Yingli Green Energy Holding Co Ltd (ADR) (NYSE: YGE) Gets Reprieve


Yingli Green Energy Holding Co Ltd (ADR) (NYSE: YGE) can now breathe easy after its lenders agreed to modify loan agreements. The loan modification will reduce the company’s interest burden on the outstanding loans and also extend the repayment schedule of the loans. YGE defaulted in $267 million bond debts.

Yingli Green Energy Holding Co Ltd (ADR) (NYSE: YGE) recently engaged its creditors in an effort to amend repayment terms for some of its outstanding borrowing. The loan negotiations were successful as YGE has been able to get some of its key lenders to relax the loan terms.

Although the company didn’t go into specifics of identifying the lenders that agreed to lower interest on their loans and allow more time for repayment, it said the deal would significantly lower its financial burden. But the management was quick to point out that reduction in interest rates on the loans was only slight. Perhaps that suggests that the major reprieve for the company comes in the form of extended maturity periods of the outstanding debts.

The Chinese solar company took on debts hoping to benefit from the strong demand for solar panels. But the global market quickly got flooded with cheap solar products, hurting sales and cash flow and complicating the company’s loan repayment schedule.

YGE turns a profit

Not only did Yingli Green Energy Holding Co Ltd (ADR) (NYSE: YGE) announce the successful loan modification, but also reported a quarterly profit in nearly five years. The company posted a net income of $12.3 million for 1Q2016 compared to a loss in the comparable quarter a year ago.

Revenue of $364.6 million topped the consensus estimate of $353.98 million.

Focus on international growth Yingli Green Energy Holding Co Ltd (ADR) (NYSE: YGE)

The management of Yingli Green Energy Holding Co Ltd (ADR) (NYSE: YGE) revealed that focus on international markets with higher selling prices such as the U.S. and Japan supported the 1Q gains. Japan accounted for about 40% of YGE’s shipments in the latest quarter and the U.S. contributed 14% of the shipments in the same quarter.

Japan’s plans to reduce its exposure to nuclear energy could also expand the market for solar energy in the country.


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