Yingli proposes restructuring of payment on US$157 million in bonds

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Formerly the world’s largest solar PV module maker, Yingli Green Energy has had a rough few years. While many other large PV module makers returned to profitability in late 2013, the company continues to report losses.

In May Yingli warned investors of “substantial doubt about our ability to continue as a going concern” in light of heavy debts, during the release of its annual report. This announcement exacerbated a slide in the company’s stock value which has been ongoing for at least a full year.

At the time Yingli had reached $1.6 billion in short-term borrowings, with total liabilities of $2.9 billion. During the first half of 2015 this short-term debt has remained steady, and long-term debt crept up to $3.1 billion. Part of the problem is that Yingli’s shipments and revenues have declined quarter-to-quarter and year-over-year, during which time it has been replaced by Trina Solar as the world’s largest PV module maker.

Under such circumstances, it is hardly surprising that Yingli is strapped for cash and having difficulty paying its creditors. The latest indication of this came on Wednesday, when the company announced plans to restructure payment on $157 million in medium-term notes due in October 2013.

Yingli is currently in negotiations with creditors and is also selling land which formerly hosted facilities under its Fine Silicon division, from which it expects roughly $138 million. However, in a brief call with analysts on Wednesday morning US time it was clear that neither of these processes has been concluded.

The company expects partial repayment of the notes before the end of the year, with the remaining amount to be repaid within the next year. Yingli executives also noted that the company is “working actively on other solutions” including both selling downstream projects and other assets, and says that it expects to pay off the balance with these sources and cash on hand.

At the end of the second quarter Yingli had fallen to $287 million in cash and restricted cash. However, the company stresses that it was able to pay off $188 million in mid-term notes due in May.

Until Yingli is able to return to profitability, it appears to be merely treading water. This may not be the last restructuring of debt that is forced by an inability to meet obligations.