NEW YORK (AP) — Suntech Power's shares bounced back Friday, rising more than 25 percent, following two days of big stock declines as the struggling Chinese solar panel company approached a debt payment.
THE BIG PICTURE: Suntech said on Thursday that it was not making a debt payment of $541 million that was due Friday. The company said that it would continue working with bondholders to restructure the agreement.
Leading up to the debt payment deadline, Suntech's stock slid Wednesday and Thursday as fears rose that the company could be forced into bankruptcy.
A sharp drop in solar panel prices over the last several years has erased the profits of solar panel makers around the world. Suntech has also been hurt by a revelation in July that a business partner faked $680 million in collateral for a loan Suntech had guaranteed.
THE ANALYSIS: Pavel Molchanov of Raymond James said in a client note Thursday that he was dropping coverage of Suntech. The analyst said that in absence of a bailout Suntech will need a full restructuring, which may involve a de facto takeover by a Chinese government-sponsored enterprise.
SHARE ACTION: U.S.-listed shares of Suntech Power Holdings Co. gained 17 cents, or 25.4 percent, to 84 cents in afternoon trading. The stock has traded between 41 cents and $3.68 over the past year, with the low of 41 cents hit on Thursday. The stock, which sold as high as $90 in January 2008, has lost more than half its value for the year to date.