SunPower secures emergency funding after debt debacle

SunPower secures emergency funding after debt debacle
(Photo by Andreas Gücklhorn on Unsplash.)

SunPower, a residential solar technology and energy services company, announced it has raised $175 million in capital financing through a second-lien term loan, following a debt fiasco that can be traced back to an inventory reporting error.

In December 2023, SunPower announced it had breached a credit agreement due to late financial reporting caused by a subsidiary’s inventory reporting error, per Reuters, which allowed its lenders to immediately demand the repayment of its $65 million debt. The company soon received a waiver from its lenders preventing technical default and providing $75 million in funding, extending the timeframe for repayment. SunPower said it would likely not be able to continue operations if it was not able to secure more funding.

Earlier this month, SunPower said it had received additional waiver extensions from Atlas Securitized Products Holdings, L.P., and Bank of America, providing for the extension of the latest temporary waivers until February 16.

The emergency loan came from Sol Holding, the company’s majority shareholder and an indirect subsidiary of TotalEnergies and Global Infrastructure Partners. The $175 million term loan includes $45 million previously funded to SunPower in December and January, $80 million in new investment, and a $50 million second tranche that is available to be borrowed upon the satisfaction of certain conditions.

In connection with the Second Lien Credit Agreement, SunPower agreed to issue penny warrants to Sol Holding to purchase up to approximately 41.8 million shares of the Company’s common stock with an additional 33.4 million of warrants issued if the $50 million second tranche of the term loan is drawn.

The Company also obtained new long-term waivers from its financial partners and entered into an amendment to its revolving debt facility, which provides the Company with access to an incremental $25 million commitment for loans under its revolving debt capacity, subject to certain conditions. Together, SunPower says these actions provide it with up to $155 million of additional liquidity.