Yingli Green Energy has entered into a credit agreement for a three-year loan facility with a fund managed by Asia Debt Management Hong Kong Limited to secure additional financing for its business expansion.
ADM Capital has agreed to provide a three-year loan facility of up to $80.0 million to Yingli China for its production capacity expansion and general corporate use. The loan will accrue interest of 12% per annum (payable semi-annually) and is expected to be available for drawdown in one lump sum at any time up to 85 days from the date of the agreement (or such later date as agreed by ADM Capital), subject to the obtaining of certain governmental approvals and satisfaction of other customary closing conditions. Under the terms of the agreement, the lenders may also require Yingli China to prepay the loan in part or in full if Yingli Green Energy fails to meet certain agreed consolidated operating and financial targets.
"This loan facility will provide us with valuable support in these times of continued turmoil in the global financial markets and is expected to further strengthen our ability to complete our expansion plan as scheduled," commented Mr. Zongwei Li, Chief Financial Officer of Yingli Green Energy. "We believe this new financing demonstrates ADM Capital's confidence in our leading position in the industry and the growth potential of our fully integrated business model."
"ADM Capital has a long track record of investing in China and the Asian region," stated Grace Tan, a member of ADM Capital's investment committee. "We are very excited at the prospects of our partnership with Yingli Green Energy and the outlook for its solar energy business."
Yingli China's repayment obligations under the agreement will be guaranteed by the Company, Baoding Tianwei Yingli New Energy Resources Co., Ltd (the Company's principal operating subsidiary in China) and Ms. Qing Miao, Director of Investor Relations of the Company and daughter of Mr. Liansheng Miao, Chairman and Chief Executive Officer of the Company, and will be secured by certain collateral provided by affiliates of Yingli Green Energy. The collateral includes, among others, a pledge by Yingli Power Holding Company Ltd., a company controlled by Mr. Liansheng Miao and the controlling shareholder of the Company, of a fixed number of ordinary shares of the Company it holds (with no obligation to deliver additional shares of collateral nor any default tied to the trading price of the American depositary shares of Yingli Green Energy) and a pledge by Cyber Power Group Limited, a recently acquired, wholly-owned subsidiary of the Company, of all its equity interest in its Hong Kong subsidiary through which Cyber Power wholly owns Fine Silicon Co., Ltd., a development stage enterprise located in Baoding, China which plans to begin production of solar-grade polysilicon in the second half of 2009.
In connection with the loan, the Company has agreed to grant to ADM Capital warrants, exercisable with respect to approximately one-fifth of the warrants every six months starting from the drawdown date of the loan to the third anniversary of the drawdown date of the loan. The initial strike price of the warrants will be based on the volume weighted average closing price per ADS on the New York Stock Exchange for the 20 trading day period immediately prior to the issuance of the warrants, subject to customary antidilutive and similar adjustments. The number of warrants to be granted will be determined based on the final size of the loan on the drawdown date but in no event will exceed 6.6 million. The Company may at its discretion settle the warrants in cash, shares or a mix of cash and shares. The warrantholders' rights to exercise the warrants will terminate on the fifteenth day following the third anniversary of the drawdown date of the loan. The Company has the obligation to purchase all unexercised warrants on the termination date at a price of US$7.00 per warrant. The Company expects to issue the warrants concurrently with the drawdown of the loan. In addition, the Company has agreed to file a registration statement with the U.S. Securities and Exchange Commission to cover the resale of the shares (in the form of American depositary shares) to be received by the warrantholders upon exercise of any warrants.
As the closing of the transaction contemplated under the agreement is subject to the obtaining of certain governmental approvals and other closing conditions, the Company cannot give assurance that the loan will ultimately close or that if it closes, the principal amount of the loan will reach the maximum principal amount of US$80.0 million as currently contemplated under the agreement.