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Suntech to shut lone US plant, blaming high costs

(China Daily)

08:38, March 14, 2013

Suntech Power Holdings Co, one of the world's biggest solar panel makers, has announced it is closing its only US manufacturing plant next month, a week after its founder was ousted as chairman.

The company blamed the April 3 closure of its Arizona facility on higher production costs "exacerbated" by US tariffs on Chinese-made solar cells and aluminum frames, as well as a global oversupply.

Wuxi, Jiangsu province-based Suntech also said in a statement it has reached an agreement with some of its lenders to defer its obligations on a $541 million loan, due to mature on Friday, by two months, giving the company more time to restructure its debts.

More than 60 percent of the holders of the notes, which are convertible into stock, have agreed not to exercise their rights until May 15. Suntech hired UBS AG last year to advise it on extending the deadline.

Citing an anonymous insider with Wuxi's city authorities, China Business Journal said the company may be seeking bankruptcy protection between March 15 and March 20.

According to media reports, it is believed there are two possible solutions to the ongoing troubles at the panel maker.

State-owned Wuxi Guolian Development (Group) Co, backed by the local government, may acquire its high-quality assets and sell out other assets to repay debts. Or it may take over all the assets, and nationalize it.

An official with Wuxi municipal government's information office refused to confirm any details.

"Nothing has been sorted out, no plan for bankruptcy or restructuring," he said.

The company statement confirmed that all 43 employees at the Arizona plant will be laid off, adding the decision was in line with Suntech's global effort to cut operating costs by 20 percent this year.

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