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Sinovel to Buy Bonds Issued as First-Half Loss Narrows

Sinovel Wind Group Co., the Chinese wind-turbine maker whose chairman quit last month, said its Jiangsu unit plans to use as much as 700 million yuan ($114 million) to purchase bonds issued in 2011.

The unit will buy some of the 2.6 billion yuan of bonds for at least 87.27 yuan each, Sinovel said today in a filing to the Shanghai stock exchange as it also announced a narrower loss in the first half. Debtholders will be limited to selling 500,000 yuan in principal under the program, or 10 percent of their total holdings.

The plan is subject to approval at a meeting of bondholders. The company said it will face huge pressure on repayment if the bondholders exercise options to sell their securities in December.

Sinovel’s net loss was 285.7 million yuan in the the six months ended June 30 compared with 457.9 million yuan a year earlier because of tighter cost control, Beijing-based Sinovel said today in a separate statement. Sales rose 48 percent to 2.05 billion yuan as the industry rebounded.

Sinovel’s annual net loss widened almost sixfold to 3.45 billion yuan in 2013 and its 2.8 billion yuan of bonds were suspended from trading on April 30.

The company didn’t win new orders in the first half. Sinovel had 3,078 megawatts of orders outstanding as of June 30, it said. An additional 8,858 megawatts of orders are waiting for final contracts to be signed.

Loss Outlook

The company expects to post a loss in the first nine months due to an increase in postponed client payments and provisions in bad debt.

Sinovel said in January that it was under investigation for suspected violation of securities laws and regulations. The result is yet determined.

Sinovel is embroiled in a legal dispute with Devens, Massachusetts-based American Superconductor Corp., which sought more than $1.2 billion in damages in Chinese courts from its former largest customer. AMSC accused Sinovel of stealing its technology and violating sales contracts.

The Chinese company declined to 13th worldwide and to seventh at home in terms of wind turbine installations. China’s leading installer is Xinjiang Goldwind Science & Technology Co., which ranks second in the world to Vestas Wind Systems A/S, according to Bloomberg New Energy Finance.

Sinovel dipped 0.3 percent to close at 3.42 yuan in Shanghai trading today before earnings were announced. The stock has slumped 17 percent this year.

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