Troubled Suntech Power Holdings Ltd (尚德電力), a Chinese maker of solar products, said it would fight being forced into bankruptcy in the US and was to receive a US$150 million Chinese government bailout.
Suntech, once the world’s biggest maker of solar cells and panels, sought market share by driving down prices to levels which some competitors claim were loss-making.
Solar products are one of the areas where China has been embroiled in bitter trade disputes with the EU and US, who accuse Beijing of unfairly subsidizing the industry.
Suntech announced in March that its main subsidiary in China would seek bankruptcy and restructuring.
A government-backed firm, Wuxi Guolian Development Group (無錫國聯), has now pledged to invest at least US$150 million in the parent company, according to a Suntech statement this week.
Guolian is backed by the government of the eastern city of Wuxi, where Suntech is based. The local authorities are keen for the company to survive, as it is a major employer and taxpayer, analysts say.
Another Chinese firm has pledged to invest in the Wuxi Suntech Power subsidiary, which is now under Chinese government administration.
Separately, Suntech said in another statement on Thursday it would challenge a petition for involuntary bankruptcy filed by a group of bondholders through a US court.
A New York court in September ruled in favor of the bondholders who hold about US$1.6 million of Suntech’s debt, it said.
Suntech earlier this year defaulted on payments on US$541 million worth of bonds.
New York-listed Suntech closed down 1.43 percent at US$1.38 on Thursday.
The European Commission concluded an antisubsidy probe into Chinese solar panels in August and a response is due for approval by EU leaders by the end of the year.
A European industry group, called EU ProSun said the commission found Chinese producers received government subsidies — from cheap raw materials to electricity and funding — of up to 11.5 percent of their sales.
At the same time, China is investigating imports of polysilicon — used in manufacture of solar products — from the EU on charges of dumping; selling below-market prices.
China’s Ministry of Commerce said on Thursday it would extend the year-long probe by another six months to May 1 next year.