Loans

6 Months Ended

Jun. 30, 2018

Loans [Text Block]

12. Loans

Bank loans:

Bank borrowings as of December 31, 2017 and June 30, 2018 consisted of the followings

		December 31,		June 30,
		2017		2018
Current maturities of long-term bank loans	$	-	$	4,532,681
Long-term bank borrowings		19,489,702		18,024,960
	$	19,489,702	$	22,557,641

On June 14, 2016, the Company renewed its banking facilities from Bank of Dandong for loans with a maximum amount of RMB130 million (approximately $19.6 million), including three-year long-term loans and three-year revolving bank acceptance and letters of credit bills for the period from June 13, 2016 to June 12, 2019. The banking facilities were guaranteed by Mr. Yunfei Li (“Mr. Li”), the Company’s CEO, and Ms. Qinghui Yuan, Mr. Li’s wife, Mr. Xianqian Li, the Company’s former CEO, Ms. Xiaoqiu Yu, the wife of the Company’s former CEO, Shenzhen BAK Battery Co., Ltd., the Company’s former subsidiary (“Shenzhen BAK”). Under the banking facilities, the Company borrowed various three-year term bank loans that totaled RMB126.8 million (approximately $19.2 million), bearing fixed interest at 7.2% per annum. The Company also borrowed various bank acceptance of RMB3.2 million (approximately $0.5 million) under the facilities. The Company repaid the loan and bank acceptance bills on June 12, 2018.

In the second quarter of 2018, the Company obtained another banking facilities from Bank of Dandong with bank acceptance bills of RMB5.0 million (approximately $0.8 million) for a term until October 17, 2018. As of June 30, 2018, the Company has borrowed a series of bank acceptance bills totaled RMB5.0 million (approximately $0.8 million) and pledged by $0.8 million bank deposit.

On July 6, 2016, the Company obtained banking facilities from Bank of Dalian for loans with a maximum amount of RMB10 million (approximately $1.5  million) and bank acceptance bills of RMB40 million (approximately $6.4 million) to July 5, 2017. The banking facilities were guaranteed by Mr. Li, the Company’s CEO, and Ms. Qinghui Yuan, Mr. Li’s wife, and Shenzhen BAK. Under the banking facilities, on July 6, 2016 the Company borrowed one year short-term loan of RMB10 million (approximately $1.5  million), bearing a fixed interest rate at 6.525% per annum. The Company also borrowed revolving bank acceptance totaled $6.4 million, and bank deposit of 50% was required to secure against these bank acceptance bills. The Company repaid the loan and bank acceptance bills in July and August 2017.

On November 9, 2017, the Company obtained banking facilities from China Everbright Bank Dalian Branch with a maximum amount of RMB100 million (approximately $15.1 million) with the term expiring on November 7, 2018. The banking facilities were secured by the 100% equity in CBAK Power held by BAK Asia. As of June 30, 2018, the Company borrowed a net letter of credit of RMB98.4  million (approximately $14.9  million) to November 5, 2018. Under the facilities, bank deposits of approximately 50% were required to secure against this letter of credit. The Company discounted this letter of credit of even date to China Everbright Bank at a rate of 4.505%.

On June 4, 2018, the Company obtained banking facilities from China Everbright Bank Dalian Branch with a maximum amount of RMB200 million (approximately $30.2 million) with the term from June 12, 2018 to June 10, 2021, bearing interest at 130% of benchmark rate of the People’s Bank of China (“PBOC”) for three-year long-term loans, at current rate 6.175% per annum. Under the facilities, the Company borrowed RMB126.0 million (approximately $19.0 million) and RMB23.3 million (approximately $3.5 million) on June 12 and June 20, 2018, respectively. The loans are repayable in six installments of RMB1.0 million ($0.12 million) on December 10, 2018, RMB29.0 million ($4.4 million) on June 10, 2019, RMB1.0 million ($0.12 million) on December 10, 2019, RMB89.0 million ($13.4 million) on June 10, 2020, RMB1.0 million ($0.12 million) on December 10, 2020 and RMB28.3 million ($4.34 million) on June 10, 2021. The facilities were secured by the Company’s land use rights, buildings, construction in progress, machinery and equipment.

On August 2, 2017, the Company obtained one-year term facilities from China Merchants Bank with a maximum amount of RMB100 million (approximately $15.1 million) including revolving loans, trade finance, notes discount, and acceptance of commercial bills etc. Any amount drawn under the facilities requires security in the form of cash or banking acceptance bills receivable of at least the same amount. Under the facilities, as of June 30, 2018, the Company borrowed a series of bank acceptance bills from China Merchants Bank totaled RMB55.2 million (approximately $8.3 million) and pledged $5.9 million bills receivables and $2.4 million bank deposits.

During the second quarter of 2018, the Company also obtained banking facilities from Industrial Bank Co., Ltd. Dalian Branch with bank acceptance bills of RMB6.2 million (approximately $0.9 million) for a term until December 21, 2018. As of June 30, 2018, the Company borrowed RMB6.2 million (approximately $0.9 million) bank acceptance bills and pledged RMB6.2 million (approximately $0.9 million) bank deposits.

The facilities were also secured by the Company’s assets with the following carrying amounts:

		December 31,		June 30,
		2017		2018
Pledged deposits (note 2)	$	7,808,329	$	11,709,929
Prepaid land use rights (note 9)		8,044,935		7,823,189
Buildings		18,391,993		17,126,825
Machinery and equipment		2,374,748		6,858,285
Bills receivable (note 3)		19,047,471		5,864,148
	$	55,667,476	$	49,382,376

As of June 30, 2018, the Company had unutilized committed banking facilities of $14.4 million.

During the three months ended June 30, 2017 and 2018, interest of $344,552 and $566,242, respectively, was incurred on the Company's bank borrowings.

During the six months ended June 30, 2017 and 2018, interest of 703,512 and $1,096,698, respectively, was incurred on the Company's bank borrowings.

Other Short-term Loans

Other short-term loans as of December 31, 2017 and June 30, 2018 consisted of the following:

			December 31,		June 30,
	Note		2017		2018
Advance from related parties
– Tianjin BAK New Energy Research Institute Co., Ltd (“Tianjin New Energy”)	(a)	$	11,493,437	$	13,293,097
– Mr. Xiangqian Li, the Company’s Former CEO	(b)		100,000		100,000
– Mr. Yunfei Li	(c)		-		120,871
– Shareholders	(d)		2,151,860		2,115,251
			13,745,297		15,629,219
Advances from unrelated third party
– Mr. Wenwu Yu	(e)		155,215		152,575
– Mr. Mingzhe Li	(e)		44,269		43,515
– Ms. Longqian Peng	(e)		691,669		679,902
			891,153		875,992
		$	14,636,450	$	16,505,211

(a)	The Company received advances from Tianjin New Energy, a related company under the control of Mr. Xiangqian Li, the Company’s former CEO, which was unsecured, non-interest bearing and repayable on demand. On November 1, 2016, Mr. Xiangqian Li ceased to be a shareholder but remained as a general manager of Tianjin New Energy.
(b)	Advances from Mr. Xiangqian Li, the Company’s former CEO, was unsecured, non-interest bearing and repayable on demand.
(c)	Advances from Mr. Yunfei Li, the Company’s CEO, was unsecured, non-interest bearing and repayable on demand.
(d)	The refundable deposits paid by certain shareholders in relation to share purchase (note 1) were unsecured, non-interest bearing and repayable on demand.
(e)	Advances from unrelated third parties were unsecured, non-interest bearing and repayable on demand.