Saturday, February 1, 2014

"Suntech Reaches Agreement with Petitioners and Supporting Noteholders in connection with the Chapter 7 Proceeding"

Press release:

GEORGE TOWN, Cayman Islands, Jan. 31, 2014 /PRNewswire/ -- Suntech Power Holdings Co., Ltd. (OTC:STPFQ) (the "Company" or "Suntech") today announced that it has signed a Restructuring Support Agreement (the "RSA") relating to the petition for involuntary bankruptcy filed against it under chapter 7 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. Under the RSA signed by the petitioners for the chapter 7 proceeding, the Company, the joint provisional liquidators of the Company (the "JPLs"), and certain supporting holders of the Company's 3% Convertible Senior Notes (the "Notes") that include members of the Company's creditor working group, the chapter 7 proceedings in the U.S. have been stayed and a stipulation for the dismissal of the chapter 7 proceedings will be executed and filed following recognition of the provisional liquidation proceeding previously filed by the Company in the Cayman Islands under chapter 15 of the U.S. Bankruptcy Code.

In addition, the RSA provides that (among other things):

The JPLs, on behalf of the Company, will use commercially reasonable efforts to file the chapter 15 petition by February 21, 2014;
The petitioners and supporting noteholders will support the chapter 15 petition;
The restructuring must treat all beneficial holders of the notes pari passu;
Upon performance of the RSA, the Company is required to dismiss appeals of certain judgments obtained by the petitioners relating to repayment of the Notes held by such petitioners; and
The RSA may be terminated if the Company fails to file the chapter 15 petition by February 21, 2014, an order obtaining recognition of the Cayman Islands restructuring proceeding is not entered by the U.S. Bankruptcy Court by May 31, 2014, or the Cayman Islands restructuring is not approved by December 31, 2014.

Mr. David Walker, one of the court appointed JPLs, said, "We are pleased to have been able to work with all parties to bring this agreement to fruition. Finding common ground and alignment among each of the Company, its large creditors, its small creditors, and ourselves as the court appointed restructuring professionals represents tremendous progress. This agreement hopefully allows us to continue to proceed with the Company's Cayman Islands restructuring to preserve value in the interests of all stakeholders."

16 comments:

Anonymous said...

CP, do you think the equity will drop further when the financials get released? Suntech has the rest of the year to carry out a restructuring. But when do you think the terms of a restructuring will be announced?

Anonymous said...

Suntech may also not have enough cash to carry out a restructuring; this may be the fundamental reason why they are dragging their feet.

Walter said...

Any idea how long it will the stock to be cancelled after the bankruptcy is approved? In other words, how long after December 31 could the stock still trade for?

Walter said...

A couple recent bankruptcies, EKDKQ and PCXCQ, had their stocks cancelled within days after their bankruptcies were approved. It might take longer because this is Chapter 15 though...

http://www.forbes.com/sites/spleverage/2013/08/20/eastman-kodak-wins-approval-of-bankruptcy-reorganization-plan/

http://online.wsj.com/news/articles/SB10001424052702303949504579264270807341770

Anonymous said...

You would need to look at Cayman rulings, Walter.

Generally, after a "winding up petition" is approved by a court, the company gets dissolved, and shareholders receive a liquidation distribution, if there is anything left over.

The creditors, however, still seem to prefer a scheme of arrangements rather than winding the company up.

Anonymous said...

The Cayman proceeding is very much in the infancy stage. Again, Suntech bought itself more time.

They have managed to extend and pretend yet again.

Anonymous said...

Can anybody explain what is meant by: "Complying with $2.50 regulatory requirement for each share under $1 is a rather large "opportunity cost."

Anonymous said...

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

Anonymous said...

You need $2.50 capital when you short a stock under $2.50. So lots of buying power is tied up. The lower the stock price the lower the expected benefit compared to the capital needed.

Anonymous said...

You need $2.50 capital when you short a stock under $2.50. So lots of buying power is tied up. The lower the stock price the lower the expected benefit compared to the capital needed.

Anonymous said...

With the sale of its main manufacturing assets to Shunfeng, Suntech is left an all but empty holding, say industry watchers.

Anonymous said...

Can someone please explain how the bonds still trade around .12 (with decent size)?

How is there still $60-70 million in this company? What am I missing?

Opium War said...

They have a new board member today!

Anonymous said...

You are missing the bigger picture: the credit bubble!

Anonymous said...

So it looks like Michael Pearson was put on the board so he can head the liquidation.

Any update on the NASDAQ appeal hearing?

Opium War said...

I think today's STP price chart is your update on the hearing.

What did anyone really think they were going to say?