The bigger question is how the company will pay for $541 million in convertible bonds due later this month. Suntech needs a bailout from a Chinese fund or state-run bank, something we’ve come to expect in recent years. If it doesn’t get one, there’s a chance the company could go bankrupt. Trina Solar Limited (ADR) (NYSE:TSL) and JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) investors should watch the outcome of Suntech’s financial dealings closely. They both have bonds due later this year, and if Suntech is bailed out, they’ll both probably get the same deal, since they’re both in better financial positions. However, if Suntech goes under, chaos is likely to ensue as investors will probably sell off all Chinese solar stocks.
Foolish bottom line
The next few weeks will be key for Chinese solar companies in particular. Earnings keep pouring out, and we may see how China’s government will handle companies in serious financial trouble.
The article This Week in Solar originally appeared on Fool.com and is written by Travis Hoium.
Fool contributor Travis Hoium manages an account that owns shares of SunPower. He also personally owns shares of SunPower and has the following options: long January 2015 $7 calls on SunPower, long January 2015 $5 Calls on SunPower, and long January 2015 $15 calls on SunPower. The Motley Fool has no position in any of the stocks mentioned.
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