Suntech Power Hikes Raised Funds in Convertible Offering (STP)

Suntech Power Holdings Co., Ltd. (NYSE: STP) has priced $500 million of 3.00% Convertible Senior Notes that are due in 2013 in a private offering to qualified institutional buyers. What is interesting about the capital raise besides the expansion it will see, is that the original amount to be raised was $425 million and this pricing is for $500 million.  The conversion rate also seems fairly cheap when you consider the performance of this one and where it has traded before.

There is also an additional $75 million that can be used for over-allotments. The initial conversion rate is subject to adjustment, but it is 24.3153 ADS per $1,000.  This represents an initial conversion price of approximately $41.13 per ADS). The sale of the notes is expected to close on March 17, 2008.  This one closed at $30.24 yesterday, and the 52-week trading range is $28.91 to $90.00.

Suntech will use about $300 million in proceeds for procuring upstream supplies, the balance for production capacity expansion, and new technology commercialization.

One call we have seen for this one was a call out of Lazard Capital, who has maintained a Buy rating with a $90 target.

Jon C. Ogg
March 12, 2008