Summary
SunPower shares fell by more than 30% after the solar company warned that it could face bankruptcy if creditors decided to demand immediate repayment of its debts. The solar supply and services company clarified that it would not have enough liquidity to cover normal business operations if forced to meet its obligations. The company received a temporary exemption until January 19 and indicated that it is seeking additional exemptions and other financing alternatives.
Details of the News
SunPower’s shares (SPWR) fell by more than 30% after the solar supply and services company warned that it may not survive after being unable to repay its debts. The company explained that it breached its credit agreement when it failed to submit its financial results for the third quarter on time, and creditors could demand repayment of $65.3 million due. This means that SunPower “will not have enough liquidity to meet its obligations and satisfy its obligations arising from normal business operations when due.” According to the solar company, if this happens, “there are significant doubts about the company’s ability to continue as an operating entity.”
Actions Taken
SunPower noted that it received a temporary exemption from creditors earlier this month, allowing the company to postpone meeting its obligations until January 19, 2024. It stated that management “is seeking additional exemptions and evaluating various financing alternatives” to raise cash and address its liquidity needs. In October, SunPower announced it would restate its financial results for 2022 and the first two quarters of this year due to issues related to its inventory valuation.
Impact of the Crisis on Stocks
SunPower shares rose on Friday after Jefferies began coverage of the stock with a “Hold” rating. However, with the decline that occurred on Monday, the stock has lost about three-quarters of its value this year.
Sources
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Article Sources
– SunPower. “Form 10-Q/A.”
– SunPower. “Form 8-K.”
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