SunPower Corp. experienced its most significant intraday plunge ever as the company disclosed breaches in a credit agreement, raising concerns about its ability to continue operating. The rooftop solar company, majority-owned by French energy giant TotalEnergies SE, witnessed a staggering 41% slump in its shares. The disclosure, made in a filing on Monday, revealed that a subsidiary defaulted under its credit agreement due to a delay in third-quarter financial statements.
Should SunPower’s lenders demand immediate repayment, the company may face a liquidity crisis, jeopardizing its ability to fulfill obligations and settle liabilities. The company acknowledged in its filing, “As such, substantial doubt exists about the company’s ability to continue as a going concern.”
Analysts at Roth Capital Partners estimate that SunPower could be liable for over $65 million, and they caution that the company’s cash flow challenges might have a cascading effect, significantly impacting dealers associated with the solar company.
In response to the situation, a SunPower representative stated that the company has initiated discussions with lenders and equity sponsors to explore solutions aimed at fortifying its long-term financial position. Additionally, SunPower recently secured access to $50 million from its revolving credit facility, providing some breathing room for ongoing discussions.
The Roth note also suggests that SunPower may be facing difficulties in compensating dealers responsible for installing its solar panels. In response, the SunPower representative emphasized the company’s commitment to addressing payment concerns promptly and maintaining strong partnerships with suppliers and dealers.
The broader renewable energy industry, including home solar companies, has faced challenges due to a sales slowdown triggered by rising interest rates. Higher borrowing costs for customers seeking to finance solar panel installations have contributed to the industry’s struggles. The clean-energy sector, including SunPower, has seen a significant decline in stock value, driven partly by central bank tightening. SunPower’s shares have plummeted over 75% this year as the company grapples with the impact of rising interest rates.
The developments underscore the financial challenges faced by companies in the renewable energy sector and the importance of navigating operational and financial hurdles amid evolving market conditions. SunPower’s efforts to engage with stakeholders and secure additional funds reflect its commitment to addressing the current challenges and sustaining its operations.
