After the Board demoting Dr Shi Zhengrong, the man who helped build one of China’s most well-known solar manufacturers, Suntech Power has found itself in hot water again. With debts of around $2.2 billion, the company is said to have to pay bondholders $541 million in convertible debt this Friday. Most evidence points to them defaulting on this payment with bankruptcy possibly on the cards. The company is also said to be closing its Arizona based factory due to heavy import tariffs imposed by the American government.

After being in financial strife for the last two or so years, it looks like Suntech may finally be at the end of the line. With a payment of $541 million due on Friday, Suntech have said that many of its bondholders (about 60%) have agreed not to take action until May 15th if they payment is not received. They signed a ‘forbearance agreement’ on the 11th March stating as such. Some of the other 40% say they have not been contacted about the forbearance agreements and expect payment on schedule. Bondholders may have the ability to sue for payments not received or file for involuntary bankruptcy immediately.

SolarWorld, a US solar panel maker, led a successful campaign last year to impose harsh tariffs on Chinese solar panels imported into the country at a time when cheap solar panels were littering the market everywhere. The company’s main motive was stated as saving American jobs. Today, Suntech Power is closing its Goodyear, Arizona based factory sacrificing 43 local employees.

The company has already been downsized operating at a maximum capacity of 15 MW as of November last year. With original expected capacity of 120 MW, the company is nowhere near its potential. At last check, Suntech had 17 693 employees in the US factory.

“Higher production costs exacerbated by import tariffs on solar cells and aluminium frames imposed by the US government, as well as global solar module oversupply, contributed to the facility’s closure,” Suntech said in a statement. The company is set to close on the 3rd of April 2013.

With import tariffs of 35.97% it is no wonder the factory is facing closure. Suntech shares have fallen 9% ahead of Friday’s payment deadline to $1.05 – it’s lowest in more than two months.

All in all, it does not paint a pretty picture for Suntech Power. Once China’s largest solar panel maker, many hope the company can get back to its once elevated status. We will keep you updated on any more news as and when it comes to hand.