Residential solar technology company SunPower Corporation has filed for Chapter 11 protection in Delaware, citing over $2 billion in funded debt obligations and plans for an asset sale.
Liquidity Crisis and Asset Sale Plans
SunPower, known for its residential solar energy and energy storage systems installed in half a million U.S. homes, is experiencing a liquidity crisis due to declining demand. The company has secured a $45 million bid for some of its assets from solar products company Complete Solaria Inc.
“In light of the challenges SunPower has faced, the proposed transaction offers a significant opportunity for key parts of our business to continue our legacy under new ownership,” said SunPower executive chairman Tom Werner.
Company Background and Recent Changes
Founded in 1985 in California, SunPower sells and installs residential solar energy and energy storage equipment. The company has systems in approximately half a million homes in the U.S. It spun off its manufacturing division in 2020, acquired Blue Raven Solar in 2021, and sold its commercial and industrial businesses in 2022. SunPower currently sells equipment and installation directly to homeowners through Blue Raven and to home builders through its New Home business, along with a network of dealers.
Debt and Financial Challenges
According to court filings, SunPower’s prepetition debt includes:
- A $200 million first-lien revolving credit facility
- A $93 million first-lien term loan
- An $185 million second-lien term loan
- A $5 million letter of credit
- Over $1.53 billion in obligations for the funded debt of nondebtor affiliates
Matthew Henry, SunPower’s global transformation officer, stated that inflation and higher interest rates slowed the home solar market growth in 2022 and 2023. The company issued two restatements of prior financial statements in 2023, resulting in a drop in share prices and multiple investor suits. Despite taking out a second-lien loan in February, SunPower faced continued obstacles, including depressed demand, key lender withdrawal, auditor resignation, and drying up of investment capital. The company laid off 1,000 employees in April.
“The debtors have now reached the end of their liquidity runway,” Henry said.
Chapter 11 Filing Goals and Stalking Horse Bid
The goal of the Chapter 11 filing is to auction SunPower’s assets, with Complete Solaria’s $45 million bid serving as a backstop for the sale of the Blue Raven and New Homes business.
“This acquisition will strengthen our position in the market and put more muscle behind our commitment to driving the future of clean, reliable energy,” said Complete Solaria CEO J.J. Rogers.
Henry noted that prepetition lenders have agreed to allow SunPower to use their cash collateral to fund the case if the company completes its asset sale by the end of September.
“Liquidity is limited, and time is of the essence,” he emphasized.
Advisers and Legal Representation
SunPower has retained Alvarez & Marsal North America as its financial adviser and Moelis & Co. as its investment banker. The company is represented by:
- Kevin Gross, Mark D. Collins, and Jason M. Madron of Richard Layton & Finger PA
- Joshua A. Sussberg, Zachary R. Manning, Chad J. Husnick, Jeffrey Michalik, and Robert Jacobson of Kirkland & Ellis LLP
The case is In re: SunPower Corp. et al., case number 1:24-bk-11649, in the U.S. Bankruptcy Court for the District of Delaware.
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