Suntech Power Holdings Company Ltd. announced the signing of a forbearance agreement with the holders of more than 60% of the company's 3% Convertible Notes. Per the forbearance agreement the company got a breather till May 15, 2013, if it defaults payments due under the Notes on Mar 15, 2013.
Wuxi, China-based Suntech is a leading solar energy company. The company designs, develops, manufactures and markets photovoltaic (PV) cells and modules.
Suntech Power’s predominantly China-focused manufacturing base gives it a distinct cost advantage compared to its U.S. and European peers. Also, its Pluto technology-enabled multi-crystalline silicon modules can achieve higher conversion efficiency. The increase in conversion efficiency helps the company to capture market share from the crowded PV market.
Suntech expects to release its 2012 fourth quarterly numbers on Apr 1, 2013. The company expects shipments of PV products in the fourth quarter of 2012 to decline in a low single-digit percentage rate compared to the third quarter of 2012. The gross margin in the fourth quarter of 2012 is expected to be slightly negative. Suntech also expects 2012 annual PV shipments to be in the range of 1.7GW to 1.8GW.
Suntech Power is one of the largest producers of PV solar modules under its proprietary Pluto technology with a geographically diversified customer base. Other positive factors for Suntech include ongoing expansion programs, higher conversion efficiency through its Pluto technology-enabled modules, subsidy program in China, and improving operating efficiencies. However, the positives are overshadowed by fears of tepid module demand in Europe, rising competition, the volatile Euro and the financial stability of its customers. Suntech Power currently has a Zacks Rank #4 (Sell).
Also, the current macro scenario does not bode well for the solar industry, which thrives mainly on subsidies and grants. As a result, major solar operators like First Solar Inc. (FSLR - Analyst Report), JinkoSolar Holding Co., Ltd. (JKS - Snapshot Report), and LDK Solar Co., Ltd. , all hold a Zacks Rank #3 (Hold).