Shares of residential solar companySunPower(NASDAQ: SPWR) jumped as much as 27.4% in trading on Thursday after the company announced some new financing updates. Shares drifted lower as the day went on and are now up 19.9% at 3:15 p.m. ET.
SunPower's debt kicked down the road
SunPower has been in default on some of its debt, leading to a "going concern" warning to investors. However, the company has gotten waivers from debtholders and is looking for more financing options.
Today's news was that debtholders had agreed to give another waiver extension on debt covenants until Feb. 16, 2024. The company also has commitments for $20 million in financing from TotalEnergies and Global Infrastructure Partners, SunPower's majority shareholders.
This gives a temporary reprieve to SunPower in the hopes of refinancing debt in the near future.
Where does SunPower go from here?
SunPower has a lot of questions to answer between now and when waivers end and earnings are released. But there's at least some indication that TotalEnergies will step in and not let the company collapse.
Most of the challenges facing solar companies are short term in nature given rising interest rates and the changes to California's net energy metering policy. But there are longer-term challenges like how companies can cut costs in the future and whether rooftop solar will be competitive with utility prices.
For today, the worst fears have passed SunPower, but that doesn't mean the company is in the clear. Financing still needs to be lined up for the rest of 2024, including potential asset sales, so expect more fireworks from the stock.
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Travis Hoium has positions in SunPower. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
