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		completion of this offering in view of the specified exercise periods in their respective governing instruments and the expected market price of our ordinary shares. See “— Private Equity Investments and Other Financings Following the Restructuring” and “Principal and Selling Shareholders.”

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		under these bonds and (iv) the remaining proceeds for general corporate purpose and working capital. Both of these bonds carry a floating interest rate tied to the British Bankers Association Interest Settlement Date plus 2.00% (up to and including August 16, 2007) or 4.00% (after August 16, 2007). Interest is payable quarterly. Under the indenture governing these bonds, we are subject to a number of covenants, such as the maintenance of certain financial ratios, restrictions on granting collateral, disposals of existing assets, the making of payments to shareholders and affiliates and the making of investments. We have also pledged 62.13% equity interest in Tianwei Yingli representing our existing equity interest in Tianwei Yingli, and our other tangible and intangible assets as collateral for our obligations under these bonds.

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	be paid in cash unless otherwise approved by several PRC governmental authorities, including the PRC Ministry of Commerce and SAFE. Obtaining such approval is a lengthy, cumbersome and unpredictable process. Yingli Group, a PRC entity, could not make a non-cash contribution to Yingli Green Energy, an offshore entity, of Yingli Group’s equity interest in Tianwei Yingli without going through such cumbersome approval process. Therefore, in order to secure cash funding required for the transfer of Yingli Group’s equity interest in Tianwei Yingli, Yingli Green Energy engaged in a Series A preferred equity financing, the proceeds from which was US$17 million and was used for the foregoing purpose.
	However, while the Series A investor agreed to such use of proceeds as documented in the definitive agreements for the Series A preferred equity financing, the Series A investor reached an informal understanding with Mr. Miao that Yingli Green Energy would seek a third-party financing, the proceeds from which would be used to increase Yingli Green Energy’s equity interest in Tianwei Yingli by way of capital contribution. Such understanding was one of the reasons for the issuance of the notes by Yingli Power to Deutsche Bank AG. The key difference between the mandatory redeemable and convertible bonds issued by Yingli Green Energy to Yingli Power and the mandatory redeemable and exchangeable notes issued by Yingli Power to Deutsche Bank AG is the respective amounts of the two tranches. Specifically, the bonds issued to Yingli Power consist of a redeemable tranche in the principal amount of US$38 million and a convertible tranche in the principal amount of US$47 million, whereas the notes issued to Deutsche Bank AG consist of a redeemable tranche in the principal amount of US$55 million and an exchangeable tranche in the principal amount of US$30 million, which resulted in a difference of US$17 million in principal amount between the US$47 million convertible tranche of the bonds issued to Yingli Power and the US$30 million exchangeable tranche of the notes issued to Deutsche Bank AG. However, notwithstanding the difference in the underlying principal amounts, the convertible tranche of the bonds issued to Yingli Power and the exchangeable tranche of the notes issued to Deutsche Bank AG are convertible or exchangeable into the same number of Yingli Green Energy’s ordinary shares, namely, an amount that would be equivalent to a 3.73% effective equity interest in Tianwei Yingli at the time of the conversion or exchange. Accordingly, the transaction was structured so that upon the mandatory redemption and conversion of the bonds issued by Yingli Green Energy to Yingli Power, and the mandatory redemption and exchange of the notes issued by Yingli Power to Deutsche Bank AG, Yingli Power would contribute US$17 million to Yingli Green Energy using its own funds. Yingli Power was not paid any additional consideration for the above transaction, except for the indirect benefit from Yingli Green Energy’s increasing its equity ownership in Tianwei Yingli as a result of the Series A preferred equity financing. We have been advised by Fangda Partners, our PRC counsel, that the transaction structure discussed above does not violate applicable PRC laws and regulations.

