According to Bloomberg, the Shanghai-area manufacturer of solar energy panels is more than $2 billion in debt and recently defaulted on bonds of more than $541 million last week. Suntech’s default led to eight Chinese banks pushing the company into bankruptcy.
After becoming the largest solar panel manufacturing company worldwide in 2011, Suntech was hurt hard as solar panel prices dropped nearly three quarters. Now, the 10,000-employee business that has relied heavily on Western investors may end up costing their shareholders more than a billion dollars.
The eight Chinese banks have filed a petition in a local court for the insolvency and restricting of Suntech’s largest subsidiary, Wuxi Suntech. Representatives at Suntech have said they will not fight the motion of bankruptcy.
Reuters notes that U.S. investors are already skittish about Suntech’s future, with stock prices having closed at $0.59 per share on the New York Stock Exchange Wednesday. That represents a 40 percent drop in price for a company that has not posted a profit since the first quarter of 2011.
“There’s a host of companies that have gone to Wall Street investors and gotten billions of dollars, and these investors are ultimately going to be on the hook and get nothing out of it,” Angelo Zino, an analyst at Standard & Poor’s Financial Services told Bloomberg.
Still, some traders have no sympathy for investors that stand to lose money in Suntech. The company reported more than $1.4 billion in losses between 2011 and 2012.
“If you’re an investor and didn’t see this coming, it’s on you,” Alex Morris, an analyst at Raymond James & Associates Inc. in Houston, told Bloomberg.