Why This Solar Player Is Under Fire

Shares of Yingli Green Energy Hold. Co. Ltd. YGE continued to plunge by more than 40 percent on Tuesday after Monday's more than 10 percent decline. China-based Yingli is a supplier of vertically integrated photovoltaic (PV) modules with a presence across many markets around the world, including China, the United States, Germany and the United Kingdom. The collapse in share prices is attributed to a 20-F filing that was released on Friday in which the company stated that its "substantial" indebtedness could affect its business, financial condition and results of operations, as well as its ability to meet payment obligations. Yingli stated that it holds a "significant" amount of debt and debt requirements. AS of December 31, 2014, the company had RMB 10,112.1 million ($1.629.8 billion) in outstanding short-term borrowing, $276.1 million outstanding in medium-term notes and $460.7 million in outstanding long-term debt. "We cannot assure you that our business will generate adequate cash flow from operations to support our operations and service our debt obligations, or that future debt or equity will be available to us under our existing or any future credit facilities or otherwise, in an amount sufficient to enable us to meet our payment obligations under our outstanding debt while continuing to fund our other liquidity needs," the company noted in its filing. "If we are not able to generate sufficient cash flow to service our debt obligations, we may need to refinance or restructure our debt, sell assets, reduce or delay capital investments, or seek to raise additional capital." The company continued: "If we are unable to implement one or more of these alternatives, we may not be able to meet our payment and other obligations under our outstanding debt." Shares collapsed to 52-week lows of $0.72 shortly after Tuesday's opening bell, but rebounded to trade above the $0.90 level by mid-morning.