop like a rock.

Here is the 2012 data:
http://www.sec.gov/Archives/edgar/data/1342803/000110465912029518/a12-10361_2ex99d4.htm

Anonymous said...

D&M is the same as Shi - you are double counting.

"As of December 31, 2011, of the 181,163,878 issued and outstanding ordinary shares, approximately 71.5% of those ordinary shares were held in the United States."

These are free floating.

At this point only 6.4 million of the 129 million float is short (under 5%!). The cost to borrow should soon fall substantially.

Anonymous said...

"The cost to borrow should soon fall substantially."

I wouldn't hold your breath. The stock loan desks are much worse than gas stations, quick to move the price up but in no rush to move back down as the price goes lower.

Anonymous said...

http://ir.suntech-power.com/mobile.view?c=192654&v=203&d=1&id=1891288

Anonymous said...

I sure do hope STPFQ does a reverse split just to knock the stock price above $1.

Another thing to factor into the short equation is the maintenance costs.

Complying with $2.50 regulatory requirement for each share under $1 is a rather large "opportunity cost."

Anonymous said...

Interesting reason from the NYSE:

"did not meet the NYSE's price criteria for continued listing standard because the average closing price of the Company's American Depositary Shares, or ADSs, was less than $1.00 per ADS over a consecutive 30-trading-day period. "

No mention of past financials, etc..

Anonymous said...

Surprise, surprise, the B.S. artists are still obsessed with their stock listing.

Don't they realize that they are all surely blacklisted from having anything to do with the NYSE again?

Anonymous said...

Did the Shunfeng shareholders vote yet?

I couldn't find anything.

Anonymous said...

Yes, you can verify on the Shunfeng IR site. Invesors overwhelming approved the financing plan and gave directors the authority to acquire Wuxi STP. The deposit and funds have been given to the administrator, so the deal should formally be brought to a close once the paperwork gets signed in the next week or two.

Anonymous said...

"The Company has notified the NYSE of its intention to cure this deficiency within the prescribed timeframe."

Anonymous said...

A million bonds on the tape today with a slight uptick in price.

Anonymous said...

http://ir.suntech-power.com/phoenix.zhtml?c=192654&p=irol-IRHome

Suntech will hold a creditors' meeting for liquidation in Cayman

Anonymous said...

not good for stock...

Anonymous said...

Any update on the Shunfeng deal?


Anonymous said...

Any update on the Shunfeng deal?

Anonymous said...

How can it be that the SEC allows companies to not file a 6k when announcing a meeting of a creditors? Shareholders are creditors. Does Suntech Holdings think that agenda item #4 ("the election of a liquidation committee") is not a material event?

Anonymous said...

They did file a 6K yesterday (1/27) about the creditors meeting.

Seems odd it's taking this long to wrap up the Shunfeng deal.

Anonymous said...

I am sure the US attorneys of Suntech are advocating the company to put it into bankruptcy voluntarily following the hearing.

The majority bondholders are down to their last straw -- which is that the judge finds the abstention oral argument that Suntech will make more persuasive than continuing with the chapter 7 proceedings.

Standing in Suntech's shoes, there are only 3 options for it to carry out a scheme of arrangements in Grand Cayman: 1. get a 305 abstention ruling in the chapter 7 proceedings, 2. chapter 15, or 3. chapter 11.

Suntech will claim that Caymen a is creditor friendly and preferable jurisdiction in their 305(a)(1) argument.

However, an insurmountable defense to Suntech's claim would be that the petitioning creditors include federal judgement rulings and that it is unreasonable for NY to compel these orders to be brought to Cayman in order to be enforced -- in other words, the chapter 7 proceedings are necessary for all creditors to reach a just and equitable solution.

Opium War said...

The Shunfeng deal happened. Wuxi Suntech is now owned by them. STPFQ is SOL.

It's funny how STPFQ doesn't comply with reporting requirements even as it is begging the NYSE for relisting and the SEC for special treatment.

Anonymous said...

I am sure the US attorneys of Suntech are advocating the company to put it into bankruptcy voluntarily following the hearing.

The majority bondholders are down to their last straw -- which is that the judge finds the abstention oral argument that Suntech will make more persuasive than continuing with the chapter 7 proceedings.

Standing in Suntech's shoes, there are only 3 options for it to carry out a scheme of arrangements in Grand Cayman:
1. try to dismiss the chapter 7 case via a 305 abstention ruling, 2. chapter 15, or
3. chapter 11.

Suntech will claim that Caymen a is creditor friendly and preferable jurisdiction in their 305(a)(1) argument.

However, an insurmountable defense to Suntech's claim would be that the petitioning creditors include federal judgement rulings and it is unreasonable for NY to compel these orders to be brought to Cayman in order simply to be enforced.

