Based on news of the imminent takeover by the Jiangsu Shunfeng PV, a Hong Kong-listed public company (1165.HK), shares of Suntech Power Holdings Co., Ltd. (ADR)(NYSE:STP) rose at one point by 20% on November 4th. In apparent confusion, investors had identified the takeover of all Chinese operations belonging to Wuxi Suntech as an injection of capital into the holding company listed in New York. There is nothing further from the truth.

Shunfeng is putting out 3B RMB or some $492M for the subsidiary, and this is how the money will be spent: The entire consideration will be used to pay for the bankruptcy expenses incurred by Wuxi Suntech, the debts owed by Wuxi Suntech to its creditors, and such debts have been reported to the Administrator and set out in the Restructuring Plan. Since the famous fraudulent “German” bond was issued to the parent, Suntech Power Holdings, not a dime will be given to bond creditors.

In addition, the company will pay another 200M RMB for expenses incurred by Wuxi Suntech from March to October. There is a promise to upgrade the plants within two years and pay $25M to Wuxi Guolian, a government SOE in custody of the assets, which will also benefit.

In its news release, Shunfeng also announced the capacity the company is apparently taking over, listing three factories. One consists of cell manufacturing, worth around 800MW capacity, which is rendered obsolete and will not be returning to production status. A second cell plant, worth some 1.6GW of solar cell manufacturing, is also suspended but will be reopening with a potential 1.2GW capacity in the future.  Finally, there is a plant with two production lines, 1GW and 1.4GW of modules, which has 1.4GW in modules operational and is currently producing modules.

Apparently, Wuxi Suntech owned four production plants in Wuxi. As part of the reorganization process, three of them were to be sold and whatever was left was to become a new Suntech.  The most advanced, fully automated plant was owned by a joint venture, 40% owned by Wuxi Suntech with the rest evenly split between Wuxi Industrial Development Group and Wuxi New District E&D Group, companies already operated by the state. Apparently, the Wuxi Guolian group is going to hold on to it, having its own plans.

The group’s injection of $150M in Suntech Power Holdings made separately by letter of intent shows Guolian intertwining its own solar businesses into the Suntech’s Power Holdings  to take advantage of the company's global platform, distribution networks, and other synergies, basically buying a brand name “Suntech.”

The holding company listed on the NYSE, stripped of the manufacturing assets in China, is left with Japanese and Swiss subsidiaries, solar farms in Europe, and other assets in China which have not been associated with any sale yet. The solar farms under the GSF (Global Solar Fund) have a certain asset value, but some of them, around 21% of the fund’s power capacity, have been seized by the Italian court in Brindisi due to improper operations.  The fate of other production subsidiaries, Shanghai and Luoyang Suntech, remains unclear at this time. There are no more details on the two wafer-producing subsidiaries, Zhenjiang Rietech and Zhenjiang Rende New Energy Science Technology Co, thought to be operated in limbo, without any headquarter directions.