Stumbles for Embattled Solar Firm SunPower End in Bankruptcy (1)

After a drawn-out saga involving a restructuring and a management shakeup, one of the most prominent names in US solar, SunPower Corp., has now filed for bankruptcy.

Over the course of less than two years, the once-darling of the industry was forced to fire workers to cut costs, restate earnings and default on a credit agreement. In 2024, the firm replaced its chief executive officer, restructured its operations and lost its accountant.

Industry headwinds added to the woes: High interest rates and subsidy changes in California — the US sector’s biggest market — have been a drag for solar firms that expected big growth from President Joe Biden’s signature climate law of 2022.

SunPower said in court papers that it’s carrying about $2 billion in long-term debt and has been struggling since October to avoid potential defaults under various financing arrangements. Shareholders in the firm include France’s TotalEnergies SE.

On Tuesday, the shares fell as much as 48%, hitting an all-time low of 33 cents. The stock was trading down 15% to 69 cents as of 1:08 p.m. in New York.

“SunPower’s travails are emphatically a company-specific issue and should not be seen as a comment on the underlying demand for US residential solar,” Pavel Molchanov, an analyst with Raymond James, said by email. “It has been a difficult six months for SunPower.”

The rooftop solar company agreed to sell assets including its Blue Raven Solar installation unit and new homes businesses to Complete Solaria Inc. as a stalking horse buyer for $45 million, according to a statement late Monday. It asked the court to approve the deal by the end of September.

A SunPower installation in Napa, California.

Photographer: David Paul Morris/Bloomberg

“SunPower has faced a severe liquidity crisis caused by a sharp decline in demand in the solar market and SunPower’s inability to obtain new capital,” Matthew Henry, the company’s chief transformation officer, wrote in a bankruptcy filing.

SunPower, founded in 1985, long had a reputation for producing some of the best solar panels in the industry. But it spun off its manufacturing operations in 2020 to focus on then-surging demand for rooftop installations. That bet soon unraveled as inflation and high interest rates boosted costs for consumers. Meanwhile, the firm’s own corporate struggles stymied its operations.

“The proposed transaction offers a significant opportunity for key parts of our business to continue our legacy under new ownership,” Tom Werner, SunPower’s executive chairman, said in the statement.

Read More: SunPower Shares Slump Amid Financial Misconduct Allegations

The company notified dealers on July 17 that it was halting new installations and shipments. Analysts interpreted the move as a sign that the company was ceasing operations, prompting some to suspend coverage or lower their share-price targets to $0.

Read More: Solar CEO’s Vision of 3,200% Sector Growth Foiled by High Rates

“In a lot of ways, it was a pioneering company,” said Joe Osha, a clean energy analyst for Guggenheim Securities. “They developed some of the earliest solar technology. There are a lot of firsts out of SunPower. It’s kind of a shame it ended up here, and that’s because of a combination of bad choices and bad luck.”

Complete Solaria, the stalking horse bidder, is run by CEO T.J. Rodgers, a veteran Silicon Valley executive and an early SunPower backer who served as the company’s chairman from 2005 to 2011.

Complete Solaria rose 12% to $1.34 at 1:08 p.m. in New York.

(Updates shares, adds analyst comment in third to last paragraph.)

--With assistance from Jonathan Randles, Yi Wei Wong, Alice Huang and Dan Murtaugh.

To contact the reporters on this story:
Will Wade in New York at wwade4@bloomberg.net;
Mark Chediak in San Francisco at mchediak@bloomberg.net

To contact the editors responsible for this story:
Brian Eckhouse at beckhouse@bloomberg.net

Millie Munshi, David R. Baker

© 2024 Bloomberg L.P. All rights reserved. Used with permission.