Yingli Green Energy (YGE) Posts Wider-than-Expected Q1 Loss; Pursuing Financing Options

Yingli Green Energy (NYSE: YGE) reported Q4 EPS of ($7.20), $5.72 worse than the analyst estimate of ($1.48). Revenue for the quarter came in at $325.7 million versus the consensus estimate of $372.3 million.

Total photovoltaic ("PV") module shipments1 were 504.5 MW1, increased from 460.4 MW1 in the third quarter of 2015, well above the Company's previous guidance of 420 MW to 440 MW.

Debt Restructuring and Introduction of Strategic Investors

The Company's subsidiaries are exploring various potential debt restructuring options in order to improve theirs liquidity and debt-to-equity ratio and reduce cash outflow from debt repayments. In particular, the Company's subsidiaries have been proactively negotiating with main bank creditors and holders of their medium-term notes ("MTNs") to try to find viable solutions. The Company understands that these bank creditors and holders of MTNs as well as the relevant state, provincial and municipal government authorities are aware of the difficulties in repayment of such debts and have expressed their understanding and continuous support. The Company and its subsidiaries are also negotiating proactively with potential strategic investors for potential strategic investments in the Company or its subsidiaries. Such debt restructuring and strategic investments, if successfully completed, will further increase the Company and its subsidiaries' liquidity and improve their debt-to-equity ratio.

Update on Repayment of Medium-Term Notes

Tianwei Yingli, a major subsidiary of the Company, repaid approximately 70% of the RMB denominated unsecured five-year medium-term notes of RMB1.0 billion (the "2010 MTNs") when they became due on October 13, 2015, and has RMB denominated unsecured five-year medium-term notes of RMB1.4 billion (the "2011 MTNs") due on May 12, 2016. As disclosed in the Company's press release dated April 6, 2016, Tianwei Yingli informed holders of the 2011 MTNs that it would be very difficult for Tianwei Yingli to repay the 2011 MTNs on the due date and Tianwei Yingli proposed to extend the repayment date by two to three years; and holders of the 2010 MTNs demanded Tianwei Yingli to repay the remaining portion of the 2010 MTNs in full together with accrued interests before May 12, 2016. Tianwei Yingli expects to be unable to repay the 2011 MTNs or the 2010 MTNs on May 12, 2016, and is still in the process of actively discussing with the holders of the 2011 MTNs and the 2010 MTNs about potential extension of the repayment dates of both MTNs. The Company is exploring various alternative financing plans for repayment of both MTNs such as: 1) introduction of strategic investors to invest into the Company and the Company's subsidiaries, 2) introduction of new creditors to grant new borrowings to the Company or the Company's subsidiaries, and 3) sales of certain long-lived assets including land use rights to obtain additional funds.

Liquidating Land Use Right Held by Hainan Yingli

On November 5, 2015, Hainan Yingli entered into a Capital Increase Agreement with its shareholder Haikou National, pursuant to which Haikou National used its land use rights to subscribe for newly issued equity interests in Hainan Yingli and Hainan Yingli is required to repurchase such equity interests from Haikou National in three installments within 10 years at an aggregate price equal to the fair market value of the land use rights on the date of the agreement plus interests calculated at the prevailing bank loan interest rate in China. Hainan Yingli subsequently disposed of the land use rights contributed by Haikou National by transferring to a third party 100% equity interest in its wholly owned subsidiary that held the land use rights (the "Hainan Land Disposal"). As of the date hereof, the Hainan Land Disposal is substantially completed while the parties are in the process of completing remaining administrative procedures. Hainan Yingli received RMB 265.0 million as partial consideration for the Hainan Land Disposal in 2015 and expects to receive the remaining portion of the consideration in the amount of RMB 470.0 million in 2016.

Business Outlook for First Quarter and Fiscal Year 2016

Based on current market conditions, the Company's current operating conditions, estimated production capacity and forecasted customer demand, the Company expects its PV module shipments to be in the estimated range of 480 MW to 510 MW for the quarter ending March 31, 2016 and 2.6 GW to 3.0 GW for the fiscal year ending December 31, 2016. The Company also expects its gross margin in the first quart of 2016 to be in the estimated range of 17 % to 19%.

For earnings history and earnings-related data on Yingli Green Energy (YGE) click here.

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