I have been short Suntech since the beginning of this year, but despite the fact that the company is in default on more than $500 million in bonds that were due last March not a whole lot has happened. Some subsidiaries are in bankruptcy proceedings, but the holding company itself has managed to push their debt problems forward by entering in forbearance agreements with the majority of convertible note holders. The second forbearance agreement ended today, and unsurprisingly a new agreement has been made that will expire on August 30, 2013. This time there is more clarity on how the debt problem will be tackled though:
In particular, the new agreement contemplates an equitization of all major debt claims held by the Bondholders. In addition, the Bondholders will nominate two additional members to the Company’s Board of Directors who will provide guidance and assist in the Company’s ongoing restructuring efforts.
It’s taking more time than expected, but the massive dilution to the equity that I’m betting on is getting closer…