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Suntech tumbles after firm says bankruptcy likely tomorrow

Suntech's (STP) is sinking after research firm Maxim Group wrote in a note to investors that the Chinese company's stock will soon become worthless. Suntech's bondholders are poised to attempt to force the solar energy company to declare bankruptcy tomorrow, and Suntech's high debt levels have left it technically insolvent, according to Maxim. As a result, the company is likely to file bankruptcy tomorrow, the firm contended. Suntech has said that 60% of its convertible bondholders have agreed to avoid demanding payment for another two months on their bonds, which are supposed to be repaid tomorrow, Maxim noted. The company's bond prospectus, however, states that 100% of bondholders must approve any change to the repayment date, the firm noted. And although the company could be saved by the Chinese government or by a massive infusion of new funds from other sources, its stock would become worthless following either of these actions, according to Maxim, which has a Sell rating and $0 price target on the shares. Meanwhile, yesterday morning The New York Times reported that Suntech had "nearly run out of cash" and was "poised to be taken over partly or entirely" by the Chinese municipality in which it is based, according to solar industry executives and an official of the municipality. In early trading, Suntech fell 17c, or 20%, to 66c.