Chinese solar company's operating unit declares bankruptcy
- Article by: KEITH BRADSHER
- New York Times
- March 20, 2013 - 8:36 PM
HONG KONG – Suntech Power, a Chinese manufacturer that became the world’s largest producer of solar panels by 2011 only to be battered by plummeting prices, announced Wednesday that its main operating subsidiary had been pushed into bankruptcy by eight Chinese banks.
Suntech was the Icarus of the solar panel industry, with production that soared year after year on heavy investment, as Western investors bought up its New York-traded shares and its international debt issues.
But a 10-fold expansion of overall Chinese solar panel manufacturing capacity from 2008 to 2012 produced a three-quarters drop in solar panel prices, undermining the economics of the business. Rapid expansion of natural gas production in the United States and a curtailment of subsidies in the European Union also hurt solar panel prices, as did a U.S. imposition last year of import tariffs.
Ocean Yuan, the president of Grape Solar, an importer of solar panels that is based in Eugene, Ore., said he foresaw a series of bankruptcies by big Chinese solar panel manufacturers, some of which have very high debt ratios like Suntech’s. Chinese manufacturers lost as much as $1 for every $3 of sales last year as they struggled to keep factories open despite ever-falling prices.
“They are bleeding every day: the more they sell, the more they lose money,” Yuan wrote in an e-mail.
The Chinese banks quietly asked a court Monday in Wuxi to declare the operating subsidiary, Wuxi Suntech, to be insolvent and begin restructuring it. The operating subsidiary notified the court on Wednesday that it did not object to the insolvency petition.
Suntech Power, the parent, said that it was not filing for bankruptcy and would continue to honor warranties on the company’s solar panels.
© 2013 Star Tribune