Yingli Quickens Debt Effort as $270 Million Payment Missed

  • Payments include two sets of 5-year medium-term notes
  • Yingli seeks to bring in new investors and sell assets

Yingli Green Energy Holding Co. said it’s stepping up efforts to repay its debts after it missed payments on about 1.76 billion yuan ($270 million) of notes due Thursday, the latest in a string of defaults by Chinese companies.

The solar-panel maker based in Baoding failed to repay two separate medium-term notes that matured on Thursday, according to statements posted on the website of ChinaBond, the nation’s debt-clearing house. The debt was owed by Baoding Tianwei Yingli New Energy Resources Co., a venture owned by Yingli and two state-owned enterprises.

The company will "quicken the work pace to generate cash flows from assets," according to the statement, which added that it will “actively promote the restructuring of the company.”

Chinese firms are struggling with record debt redemption this year as Premier Li Keqiang seeks to wipe out zombie corporations amid the country’s weakest economic expansion in a quarter-century. At least nine firms including Yingli have missed local note payments so far this year, exceeding the tally for the whole of 2015.

Losses Mount

Yingli hasn’t had a profit since 2011. It was part of a wave of Chinese manufactures that flooded the market with low-cost equipment in recent years, borrowing aggressively to expand factories. It amassing debt that peaked at 15.5 billion yuan as the falling price of solar panels squeezed its revenue. The company surrendered its position as the top manufacture in 2014 to Trina Solar Ltd.

The remarks on Thursday mesh with those made yesterday by Miao Liansheng, chairman and founder of Yingli, who told investors on a conference call that he expects to negotiate a “successful resolution” to Yingli’s woes. “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,” Miao said on the call.

In breach of its loan covenants for more than a year, Yingli has been kept alive by state-backed institutions led by the China Development Bank and Bank of Communications Co. On Wednesday, Yingli warned it was preparing to default as it 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.

Yingli said that “to the company’s knowledge,” none of the creditors had “taken any immediate action against Tianwei Yingli,” the company said in an English-language statement on PRNewswire on Thursday.

On Thursday, Yingli said it’s working to draw in new investors and make asset sales, although these steps will take time. Yesterday, the company 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.

— With assistance by Joe Ryan, and Feifei Shen

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