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Suntech Applies for Provisional Liquidation in Cayman Islands

FILE - Employees work on a solar panel production line at Suntech Power Holdings headquarters in Wuxi, Jiangsu.
FILE - Employees work on a solar panel production line at Suntech Power Holdings headquarters in Wuxi, Jiangsu.
Suntech Power Holdings Co Ltd, once the world's largest maker of solar panels, said it had filed an application for provisional liquidation in the Cayman Islands, where the New York-listed Chinese company is incorporated.

Suntech also said it would consider pursuing a filing in the United States that would allow U.S. courts to recognize a foreign bankruptcy as the main proceeding and block creditors from seizing the company's U.S. assets.

Suntech shares fell 14 percent to $1.29 on Wednesday morning on the New York Stock Exchange, way below their life high of $86.28 in December 2007.

“We do think this is the end for Suntech,” Raymond James analyst Ryan Berney said.

Shunfeng Photovoltaic International Ltd agreed last week to buy Suntech's main manufacturing unit, Wuxi Suntech, for $492 million, leaving Suntech with few other assets.

Wuxi Suntech was dragged into bankruptcy proceeding by Chinese creditors in March, days after Suntech defaulted on a principal payment on $541 million of convertible bonds.

“Shunfeng is buying essentially all of Suntech's production capacity and technology portfolio, apparently leaving the U.S.-listed holding company a quasi-empty shell,” Berney said.

After the sale of its main manufacturing unit, Suntech is left with little more than its U.S. sales and distribution business and an investment company that holds solar power plants in Italy.

However, some of these plants are under investigation in Italy for illegally availing state subsidies.

“By commencing such proceeding in the Cayman Islands, the company will have the benefit of protection and additional time to complete negotiations and conclude the restructuring in the best interests of all stakeholders,” Suntech said on Wednesday.

The company, which has been unable to recover from a steep slide in panel prices caused by global oversupply, said last week that it would contest a bankruptcy petition filed against it in the United States by some bondholders.

A group of four U.S. bondholders made the filing for liquidation after Suntech repeatedly deferred payments on its overseas bonds.
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