UPDATE 1-Suntech shares rise 34 percent in market debut
Wed Dec 14, 2005 12:45 PM ET
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NEW YORK, Dec 14 (Reuters) - Shares of Chinese solar energy cell maker Suntech Power Holdings Co. Ltd. (STP.N: Quote, Profile, Research) rose 34 percent in their U.S. market debut on Wednesday, a day after pricing at the top of a recently raised forecast.
The shares were up $5.10 to $20.10 on the New York Stock Exchange.
The deal includes 26.4 million American Depositary Shares and is worth about $396 million. The company is offering 20 million shares with the balance coming from existing shareholders.
Suntech, which is based in China's Jiangsu Province, plans to use proceeds from the IPO to expand manufacturing capacity and to research ways of lowering the cost of producing silicon solar cells, also known as photovoltaic cells.
Company executives said in a telephone interview that they aim to reduce the cost of their solar cells from their current level of about $2.30 per watt to approximately $1 per watt, in an effort to make solar-generated electricity more cost-competitive with electricity generated by burning fossil fuels.
Stuart Wenham, the company's chief technical officer, noted that the company's strongest growth is in Japan, where electricity is particularly expensive since the country needs to import most of the fossil fuels it uses to generate energy.
Western European countries with policies encouraging the use of solar energy, such as Germany, Italy and Spain, are also becoming growth areas, Wenham said.
Those countries' goal, he explained, is "to help the advancement of the technology so that through the economies of scale and improved technology ... it will bring the cost down in any case and be able to directly compete with fossil fuel electricity."
Suntech on Monday raised its price forecast to $13 to $15 from an earlier range of $11 to $13, with the offering pricing at $15 a share on Tuesday.
Credit Suisse First Boston, a unit of Credit Suisse Group (CSGN.VX: Quote, Profile, Research) , and Morgan Stanley (MWD.N: Quote, Profile, Research) were the lead underwriters on the deal. (Additional reporting by Belinda Goldsmith)
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