Yingli Slides Most Ever After Seeking Backers to Ease Debt

(Bloomberg) — Yingli Green Energy Holding Co., the world’s

biggest solar panel maker until last year, fell the most on

record after saying it’s seeking investors to help cope with $2

billion of debt that’s threatening its ability to remain

solvent.

Yingli dropped 42 percent to 86 cents at 9:53 a.m. in New

York. Earlier it plunged as much as 52 percent, the most

intraday since its June 2007 public offering.

The Chinese manufacturer said it’s confident it can repay

its liabilities, which include $1.6 billion in short-term loans.

In an e-mailed statement Tuesday, Yingli said it’s looking for

partners that can take additional shares as well as a strategic

investor.

Yingli warned in a filing Friday that there’s “substantial

doubt” it can remain afloat, and the shares dropped 12 percent

Monday.

“Potential risks don’t mean they will happen and don’t

mean Yingli is facing or will face such risks,” Wang Yiyu,

Yingli’s chief financial officer, said in the statement Tuesday

from the company’s Baoding, China, headquarters. “They

shouldn’t cause an overreaction.”

While competitors led by Trina Solar Ltd. snap back from a

solar slump that dragged down prices and gutted margins across

the industry, Yingli has remained unprofitable since the second

quarter of 2011.

Yingli’s Warning

“Our substantial indebtedness and net loss may adversely

affect our business, financial condition and results of

operations, as well as our ability to meet our payment

obligations,” Yingli said in the filing on Friday. The company

also had long-term debt of $460 million at the end of last year.

Yingli was the biggest panel maker in 2013 and slipped in

2014 after Trina’s panel shipments reached 3.66 gigawatts, 8.9

percent more than the 3.36 gigawatts Yingli delivered.

“The firm’s reputation is for very low cost at its

manufacturing base well away from the major cities, and for

compromising on margin to sell volume,” said Jenny Chase, lead

solar analyst for Bloomberg New Energy Finance. That “makes it

popular with project developers, but has obvious consequences

for the balance sheet.”

Solar panel prices have declined more than 67 percent since

2010. That bankrupted more than 30 companies including the main

subsidiary of Suntech Power Holdings Co. and Q-Cells SE, which

were the top solar suppliers before Yingli took the lead.

Competition Recovering

While competitors such as Trina and JA Solar Holdings Co.

focused on profit, Yingli concentrated on market share to

maintain its size in the midst of an industry shakeout. Now,

rising demand for panels is reviving profit at most solar

companies.

“Solar cell and panel manufacturing has become more

concentrated as prices have fallen,” Yin Lei, a Shenzhen-based

analyst at China Merchants Securities Co., said by phone.

“Companies with more liabilities and weaker cost controls will

be eliminated,” while top manufacturers with the lowest costs

will benefit from the growth in demand, he said.

China’s government, which invested heavily in the industry

in the past decade, more recently has sent mixed signals about

its willingness to support solar.

President Xi Jinping boosted targets for installations this

year while authorities also sought to eliminate outdated

capacity and encourage companies to consolidate through mergers

or restructuring. The government also allowed Baoding Tianwei

Group Co. to default on bond payments last month, a first by a

state-owned company in China.

Baoding Tianwei, also based in the northern city of

Baoding, failed to pay 85.5 million yuan ($13.8 million) of bond

interest in April.

To contact the reporter on this story:

Justin Doom in New York at

jdoom1@bloomberg.net

To contact the editors responsible for this story:

Reed Landberg at

landberg@bloomberg.net

Will Wade, Robin Saponar

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