The month of May could determine the fate of Suntech Power (NASDAQOTH: STPFQ ) as we know it. The company's main operating unit is in insolvency in China and will meet with creditors on May 22 to decide on a path forward. That discussion will likely be affected by what happens on May 15, when all holders of $541 million of bonds are due full payment.
The stock will bounce around wildly with every rumor and we don't even know if the company will be around at the end of the month.
The stay of execution is ending
You may remember that in March 60% of the holders of $541 million in 3% convertible notes agreed to give the company two more months to come up with the money they were owed. That stay of execution ends on May 15, when the company will owe all of that money plus interest.
Without an infusion of cash from China Development Bank, it's unlikely the company could pay what it owes this month and debt holders could pull the company into an involuntary bankruptcy. What complicates matters is that China Development Bank was one of the banks that brought the Wuxi Suntech subsidiary into insolvency. There's no reason to believe it will save both U.S. debt holders and China's struggling manufacturing facilities.
It won't be until May 22 at the earliest that Suntech could come up with a plan for the Wuxi Suntech business. That's when it will meet with creditors and a full default on bonds due May 15 would complicate matters even more.
On the outside looking in
Unlike Yingli Green Energy (NYSE: YGE ) , China's state-run banks haven't jumped at the chance to bail out Suntech. The company will need to come up with hundreds of millions of dollars this month to stay alive and there don't appear to be a lot of options.
With Yingli recently locking up $165 million in loans, LDK Solar (NASDAQOTH: LDKYQ ) getting $71 million earlier this year, and JinkoSolar (NYSE: JKS ) signing a $58 million loan agreement with China Development Bank to build solar projects, China is still betting big on solar. These three companies (and many others) may not be financially viable, but they aren't seeing any drop in support from China, so it's just Suntech flailing in the wind right now.
The future doesn't look good for Suntech Power and the company may not survive more than a few more weeks.
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