Wuxi, China-based Suntech announced on Wednesday, Oct. 30, that it has received a letter of intent for at least a $150 million cash investment from Wuxi Guolian Development (Group).
The investment will support the company's rehabilitation and restructuring of its financial and operational affairs, the statement said.
The investment company, which is based in Wuxi in China's Jiangsu Province, invests in downstream solar companies, power generation projects, textile industries, waste disposal facilities and environmental protection and energy projects. It will fold other solar products companies it owns into Suntech, according to Wuxi Guolian."Even though the investment letter of intent is indicative only and is not a firm commitment, this is an important step in the restructuring of the company with key stakeholders," said Suntech's CEO Zhou Weiping said in the statement Wednesday. "While there will be substantial dilution for existing shareholders, the successful implementation of these efforts will preserve the company's international platform, rebuild the company's operating assets, and rehabilitate the company's global brand." Suntech announced on Aug. 30 that it was looking for a new strategic investor to provide it with funding through the purchase of new equity. The company also said it had reached a deal with a group of creditors led by Clearwater Capital Partners and Spinnaker Capitalto restructure its debt by converting it into equity. Since then, however, Suntech has had an involuntary Chapter 7 petition filed against it on Oct. 14 in the U.S. Bankruptcy Court for the Southern District of New York in Manhattan. Jiangsu Liquidators (owed $1 million), Trondheim Capital Partners($516,278), Michael Meixler ($51,628) and Longball Holdings($10,325) filed the bankruptcy case against the company after it failed to make payments on a $578,231 judgment. Suntech hasn't yet responded to the involuntary petition, but has until Nov. 6 to do so. Suntech had been operating under a forbearance agreement with the majority of its 3% convertible noteholders, but the agreement expired on Aug. 30. The company owes $541 million on the notes that came due on March 15. Since Suntech failed to repay the notes when they came due, it's in default under the agreement.