Solar panel firm founder 'upbeat' despite dim outlook on debt
Stuart Wenham, who has served as Suntech's main technology executive since the firm's founding in China in 2001, said Dr Shi was relaxed and confident during a meeting last week, even after he was ousted as chairman.
"How can you own 30 per cent of the company - much more than the next biggest shareholder - and not have a say in its future?" said Dr Wenham, who was co-supervisor of Dr Shi when he was doing his PhD at the University of NSW, and serves as director of its Photovoltaics Centre of Excellence.
This week may prove crucial to the future of Suntech, which is one of the world's largest makers of solar PV panels.
The company earlier this week secured agreement with 60 per cent of bondholders to delay repayments by two months to May 15 on convertible debt totalling $US541 million ($525 million).
Some of the remaining 40 per cent of bondholders, though, say they aren't prepared to wait that long and may sue the US-listed company if repayments are missed this week.
"Every piece of information that I've looked at suggests they will default on Friday," James Millar, a partner at law firm Wilmer Cutler Pickering Hale and Dorr in New York, told Bloomberg.
Suntech rose to prominence when it became the first Chinese solar company to be listed on the New York Stock Exchange in 2005. Its stock quadrupled by the end of 2007, valuing founder Dr Shi's stake at more than $3 billion.
Suntech's stock price and Dr Shi's status have since plummeted amid a global glut of solar PVs.
Dr Shi was ousted as Suntech's chairman seven months after being replaced as the firm's chief executive officer. He said he was "shocked" by his removal and warned the company needed a "viable business plan".
Concerns about Suntech's possible debt default caused its shares to resume their slide this week. They lost a combined 14 per cent on Monday and Tuesday to $US1.09, about one-eightieth of their record close on Boxing Day 2007.
The company's strained finances were on display on Tuesday when Suntech revealed plans to shut its US plant in Arizona next month - just 30 months after its opening.
The company blamed the closure, in part, on the US government's decision to slap anti-dumping tariffs of 36 per cent on its solar cell imports from China.
The firm's best chance of survival is likely to be in the form of a bailout by authorities in China, as has happened to several other cash-strapped solar energy firms.
Whatever the outcome of the debt repayments, Dr Shi is certain to remain active in the industry, Dr Wenham said.
"It's his passion - it's not a job or a career," he said. "It's his life."
Frequently Asked Questions about this Article…
Suntech is facing pressure over US$541 million of convertible debt. The company reached an agreement with about 60% of bondholders to delay repayments until May 15, but the remaining bondholders haven’t agreed and some say they may sue if payments are missed.
There is a significant risk. A legal partner quoted in the article said every piece of information suggested Suntech would default on Friday. That said, the deal to delay repayments with 60% of bondholders introduced some short-term breathing room, so the outcome remains uncertain.
According to Suntech’s chief technology officer Stuart Wenham, founder Shi Zhengrong has been upbeat, relaxed and confident despite being ousted as chairman. Wenham said Dr Shi remains passionate about the industry and is likely to stay active regardless of the debt outcome.
The article cites a global glut of solar PV panels that depressed prices and demand, and U.S. measures — specifically anti-dumping tariffs of 36% on Chinese solar cell imports — which the company partly blamed for forcing the closure of its U.S. operations. Those pressures contributed to a sharp fall from its 2007 highs.
Suntech revealed plans to shut its Arizona plant next month. The plant had been opened just 30 months earlier, and the closure was partly attributed to U.S. anti-dumping tariffs on Chinese solar cell imports.
The article says Suntech’s best chance of survival is likely a bailout by Chinese authorities, similar to rescues seen for other cash-strapped solar firms. That is presented as a likely scenario rather than a confirmed outcome.
Suntech listed on the NYSE in 2005 and its stock quadrupled by the end of 2007, valuing founder Shi’s stake at more than US$3 billion. Since then the stock plunged amid industry oversupply; in the week covered it lost a combined 14% over two days to US$1.09, roughly one‑eightieth of its record close on Boxing Day 2007.
Key figures include founder Shi Zhengrong (the company’s founder and former CEO and chairman), Stuart Wenham (Suntech’s chief technology officer and a long-time technology executive who described Shi as upbeat), and James Millar (a partner at U.S. law firm Wilmer Cutler Pickering Hale & Dorr, who commented on the likelihood of default). Their comments shed light on leadership stability, technological stewardship and legal risk — all important to investors assessing Suntech.
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