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		2,112,057 of our ordinary shares at an exercise price of US$0.01 per share, subject to certain anti-dilution provisions. All outstanding Series B preferred shares are automatically convertible into our ordinary shares upon the completion of this offering at a conversion ratio of one-to-one, subject to certain anti-dilution provisions. These warrants are cancellable upon the conversion of the shareholder loan as described below. Of US$118 million in aggregate proceeds, US$17 million, which was received as advance payments, was used to increase our equity interest in Tianwei Yingli to 53.98% from 51%, US$22.6 million (together with US$17 million from portions of the proceeds from the issuance and sale of the mandatory redeemable bonds and the mandatory convertible bonds) will be injected into Tianwei Yingli in the form of a direct equity contribution and the remaining US$78.4 million was injected into Tianwei Yingli in the form of a shareholder loan from us to Tianwei Yingli which will be converted into equity interest in Tianwei Yingli. On or about March 27, 2007, we issued to the Series B preferred shareholders (other than the three investors who had made advance payments) additional warrants with terms similar to the previously issued Series B warrants to purchase an aggregate of 688,090 of our ordinary shares in exchange for the early termination of an escrow arrangement with certain restriction, which made the release of a portion of the proceeds, in an amount of US$19.6 million, that were received from the issuance and sale of the Series B preferred shares contingent upon our obtaining the relevant PRC regulatory approvals and completion of related procedural formalities in connection with the conversion of the shareholder loan into equity interest in Tianwei Yingli. This amount of US$19.6 million was injected into Tianwei Yingli upon removal of such restriction in the form of entrusted loan from us to satisfy Tianwei Yingli’s working capital requirement.
	•	On December 18, 2006, we further amended the joint venture contract with Tianwei Baobian for us to make an additional equity contribution of US$118 million to Tianwei Yingli, and we have obtained approvals from the National Development and Reform Commission and the PRC Ministry of Commerce, and are in the process of obtaining approval from, and making registrations with the State Administration of Foreign Exchange, Baoding Branch the Hebei Provincial Administration for Industry and Commerce. As the approvals and registrations are largely procedural in nature, we do not anticipate having difficulties in obtaining or making them. Upon obtaining the relevant PRC regulatory approvals and making related filings and registrations for the additional equity contribution by us of the US$118 million, our equity interest in Tianwei Yingli would increase to 70.11% from 62.13%. All outstanding warrants issued in connection with the Series B preferred shares are exercisable into our ordinary shares after April 30, 2007 or such later date, as selected by Baytree Investments, but upon or prior to the earlier of the completion of this offering and the conversion of the shareholder loan into equity interest in Tainwei Yingli. Upon conversion of the shareholder loan, whether prior or subsequent to our initial public offering, any unexercised warrants will be automatically cancelled, and the holders of the ordinary shares into which any warrants have been exercised are obligated to return such shares to us for cancellation or pay us an amount to be mutually determined between us and such shareholder.
	•	In connection with a convertible loan to Tianwei Yingli from China Foreign Economic and Trade & Investment Co., Ltd., or FOTIC, a trust and investment company established in China, FOTIC acted as a nominee for certain third-party individuals. This convertible loan was made on May 17, 2006. Under a repayment and termination agreement dated December 29, 2006 among Tianwei Yingli, FOTIC, China Sunshine Investment Co., Ltd., or China Sunshine, a British Virgin Islands investment holding company, and us, Tianwei Yingli repaid the convertible loan in the principal amount of RMB 85,635,000 plus accrued interest of RMB 4,281,750 on December 29, 2006. As a condition of repayment, under the repayment and termination agreement, we issued on December 29, 2006 to China Sunshine a warrant to purchase 2,068,252 of our ordinary shares at an exercise price of US$4.835 per share. On February 2, 2007, China Sunshine fully exercised this warrant at an exercise price per share of US$4.835 and purchased 2,068,252 of our ordinary shares.

