Being one of the 109 favored companies, Chaori Solar confirmed default on March 5th and some investors henceforth started asking the company to undergo bankruptcy liquidation to pay its huge debts.
The Shanghai manufacturer has confirmed its default on an about RMB $90 million (approximately US $ 15 million) interest payment to its bondholders. PV Magazine noted that mainstream media include BBC, Bloomberg and Reuters have started to pay attention to the “solar crisis” as Chaori is the first Chinese company to default on a domestic corporate bond. Chaori’s bankruptcy may suggest a potential risk in China, one of the world’s largest PV providers.
Chaori is one of the 109 companies to make the list of businesses complying with the government's manufacturing standards, this background ironically represents its predicament as a negative sign of the country’s solar industry. The BBC reported that Chaori only proposed to settle RMB $4 million of the $90 million owed to bondholders, the first ever default confirmed in China’s notes market. The Shenzhen stock exchange website had de-listed a Chaori’s bond last May, after consecutive losses for the company in 2011 and 2012; this move is now regarded as a sign of Chaori’s downward situation.
PV Magazine suggested that commentators are speculating the Chaori’s default to be a proof of China’s Bear Stearns or Lehman Brothers moment amidst the solar trade war between the U.S. and China, and previously, the Suntech’s demise. If Chaori’s default really triggers off a collapse of China’s “overblown” public stocks, there seems to be more company that are already on their way to bankruptcy.
As the Chinese government continues pushing green energies, it also intends to consolidate its plethora of solar companies to avoid more companies collapsing, indicated PV Magazine.
