Yingli Green Says Some Banks Agree to Modify Loan Payments

  • Chinese solar company remains in talks over defaulted notes
  • Yingli reported its first profitable quarter since 2011

Yingli Green Energy Holding Co., the Chinese solar manufacturer that defaulted on 1.76 billion yuan ($267 million) in bond payments, said some of its banks have agreed to modify terms on its credit lines. Its American depositary receipts surged.

Yingli, which also reported its first quarterly profit in five years on Tuesday, said its discussions with creditors have reduced interest rates and extended maturity dates with several of its lenders. Chief Financial Officer Yiyu Wang didn’t identify the lenders, saying on a conference call only that they applied to both short- and long-term facilities.

“We have been very actively talking and discussing with our key lenders,” the finance director said on the call with investors Tuesday. “Some of the key lenders have been agreed to help us to expand the original prepayment schedule to a more smooth payments schedule.”

The comments and Yingli’s return to profit are an indication Chairman Liansheng Miao’s effort to rehabilitate the company’s finances may keep the company solvent. Yingli borrowed heavily to expand factories just as the solar market was flooded with low-cost panels. The global glut starting in 2011 drove dozens of companies into bankruptcy. While competitors started to return to profitability in 2013, Yingli continued to struggle.

Quarterly Profit

“Despite the challenges we face, we have achieved a remarkable improvement in our financial performance in the first quarter of 2016,” Chairman Liansheng Miao said in a statement Tuesday.

Yingli’s American depository receipts, each worth 10 ordinary shares, climbed 9.9 percent to $4.67 at 12:03 p.m. in New York.

In recent months, Miao has had to personally guarantee some of Yingli’s debt to keep the company afloat. Trina Solar Ltd. surpassed Yingli as the world’s biggest solar panel maker in 2014.

Executives are continuing to negotiate with holders of two medium-term notes and have scheduled a meeting with creditors on June 17. Those notes were sold by Baoding Tianwei Yingli New Energy Resources, a venture Yingli owns with two state-owned enterprises.

Yingli reported net income of 79.6 million yuan in the first quarter, compared with a net loss of 363 million yuan a year earlier, according to the statement. Its gross margin was 20 percent, a level it expects to maintain in the current quarter. The company shipped 508 megawatts of panels in the first quarter, meeting its forecast, and expects that to increase 14 percent in the second quarter.

Earnings Outlook

Yingli flagged earlier this month the likelihood it would report first-quarter profit. Its statement on Tuesday said shipments were 508.1 megawatts in the period, in step with its expectations for 500 megawatts to 510 megawatts.

For the second quarter, Yingli said it expects shipments of 580 megawatts to 620 megawatts and a gross margin in the range of 18 percent to 20 percent.
Its earnings in the first three months of the year were affected by a foreign exchange gain resulting in a strengthening of the Japanese yen against the yuan. Yingli concentrated on selling more panels into Japan, where solar prices are higher and installations have boomed ahead of the government’s plan to ratchet back subsidies.

Yingli reported a 55-million yuan gain from foreign exchange in the first quarter. That compares with a loss of 130 million yuan during the same period a year ago.

Among the other major cell makers, Trina, JA Solar Holdings Co., Canadian Solar Inc. and JinkoSolar Holding Co. returned to profit in 2013 after two years of losses.

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