Yingli Green struggling to repay looming debt

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Updated: Struggling Silicon Module Super League (SMSL) member Yingli Green has said it will have to restructure a repayment plan for US$157 million, due in October. 

Previously, Yingli Green had said it expected to honour the mid-term debt by selling land rights held by the company back to the local provincial government in China in connection to its polysilicon plant, Fine Silicon. The company also planned to sell some equity interests in joint ventures to further support liquidity in the second-half of the year.

Yingli Green noted that it expected to receive around US$138 million from the land rights sale.

However, the proceeds of the sale would neither be received before the US$157 million debt is due nor would the proceeds be fully received by the end of the year.

Yingli Green said that it would therefore be able to partially repay the debt before the end of 2015, while an unspecified amount of the debt would only be made available within one year of the overdue debt.

Yiyu Wang, chief financial officer of Yingli Green Energy said: “The company has established good will with our major notes-holders through the successful repayment of our mid-term notes due this May, which amounted to US$188 million, and we are closely communicating with the notes-holders again around this revised repayment plan.”

The company reported a net loss of US$96.5 million in the second quarter of 2015, compared to a net loss of US$58.6 million in the previous quarter and has racked-up losses of more than US$1 billion in recent years and debts of over US$2 billion, forcing the company to announce a going concern warning in its 2014 annual report.

As of June 30, 2015, Yingli Green only had US$92.7 million in cash and cash equivalents and slashed full-year shipment guidance by more than 1GW.

The company also received a de-listing notice from the NYSE. 

In a hastily arranged conference call with financial analysts, Yingli Green’s CFO said that the Fine Silicon land rights sale had mostly been completed but was very vague on exactly when the money from the land rights sale would be made available.

It appeared after further questions from analysts that the local government organised a bid process for the land rights and that the winning bidder was expected to pay 60% of the accepted bid within a month. The local government would then pay Yingli Green, which the CFO said could be in the next couple of months.

However, the remaining 40% payment by the bidder would take several quarters. 

Management also noted that the amount not paid on time for the medium-term notes would more than likely incur higher interest payments as a penalty.

According to an investor note from ROTH Capital financial analyst, Philip Shen the situation for Yingli Green was “looking increasingly challenging” due to US$226mn of medium-term notes due in May, 2016.

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