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  • project2069 project2069 Mar 14, 2013 10:36 AM Flag

    Off Topic: Suntech Power (STP) down 44% today. Bankruptcy filing expected tomorrow.


    I'm kicking myself in the head for not buying a ton of the 0.50 puts the other day, I could have gotten them for a nickle, but chose to buy LYG instead. :(

    Sentiment: Strong Sell

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    • Be careful with STP. I still say there is a chance that Wuxi bails them out. More likely they let it go to BK to wipe out the common shareholders first and then the creditors and Wuxi make a deal. This one isn't a sure thing which is why you saw that 50% retrace from the low and it isn't trading for single digits.

      The talk of having to file BK is just to get Wuxi to make a quick decision. Wuxi might get the word from higher up to let them go under to get rid of the capacity or they might be chosen as one of the ultimate survivors. Too many unknowns here make it a gamble instead of an investment decision.

      Just like ABAT. Can't go long and can't short it until there is more guidance.

      • 3 Replies to lbcb321
      • You (and others following the current STP debacle) may find it useful to research events relating to LDK Solar from about 1 May 2012 through the end of last year. I think it's likely that STP's situation will evolve in similar fashion.

        A considerable amount of the available information regarding LDK's case appears only in the Chinese press, but is still discoverable. Some highlights ddrived from the press accounts:

        Sometime in late April or early May of 2012, it appears that a petition for bankruptcy for LDK may have been filed in the Xinyu People's Court. This may have been initiated by the Company, but more likely came from a creditors' committee.

        This petition was refused by the Court, which clearly has the prerogative to refuse such petitions under the Enterprise Bankruptcy Law of the PRC.

        It appeared initially that the Xinyu city government would step in with a loan or grant, but significant questions arose as to whether they could legally do so. Ultimately, the Xinyu government formed a sort of "shadow BOD", and, amongst other actions, began courting various suitors to buy portions of LDK's operations.

        LDK, on its own initiative, entered into some realignment offers of certain outstanding bond offerings, and this, together with sales of interests in the company to various outside concerns-including, significantly, creditors-has kept them afloat up to this point. The saga is still unfolding, so one can't say whether ultimately this will be a successful or failed strategy.

        This, or some minor varint of it, is the strategy I think is likely at Suntech.

      • Told you to be careful with STP. They have now doubled off their low. Should be a couple more trading opportunities. I'm taking a smaller position for the fun of it. Have order in to short 10K here. Looking for quick $3K profit. City of Wuxi could still bail them out, but I think a junior bondholder forces them into BK court. If it wasn't for the unknown of a bailout from Wuxi, I would short a couple hundred thousand shares.

        APR .50 Puts are .16 so that isn't the greatest trade. Very tempting to get the .50 Puts for .02 that expire today. One of the junior bondholders could announce they are forcing them into an involuntary BK and they could crash at the close. ... tempting.

      • What affect do you think it will have on abat? Good or bad?

0.0410.000(0.00%)Dec 30 3:47 PMEST