Too big to fail? Yingli confirms debt restructuring

22. January 2016 | Global PV markets, Financial & Legal Affairs, Industry & Suppliers, Markets & Trends | By:  Vincent Shaw

The China Banking Regulatory Commission and the National Energy Administration have signaled their support for a restructuring of Yingli's massive debt, noting the company's importance to the Chinese PV industry and the role of its core technology.

Yingli manufacturing

Yingli appears to be too big to fail despite its very large financial problems.

Financially troubled Chinese PV module manufacturer Yingli said on Thursday that it was considering undertaking debt restructuring measures.

A spokesman for the company, which has been mired in debt for considerable time, told media that a high level meeting was held recently by the China Banking Regulatory Commission (CBRC) and the National Energy Administration (NEA) to discuss Yingli’s situation.

The government has ordered several government departments and major banks to cooperate with efforts to restructure Yingli debts. In a document sent to government departments, banks and regional governments, the CBRC and NEA expressed support for debt restructuring, stressing Yingli’s importance, including its industrial position and core technology. The agencies said, however, that the action had to be carefully controlled and no unilateral restructuring was allowed. The National Development Bank will chair a financial bondholder committee to coordinate the process.

According to its 2015 third-quarter financial report, Yingli recorded a net loss of CNY 4.2 billion and liabilities of more than CNY 18.4 billion. Yingli possesses only CNY 1.6 billion in cash and CNY 11 billion in current assets.

Yingli has suffered greatly from its massive debt for a long time. The company’s business expansion in recent years contributed to its growing debt. In view of the company’s size and potential impact to China’s PV industry, and based on the previously successful examples of Suntech and LDK, the government is widely expected to save Yingli from going under. Indeed, it appears to be too big to fail.

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