In other words, the "majority of creditors before the court" (which comprises both note holders and holders of judgement rulings) are petitioning that chapter 7 is entirely necessary for all creditors to reach a just and equitable solution.

Anonymous said...

On page 29 of the Joint Provisional Liquidators' January 2014 report to creditors, they talk about the NYSE appeal presentation which will address the restatements of the financial statements and where they also intend to argue that:

"The trading history of the Company's ADSs since suspension which supported the Company's belief that investors continued to believe in the value and prospects of the Company."

They are presumably propping up their own stock (painting the tape) for the purpose of the appeal which will be heard on February 6. If the appeal is unsuccessful... bombs away??

They've also asked the SEC "whether they would allow filing of the accounts for 3 years from 2010 to 2012 under the one 'Super 20-F Form' to be filed by 30 April 2014."

Anonymous said...

Do you know where to find the Joint Provisional Liquidators' January 2014 report to creditors?

Anonymous said...

From seeking alpha article:

The January 30 hearing has been adjourned, but case conference scheduled for tomorrow will go forward.

http://bit.ly/1nk9Kkl

http://seekingalpha.com/article/1932621-court-documents-show-suntech-power-shares-almost-worthless#comments_header

Anonymous said...

Anyb update on the case conference?

Anonymous said...

1/30 Case Conference Update

Suntech Power Holdings Co., Ltd. has entered into a new Restructuring Framework Agreement (RFA) with Creditors, including the Petitioners, Clearwater, and Spinnaker.

The RFA obliges Suntech to file for bankruptcy under Chapter 15 in New York court before February 21st, 2014.

All of the RFA parties support the conversion of the Chapter 7 case to a Chapter 15 case that would recognize the the Cayman Islands Provisional Liquidation as the foreign main proceeding.

In the event that Suntech fails to submit a Chapter 15 filing (or if the conversion from Chapter 7 to Chapter 15 is not completed) before Friday, February 21st, then the Chapter 7 proceedings will continue.

A case conference has been scheduled for February 25th and a hearing on the Chapter 7 case has been tentatively scheduled for March 4th.

Anonymous said...

FYI: as part of the Chapter 15 filing, Suntech will need to release audited financial statements.

It also will burn a great deal of Suntech's remaining cash balance.

Anonymous said...

Why would the creditors agree to give Suntech anymore time?

Why enter into this framework if it just further delays the inevitable?

There is no way Suntech can complete previous years financial statements in this time period. There is no one left!

Anonymous said...

There may have been a private workout arrangement whereby the majority bondholders paid cash to the petitioners in order to buy time to file under chapter 15.

The PwC liquidators likely retained PwC to audit Suntech -- it's been mentioned in numerous press releases (and the provision liquidation report) that updated 2009-2013 financials would be reported "as soon as reasonably practical" to meet SEC requirements in early (February) 2014.

I imagine the JPLs will be announcing the financials and a broader restructuring framework and specifics on the equity dilution at the hearing on 2/12.

Anonymous said...

Suntech had only $1m of cash so they must have either sold some of the few remaining assets already or gotten a few more million secured loans.

The only remaining hope for the bondholders is if STPFQ can quickly pull off a swap and reverse split to allow them to sell shares.

The Wuxi government might also pump about $100-150M into the company for 51% equity + to settle the Wuxi STP claim and acquire any IP, non-China contracts, and other similarly small assets held by Suntech's international subsidiaries.

Bonds are at an all time low ($8) and equity will likely rush to exit at well sometime within the next 3 weeks.

Anonymous said...

Since the petitioners have judgement rulings, they could also have been priority status and the JPLs may re-pay their claims in full before or at the hearing in the Cayman Islands on 2/12.

Anonymous said...

"Bonds are at an all time low ($8) and equity will likely rush to exit at well sometime within the next 3 weeks."

I'll take the over on the equity.. The thing will just never go down..

Only 5k lot in the bonds at 8, would be nice to see some real volume there.

Opium War said...



On page 29 of the Joint Provisional Liquidators' January 2014 report to creditors, they talk about the NYSE appeal presentation which will address the restatements of the financial statements and where they also intend to argue that:

"The trading history of the Company's ADSs since suspension which supported the Company's belief that investors continued to believe in the value and prospects of the Company."

They are presumably propping up their own stock (painting the tape) for the purpose of the appeal which will be heard on February 6. If the appeal is unsuccessful... bombs away??

They've also asked the SEC "whether they would allow filing of the accounts for 3 years from 2010 to 2012 under the one 'Super 20-F Form' to be filed by 30 April 2014."

Anonymous said...

I don't think the company is engaging in market manipulation. It does not have the cash to do so. Few people are selling Suntech but when they do the price will drop substantially.