SunPower Corporation (SPWRA) raised $250 million to replenish its liquidity subsequent to its acquisition of European solar power plant developer SunRay Renewable Energy.
SunPower raised the amount in two separate offerings of senior cash convertible debentures due 2015 at a coupon rate of 4.5%. Both the offerings have already closed in April 2010. The debentures will pay interest semi-annually on Mar 15 and Sep 15 beginning Sep 15, 2010, at a rate of 4.5% per annum, and will mature on Mar 15, 2015. The company intends to use the proceeds to replenish its cash reserves used in the acquisition of SunRay Renewable Energy.
Headquartered in San Jose, California, SunPower designs, develops, manufactures, markets and sells high-performance solar electric power technology products, systems and services worldwide for residential, commercial and utility-scale power plant customers.
SunPower’s semiconductor-based solar cells and solar panels, which convert sunlight into electricity, are manufactured using proprietary processes and technologies.
The outlook for SunPower appears strong, given the revival of the alternative energy industry — and specifically solar power energy — higher captive generation of panels, rising average conversion efficiency, declining silicon cost and assured silicon supply. Furthermore, state RPS requirements, stimulus plans and ITC grants underscore the SunPower story in U.S.
SunPower may face headwinds in the near term due to oversupply of modules in the market, subsidy risk in Germany and Italy, and receding margins. Also, the company recently announced that its Philippines ’ manufacturing operations understated cost of goods sold by $33.2 million in fiscal 2008 and the first nine months of 2009. SunPower is putting its house in order by implementing financial controls to ensure financial integrity.
SunPower is also trading at a slight premium compared to its peers like Suntech Power Holdings Co. Ltd. (STP) and First Solar Inc. (FSLR) based on forward earnings estimates. Thus we advise investors to keep away from the Zacks #5 Rank stock in the near-term.
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