Yingli Green Says It Probably Can't Repay Debts Due Thursday

  • Chairman Liansheng Miao expects to negotiate deal with banks
  • Yingli says it expects cash from disposing of land-use rights

Yingli Green Energy Holding Co. Ltd. said it probably can’t repay 1.7 billion yuan ($260 million) of debt that matures on Thursday and that it’s in talks with creditors about refinancing.

Liansheng Miao, chairman and founder of the Chinese solar panel maker, said he expects to negotiate a “successful resolution” to Yingli’s woes. He has proposed bringing in new investors and creditors as well as selling assets. Yingli expects its shipments and margins to climb this year and at least 735 million yuan from disposing of land-use rights.

Unprofitable since 2011, Yingli has breached its debt covenants for more than a year and has been kept alive by state-backed institutions led by the China Development Bank and Bank of Communications Co. Until 2014, it was the world’s biggest solar panel maker, part of a wave of Chinese companies that flooded the market with low-cost equipment and sent down the price of photovoltaics.

“Looking ahead, we expect 2016 to be an important year of transformation for us,” Miao said in the statement on Wednesday. “We will continue to actively explore methods to improve our operating fundamentals through reducing manufacturing costs and related expenses and pursuing various alternative financing options.”

Yingli said it expects shipments of 2.6 gigawatts to 3 gigawatts of solar products in 2016, up at least 6 percent from the 2.45 gigawatts delivered last year. Its gross margin, 16.8 percent in the fourth quarter, is likely to average 17 percent to 19 percent, Yingli said.

The company reported a net loss of 5.6 billion yuan for 2015, less than the range of 5.8 billion yuan to 5.9 billion yuan it had said on April 29 it expected. Revenue of 10 billion yuan was at the low end of its guidance and down from 12.9 billion yuan in 2014.

Notes Due

Yingli has two sets of medium-term notes due on May 12. The first issued in 2010 had a principle of 1 billion yuan and was 70 percent repaid in October. The second, which was issued in 2011, has a principle of 1.4 billion yuan. Bank of Communications underwrote both offerings and asked for final payment on both issues when the 2011 notes become due on May 12, according to Yingli.

In a call with investors, Miao said Yingli executives have met with creditors several times. The banks and regional government officials involved “have expressed their understanding and continuous support,” Yingli said in its statement.

The company has proposed extending the maturity on debts by two to three years. It’s been talking with potential investors and new creditors. It’s also working on the sale of “long-lived assets” including land-use rights.

Active Talks

“The company is actively negotiating with note holders,” Yingli Chief Financial Officer Yiyu Wang said during call conference call Wednesday. “The company is proposing to the note holders an extension of the repayments of the medium notes, which would give the company more time to secure the financing necessary.”

In November, Yingli entered into a deal with Haikou National where the shareholder will get land0use rights in exchange for an equity state in the Hainan Yingli unit of the solar manufacturer. Hainan Yingli received 265 million yuan last year under the deal and expects another 470 million yuan this year, according to Yingli’s statement on Wednesday.

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