Dive Brief:
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SunPower filed for Chapter 11 bankruptcy late Monday after announcing plans to sell portions of its operations to Complete Solaria for $45 million. One of the largest residential solar installation companies in the U.S., SunPower was a leading U.S. manufacturer of solar panels before it spun out its manufacturing operations in 2019.
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According to the company's bankruptcy filings, SunPower encountered an acute liquidity crisis following a steep drop in demand for residential solar and a series of erroneous financial reports that rendered the company unable to secure new financing.
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The company aims to sell its existing operations and assets as quickly as possible to pay down its outstanding debts, then it plans to wind down any unsold business operations, according to the bankruptcy documents.
Dive Insight:
SunPower's entire residential and energy storage operation appears headed for a fire sale in the wake of what Matthew Henry, SunPower's newly appointed chief transformation officer, described in bankruptcy filings as a “severe liquidity crisis.”
SunPower has faced potential defaults on various financing arrangements since October 2023, Henry said. Inflation and increased interest rates have reduced demand for residential solar, he said, which contributed to the company's decision in late 2023 and early 2024 to take on hundreds of millions in additional debts that were supposed to serve as bridge financing.
However, the company also experienced delays in filing certain financial reports with the Securities and Exchange Commission on account of errors in previous reports, Henry said. This contributed to SunPower’s inability to procure further capital in spring 2024, he said.
“While the company, along with its advisors and stakeholders, worked diligently to address its liquidity crisis, SunPower has been left with no choice but to effectuate a value-maximizing sale process through chapter 11, followed by a winddown of its businesses, for the benefit of all parties in interest,” Henry said in the company's initial bankruptcy filings.
SunPower appointed Henry in August to oversee the bankruptcy proceedings, but he will remain a managing director at Alvarez & Marsal North America. SunPower retained Alvarez & Marsal in late 2023 to help it address its financial difficulties.
The bankruptcy documents indicate that SunPower has approximately $2.01 billion in outstanding debt obligations.
SunPower has entered into an agreement to sell its Blue Raven and New Homes business units, along with a portion of its dealer network, for $45 million in cash to Complete Solaria as a so-called “stalking horse” bidder.
“Solar energy utility generation costs are now 2.4 cents per kilowatt hour (kWh) versus 3.6 cents per kWh for coal, the cheapest fossil fuel source,” T.J. Rodgers, CEO of Complete Solaria, said in a statement. “Thus the move to zero emission solar energy is accelerating, along with distributed solar power generation, as homeowners can now generate their own power for 8-10 cents per kWh, below the price of utility power in most states.”
In the statement, Rodgers adds, “We look to welcome Blue Raven Solar, the SunPower New Homes Division, and a portion of SunPower's Dealer network into the Complete Solaria portfolio. This acquisition will strengthen our position in the market and put more muscle behind our commitment to driving the future of clean, reliable energy.”
Per the stalking horse convention, the deal with Complete Solaria is intended to serve as an initial lowest-offer bid, which means that the SunPower assets in question could be sold to another company should a higher bidder materialize. SunPower's bankruptcy filings indicate that the company plans to select the successful bids on its assets by Sept. 10.
“The limited liquidity available to [SunPower] cannot support a protracted chapter 11 process,” Henry said in the bankruptcy filings.
SunPower is still “working to secure long-term solutions for the remaining areas of our business” not subject to the deal with Complete Solaria, according to a statement by Executive Chairman Tom Werner.
In the two decades since SunPower went public, the company's various solar installations have generated approximately 173 TWh of electricity, Henry said. SunPower spun off its solar panel manufacturing business in 2019, creating Maxeon Solar Technologies, which remains in operation and is now headquartered in Singapore. Henry said in the filings that SunPower sold its remaining commercial and industrial business in May 2022 to focus exclusively on residential solar.
