One-time poster child for the Chinese solar industry, Suntech Power Holdings, has filed for bankruptcy after defaulting on $US541 million bond that matured last week, prompting eight Chinese banks to ask a court in the company’s home town to start bankruptcy proceedings on its main manufacturing unit.
The fall from grace of Suntech and its founder – the UNSW-trained Australian citizen and so-called ‘Sun King’ Zhengrong Shi – has been spectacular; Suntech was once the world’s biggest solar company, and Shi’s stake in the company was valued at $US1.7 billion when he emerged at the top of the Wall Street Journal’s rich list for China in 2006. Today, his roughly 30 per cent stake is down to about $US32 million, if you factor in the bankruptcy process.
Shi was ousted as the company’s chairman at the beginning of March, and lashed out about the company’s inability to restructure the debt. “The problem is they don’t have a solution,” he said in an interview. “They need a viable business plan.”
As Bloomberg reports today, “the decline of China’s first solar billionaire shows how the industry built itself with cash from Wall Street and Chinese authorities, creating a boom in factory expansions that ultimately drove down prices,” leading to the current painful slump in the global solar industry that has claimed such high-profile victims.
“Being in the solar manufacturing industry over the past eight years has been an excellent way to turn a big fortune into a small one,” said Jenny Chase, lead solar analyst at Bloomberg New Energy Finance in Zurich.
The question now is whether Suntech, in some form – and possibly under state control – will continue to exist. The company’s CEO, David King, said in a statement that the aim now was to work closely with stakeholders “to put Suntech back on track for growth.” In the meantime, he said the company was “committed to continuing to provide high-quality solar products to our global customer base.”