BEIJING (AP) China's troubled solar panel maker Suntech Power Holdings Ltd. said it was in line to receive a $150 million investment from a company controlled by its hometown government as it restructures following a debt default.
The cash infusion could help to revive Suntech following financial trouble that saw it tumble from its status as a dominant solar panel manufacturer amid price-cutting wars triggered by a global production glut. Suntech's main Chinese subsidiary, Wuxi Suntech Power Co., was forced into bankruptcy court in March after missing a $541 million payment to bondholders.
Suntech has received an investment letter of intent from Wuxi Guolian Development (Group) Co., the company said in a statement Wednesday. Suntech's CEO said that it was not a firm commitment but "an important step in restructuring of the company."
The Chinese Cabinet announced in December it would encourage mergers and acquisitions among China's solar panel producers to reduce overcapacity and return the industry to profitability.
The Communist government sees solar power as a strategic emerging industry that it wants to develop. Beijing encouraged the industry's expansion over the past decade with grants and low-cost loans. That prompted hundreds of small producers to spring up, flooding the market and depressing prices.