A number of troubled Chinese solar producers have managed to obtain bailout loans from the China Development Bank, although other banks have refused to lend to such high-risk companies.
Jinko Energy reportedly cut a deal with the bank for a 15-year loan of 360 million yuan (US$58 million) last week, following on the backs of a 320 million yuan (US$51 million) loan to Renesola and a 10 billion yuan (US$1.6 billion) loan to China Merchants New Energy last month. The extraordinarily large loan obtained by the company will be used in the development, construction, and operation of domestic and overseas solar power stations, rather than in the development of the industry in the traditional sense — namely operations producing components and silicon chips — which has been suffering from oversupply.
The National Development Bank has reportedly already offered 100 billion yuan (US$16 billion) of unsecured loans to several major solar producers, including JA Solar Holdings, Trina Solar, and Suntech Power over the past three years. Other photovoltaic firms also closed various medium-level deals with the bank. The active financial support rendered by the bank, however, has failed to inspire other major lenders to follow suit. Many have stopped providing working capital to solar firms and urged them to repay their debts in the wake of the business downturn. Financial managers of many solar companies and some bank loan officials admit that it's unlikely for domestic banks to provide large loans to firms in the short term. Despite the improvement of the finances of some firms, they don't have the ability to repay their loans in full, largely due to low prices, slim profits and high debt ratio, according to the Shanghai-based National Business Daily. In the first quarter of 2012, Trina Solar,posted sales of US$300 million but its accounts receivable topped US$390 million and its current liquid debt hit US$1.5 billion, 74% of the company's total debt.
In the fourth quarter last year, six Chinese solar companies listed on the US stock market were laden with short-term loans of US$4 billion, up 43% year-on-year, and their holdings of cash assets was only US$2 billion, down 39% year-on-year. Their liquid assets also fell 13.52% year-on-year to US$7.1 billion in the quarter.
