Jiangsu Shunfeng Photovoltaic Technology, a wholly-owned subsidiary of Shunfeng Photovoltaic International, has submitted a bid to acquire an equity stake in Wuxi Suntech Power, a wholly-owned subsidiary of Suntech Power Holdings.
As part of its bid, Shunfeng has deposited with the debt administrator of Wuxi Suntech, a manufacturer of solar cells and modules, an amount of around RMB500m ($81.7m), which is refundable if the bid fails.
Pursuant to the bid, the company has also made a proposal of debt restructuring of Wuxi Suntech, which was forced into bankruptcy on 20 March 2013 following its parent company Suntech defaulted on $541m of bonds.
The company's motive behind the bid is to further raise its production capabilities of solar cells and modules, which in turn would strengthen its expansion into the solar power plant operations.
If the bid turns successful, the company is likely to formally sign a sale and purchase agreement with the administrator and will be required to clear Wuxi Suntech's debt, which is estimated to be around $1.75bn, as well as finance up to $327m to sustain operations.
The company may opt for various means to finance the potential transaction that include debt financing, capital raising, joint-venture or partnership arrangement, internal resources or a combination of them.
According to sources close to Reuters, a consortium of the local government-owned company Wuxi Guolian and GCL-Poly is also said to have bid for the acquisition of Wuxi Suntech, while the administrator is currently reviewing both the bids and will finalise the winner shortly.
Image: Shunfeng intends to acquire Wuxi Suntech. Photo: courtesy of Freedigitalphotos.