Yingli Says Noteholders Want Guarantees to Extend Maturity

  • Penalties for defaulting on note add 7.6% annual interest
  • Yingli pressed for more details on its refinancing plan

Yingli Green Energy Holding Co., the Chinese solar panel maker that missed payments on 1.76 billion yuan ($260 million) in debt in May, said creditors are demanding additional guarantees on the debt in exchange for stretching out payments.

Owners of more than half of the Yingli notes issued in 2010 and 2011 agreed to extend to March 2017 the deadline for Yingli to pay back securities, which were due on May 12, according to a statement posted Tuesday to the website of ChinaBond, the nation’s debt clearing house. 

The company’s American depositary receipts, each worth 10 ordinary shares, rose 2.9 percent to $3.93 at the close in New York.

A statement on PR Newswire Wednesday from Yingli gave more details on the terms of that deal. Noteholders organized by the lead underwriter Bank of Communications Co. are seeking to protect their rights. Yingli said it’s continuing talks with the noteholders and that a return to profit in the first quarter after years of losses show its financial position is improving.

The notes were sold to creditors by Baoding Tianwei Yingli New Energy Co. Ltd., a venture that manufactures solar panels owned by Yingli and two state-owned enterprises. Noteholders demanded that Yingli itself guarantee the debt in exchange for extending the maturity of the debt. The noteholders also agreed:

  • Yingli should repay all the interest and a third of the principle of the 2011 notes immediately.
  • That the new March 2017 maturity date is conditional on another Yingli subsidiary guaranteeing the debt.
  • A penalty of 0.021 percent daily interest, or about 7.6 percent a year, should accrue for the defaulted notes.
  • Noteholders should hire third-party intermediaries to help them handle talks with Yingli and protect their interests.

Gordon Johnson, an analyst at Axiom Capital Management, said Yingli’s creditors have little choice but to be patient with the company.

“If the creditors force a liquidity event, Yingli would not be able to pay,” Johnson said in an interview Wednesday. “So they are just hoping that with a higher stock price the company will be able to borrow and issue equity to the extent that it can find its way out of this.”

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