Yingli Green Energy Holding Co., the world’s biggest solar panel maker until last year, fell the most on record after saying it’s seeking investors to help cope with $2 billion of debt that’s threatening its ability to remain solvent.
Yingli dropped 42 percent to 86 cents at 9:53 a.m. in New York. Earlier it plunged as much as 52 percent, the most intraday since its June 2007 public offering.
The Chinese manufacturer said it’s confident it can repay its liabilities, which include $1.6 billion in short-term loans. In an e-mailed statement Tuesday, Yingli said it’s looking for partners that can take additional shares as well as a strategic investor.
Yingli warned in a filing Friday that there’s “substantial doubt” it can remain afloat, and the shares dropped 12 percent Monday.
“Potential risks don’t mean they will happen and don’t mean Yingli is facing or will face such risks,” Wang Yiyu, Yingli’s chief financial officer, said in the statement Tuesday from the company’s Baoding, China, headquarters. “They shouldn’t cause an overreaction.”
While competitors led by Trina Solar Ltd. snap back from a solar slump that dragged down prices and gutted margins across the industry, Yingli has remained unprofitable since the second quarter of 2011.
“Our substantial indebtedness and net loss may adversely affect our business, financial condition and results of operations, as well as our ability to meet our payment obligations,” Yingli said in the filing on Friday. The company also had long-term debt of $460 million at the end of last year.
Yingli was the biggest panel maker in 2013 and slipped in 2014 after Trina’s panel shipments reached 3.66 gigawatts, 8.9 percent more than the 3.36 gigawatts Yingli delivered.
“The firm’s reputation is for very low cost at its manufacturing base well away from the major cities, and for compromising on margin to sell volume,” said Jenny Chase, lead solar analyst for Bloomberg New Energy Finance. That “makes it popular with project developers, but has obvious consequences for the balance sheet.”
Solar panel prices have declined more than 67 percent since 2010. That bankrupted more than 30 companies including the main subsidiary of Suntech Power Holdings Co. and Q-Cells SE, which were the top solar suppliers before Yingli took the lead.
While competitors such as Trina and JA Solar Holdings Co. focused on profit, Yingli concentrated on market share to maintain its size in the midst of an industry shakeout. Now, rising demand for panels is reviving profit at most solar companies.
“Solar cell and panel manufacturing has become more concentrated as prices have fallen,” Yin Lei, a Shenzhen-based analyst at China Merchants Securities Co., said by phone. “Companies with more liabilities and weaker cost controls will be eliminated,” while top manufacturers with the lowest costs will benefit from the growth in demand, he said.
China’s government, which invested heavily in the industry in the past decade, more recently has sent mixed signals about its willingness to support solar.
President Xi Jinping boosted targets for installations this year while authorities also sought to eliminate outdated capacity and encourage companies to consolidate through mergers or restructuring. The government also allowed Baoding Tianwei Group Co. to default on bond payments last month, a first by a state-owned company in China.
Baoding Tianwei, also based in the northern city of Baoding, failed to pay 85.5 million yuan ($13.8 million) of bond interest in April.
— With assistance by Justin Doom