Hydropower, Solar

Yingli Reaches Agreements With Lenders to Modify Loan Payments

Yingli Green Energy Holding Co. reached deals with lenders to modify loan agreements after the Chinese solar manufacturer defaulted on 1.76 billion yuan ($267 million) in debts in April. Its American depositary receipts surged.

The company, which reported its first quarterly profit Tuesday since 2011, has renegotiated interest rates and maturity dates with several banks, chief financial officer Yiyu Wang said during a conference call. Wang called the interest rate cuts “slight” but said the move would nonetheless significantly reduce Yingli’s financial pressure. He didn’t identify the lenders.

Baoding-based Yingli continues to negotiate with holders of the two medium-term notes that its Baoding Tianwei Yingli New Energy Resources unit defaulted on in April. Yingli jointly owns the venture with two state-owned enterprises. The company has scheduled a meeting with creditors for June 17.

Yingli borrowed heavily as it expanded to become the world’s biggest solar manufacturer, part of a wave of Chinese suppliers that flooded the market with low-cost panels. That led to a global glut starting in 2011 that drove dozens of companies in Asia, Europe and the U.S. into bankruptcy, and prompted years of losses at the survivors. While competitors started to return to profitability in 2013, Yingli continued to push a low-price strategy in pursuit of market share, making it the last major supplier to report a post-slump profit.

Profitable Quarter

“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. Miao has had to personally guarantee some of Yingli’s debt to keep the company afloat. The company was surpassed as the biggest panel-maker by Trina Solar Ltd. in 2014.

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.

Yingli’s American depository receipts, each worth 10 ordinary shares, climbed 8.5 percent to $4.61 at 10:12 a.m. in New York.

©2016 Bloomberg News

Lead image credit: Kevin T. Houle | Flickr