Shunfeng Photovoltaic, a Hong Kong-listed solar company, announced on Sunday it had won a bid to acquire the core assets of Suntech, a former industry leader, for 3 billion yuan ($492 million yuan).
Suntech Power Holdings Co (STP), based in Wuxi, Jiangsu province, used to be the world's biggest solar panel manufacturer, but has been suffering from falling prices and a supply glut and defaulted on a $541 million US bond payment in March.
The default led to bankruptcy proceedings in China. Including the bonds, Suntech holds debts of 10.7 billion yuan.
Shunfeng said that it had paid 500 million yuan as a deposit to acquire Suntech. Shunfeng said Sunday that it would pay an additional 2.5 billion yuan within a month after the restructuring deal is approved by Shunfeng's shareholders and the local court overseeing the restructuring of Suntech.
Shunfeng also said it would pay an additional $25 million to a local State-owned investment company, Wuxi Guolian Development Group Co, which has been helping to oversee Suntech's restructuring.
As part of the deal, Shunfeng said it would absorb Suntech's losses of up to 20 million yuan per month between March 20 and Oct 31. It will also provide funds for upgrading Suntech's facilities within two years.
Analysts said the deal may help Shunfeng's expansion into the downstream power station business with a stable supply of solar products made by Suntech.
However, it will take time to see if Shunfeng is able to meet the capital demand, and Suntech's creditors from home and abroad are keen to recover their former investment.
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