SunPower yesterday published a filing with financial regulators which sheds light on its plan to bring in more capital, as well as how much it is willing to pay for the cash injection.
According to the filing, on August 10 a SunPower subsidiary entered agreement to borrow $110 million from sustainable infrastructure investor Hannon Armstrong under a subordinated loan structure, with the proceeds being used for purposes including plans to “retire certain preferred equity”.
SunPower will be paying a pretty penny for the capital, as it comes with a 12% interest rate and limits on pre-payments. However if the rate is high, the source of SunPower’s payments is relatively solid, as the company plans to pay off the loan with net revenues from its residential lease portfolio.
The mezzanine loan – which gives the lender the right to an equity stake in the recipient business in the case of any default – comes as SunPower reported improved fundamental profitability in its second-half results.
However the PV manufacturer faces a significant outlay to retool its factories for its new back-contact technology, not to mention having to finance its planned acquisition of the SolarWorld Americas factory in Oregon.
It is unclear how much money SunPower will have to raise for the latter project. The manufacturer was sitting on $267 million in cash and equivalents at the end of the second quarter and is raising funds from a variety of sources, including $25 million from the sale of its microinverter business to Enphase.