The upstream solar industry is a capital-intensive industry. It’s very important for companies like Yingli Solar (YGE), Trina Solar (TSL), First Solar (FSLR), Canadian Solar (CSIQ), and SunPower (SPWR) to maintain their liquidity positions to raise capital at lower rates.
Yingli Solar’s interest expenses were consistently on the rise between 2011 and 2014. However, the company reported its net interest expenses for 2015 at $147.4 million compared to $158.1 million in 2014.
According to company filings, the decrease in interest expenses in 2015 is mainly due to repayment of bank loans and two medium-term notes that were due in May 2015 and October 2015. Moreover, the weighted average interest rate of the company’s borrowings in 2015 was 6.39% compared to 6.44% in 2014.
Yingli Solar’s debt structure
As of December 31, 2015, Yingli Solar (TAN) had about $371 million in long-term debt and about $1,049 million in short-term borrowings on its books. The majority of the company’s short-term debt was due for payment in May 2016. However, the company defaulted on its debt. According to the latest quarterly filings, Yingli Solar is still in the process of negotiating with the noteholders about revisions to the repayment schedules of its MTNs (medium-term notes).
As of December 31, 2015, Yingli Solar had about $191 million in cash and cash equivalents on its balance sheet as compared to $172 million at the end of 2014. The net cash provided by operating activities amounted to about $152 million in 2015 as compared to $70 million in 2014 and $58 million in 2013.
According to company filings, the increase in its cash position is mainly due to increases in net cash provided by investing and operating activities as compared to the previous year.
Next, we’ll analyze the key risks involved in Yingli Solar’s business.