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	convertible loan understood that at the time the convertible loan was made, the lenders’ intention was to exercise the conversion right under the convertible loan for an equity interest in an offshore listing vehicle for Tianwei Yingli to be listed on an overseas stock exchange. However, after the convertible loan was made, the parties to the loan agreement became aware of certain PRC legal and regulatory considerations which cast some uncertainties into the enforceability and legality under PRC laws of the conversion of the loan, which is RMB-denominated. Specifically, the original transaction contemplated the exercise by certain third party individuals or a PRC entity, namely FOTIC, as the nominee for the third party individuals, of a conversion right under a loan agreement with another PRC entity, namely Tianwei Yingli, for an equity interest in an offshore entity that is the controlling shareholder, namely Yingli Green Energy, of the second PRC entity, namely Tianwei Yingli, which was a relatively novel arrangement in the PRC for which the parties could not find sufficient precedents or clear legal authority to establish the legality of such arrangement. Accordingly, in order to reduce the potential legal and/or regulatory uncertainties, Yingli Green Energy agreed to repay the debt and also agreed to the lenders’ designation of China Sunshine Investment Co., Ltd., an entity incorporated in the British Virgin Islands and unrelated to the lenders, as the holder of the conversion right, which in the final arrangement took the form of a warrant.
	The inclusion of the warrant as a condition to repayment of the loan also served the business interests of both Yingli Green Energy and the lenders. The arrangements that the parties agreed upon were that (i) Yingli Green Energy would repay the loan in full, including the accrued interest, (ii) Yingli Green Energy would issue a warrant to the lenders’ designated entity, China Sunshine Investment Co., Ltd., and such warrant would be exercisable into Yingli Green Energy’s equity interest that would be substantially equal to the principal amount of the loan, and (iii) to the extent China Sunshine exercises the warrant, the majority of the proceeds from the repayment would effectively be returned to Yingli Green Energy in the form of the exercise price paid by China Sunshine (which was US$4.835 per share, or the share price paid by the investors in Yingli Green Energy’s Series B preferred shares), and (iv) China Sunshine would have a reasonably short period of time (which was fixed at 45 days under the repayment agreement) to exercise the warrant. The repayment agreement dated December 29, 2006 reflected the foregoing arrangements. The above arrangement helped eliminate a potential liquidity risk associated with an immediate loan repayment for Yingli Green Energy while allowing the lenders to designate its conversion right to China Sunshine.

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	the mandatory exchangeable notes is subject to certain adjustments relating to the offering price of our ordinary shares in the event of our initial public offering.
(4)	The warrant was issued by Yingli Power to Deutsche Bank AG in connection with the issuance of the floating rate notes issued by Yingli Power to Deutsche Bank AG. The floating rate notes consist of mandatory redeemable notes and mandatory exchangeable notes, whose respective terms substantially mirror the mandatory redeemable bonds and the mandatory convertible bonds issued by us to Yingli Power on the same date as the floating rate notes. This warrant is exercisable into our existing shares held by Yingli Power. The warrant may be exercised upon the listing of our ordinary shares on the New York Stock Exchange (or other internationally recognized stock exchange) which occurs after the mandatory redeemable notes and the mandatory convertible notes have been repaid in full (the scheduled final maturity dates of both notes being November 16, 2008).
(5)	Represents the consideration paid by Deutsche Bank AG under the instrument governing this warrant. The exercise price of this warrant is the lower of (i) 25 times Tianwei Yingli’s net income for the year ended December 31, 2006, multiplied by our ownership percentage in Tianwei Yingli and divided by the total number of our outstanding ordinary shares on a fully diluted basis and (ii) 67.5% of the offering price of our ordinary shares in a public offering of our ordinary shares and listing of such shares on the New York Stock Exchange or any other internationally recognized stock exchange.
(6)	Represents the consideration paid by the Series B preferred shareholders under the share purchase agreement for issuance and sale of the Series B preferred shares. US$0.42 per share of this consideration was allocated on a relative fair value basis to the warrants issued in connection with the Series B preferred shares, based on a valuation performed by us with the assistance of American Appraisal.
(7)	Represents the consideration paid by the Series B preferred shareholders under the respective instruments governing these warrants. US$0.42 per share of the consideration paid by the Series B preferred shareholders under the share purchase agreement for issuance and sale of the Series B preferred shares was allocated to these warrants on a relative fair value basis. The exercise price of these warrants is US$0.01 per share, which is the par value per share of our ordinary and preferred shares.
(8)	The warrants were issued in consideration of the early termination of an escrow arrangement which removed the restriction on the proceeds of US$19.6 million that were received from the issuance and sale of the Series B preferred shares that took place from December 20, 2006 through January 13, 2007.

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