Suntech Power (OTC:STPFQ) is still alive after all. The U.S. traded stock was never really gone; it had just defaulted on loans and gone dark to investors, not updating earnings or progress in restructuring.

Late on Friday the company said it has reached an agreement with its Creditor Working Group that "contemplates a scheme of arrangements as part of a holistic restructuring." In short, no actual deal has been reached but debt holders have preliminarily agreed to exchange debt for equity in a new slimmed down Suntech. Some non-core assets may be sold in the process and the group will decide what debt level will be reasonable for operations to support.  

For stockholders, we know there's dilution coming; we just don't know how bad it will be. According to Friday's announcement a final deal will be reached in "the next week or so."

Is there any business left?
It's possible that Suntech could remain a big player in the solar industry but a lot of damage has been done to the company's reputation and its core business. We've never seen a company go through bankruptcy -- which is essentially what Suntech did even though the parent company never filed for bankruptcy -- and emerge as a dominant player in solar so this is uncharted territory.

Suntech's saga is also a warning sign for Chinese competitors who are building up huge debt loads. Yingli Green Energy (NYSE:YGE) and LDK Solar (OTC:LDKYQ) are the two companies that I think are headed for a similar fate of defaulting on outstanding loans, something LDK has already done on a small scale. Each has over $2 billion in debt, mostly funded by Chinese state-run banks. The Suntech solution shows that bailouts won't last forever and even China's state-run banks are willing to effectively take a company into bankruptcy and dilute existing shareholders. At the end of the day, those speculating that easy money will last forever for solar manufacturers may end up with little or nothing when debt collectors come calling.