SunPower – Solyndra squared?

Now Department of Energy Is Going International

How did a company get a $1.2 billion Department of Energy (DOE) loan guarantee three weeks after it announced it was building new manufacturing plant in Mexicali, Mexico to build the panels for a photovoltaic electricity ranch project in eastern San Luis Obispo County, CA? The $1.2 billion DOE loan guarantee will help San Jose-based SunPower build a 250-megawatt solar plant, the California Valley Solar Ranch (CVSR). Hours before the DOE 1705 loan program expired at the end of Fiscal Year 2011 on Sept. 30, the $1.2 billion in loan guarantees was approved for SunPower. SunPower plans to manufacture its high-efficiency E18 series, E19 series, and E20 series solar panels, and will also produce its SunPower T5 Solar Roof Tile system at the Mexicali facility.

In addition to manufacturing solar panel and roof tiles, SunPower builds solar panel ranches, like CVSR, which it then sells off, but retains the services contract. The DOE loan guarantee is earmarked for CVSR, which it has already sold to NRG Solar, but will continue to maintain. According to DOE, CVSR will create 350 construction jobs during the two-year build and 15 permanent jobs. WOW! $1.2 billion for 15 permanent jobs. What will DOE think of next?

SunPower, a failing California company whose current $800 million capitalization is below its $820 million current debt level. And, shareholders and retirement funds are suing it. But not to worry (said very sarcastically). Total, the French oil giant, paid $1.3 billion for 60% of SunPower in June, 2011. Total paid a 50% premium, or $15.26 per share, of Sunpower’s stock share value in April, 2011.

Loan Guarantee, Takeover, and Insider Stock Trading

Consider this: the loan guarantee was announced April 12, 2011, two weeks before Total launched its takeover. The takeover deal, made public April 28, 2011, allowed insider traders to get very liquid. SunPower CEO Tom Werner is typical of an inside trader. On May 24, 2011, he exercised his right to purchase 428,343 shares at $3.30 per share, a $18 discount from the day’s trading range. He sold 478,084 shares June 15, 2011, the day the Total takeover closed, at $23.25 netting him $11,115,453. Not bad for sitting on stock for less than a month.

SunPower Is In Big Trouble

Stoyan Elitzen, in September, 2011, at SeekingAlpha.com, says SunPower as the ninth-most-shorted solar stock traded. Although its stock has recovered from its all-time low of $6.60 per share to trade between $8 and $9 per share, it is far from its all-time high of $133.

An October 4, 2010 stock sell-off, dropping stock prices 12%, was triggered by the company’s Oct. 3 aftermarket statement announcing the company was paying down its $50 million credit line with a consortium of European banks and opening a new $200 million credit line with Deutsche Bank. According to the statement, Dennis V. Arriola, the company’s chief financial officer said the new credit line will improve the company’s ability to operate.

SunPower and its officers are defendants in a shareholder lawsuit, with plaintiffs including the Austin (TX) Police Retirement System, the Arkansas Teachers Retirement System, and other institutional investors for an alleged scheme to deceive the investing public by making false statements contrary to nonpublic information known to the insiders.

Political Pull

Two men with strong SunPower connections are Rep. George R. Miller III, (D-CA), the senior Democrat on the House Education and Workforce Committee and the co-chairman of the Democratic Steering and Policy Committee, and his SunPower lobbyist son, George Miller IV. Miller III is a strong advocate for SunPower, which converted an old Richmond, CA, Ford plant in his district to a panel-manufacturing facility. And SunPower employs George IV, SunPower’s top lobbyist in California. Miller IV was pushing for the $1.2 billion loan guarantee taxpayers are on the hook for now.

Of the $15,650 SunPower donated in 2010 to House and Senate candidates, $14,650 went to Democrats. Top recipients: $4,000 to Sen. Harry Reid (D – NV), $3,000 to Rep. Gabrielle Gifford (D – AZ) and $2,900 to Sen. Barbara Boxer (D – CA). Does anyone see a pattern here?

Another Solyndra?

Another Solyndra? Unless SunPower has an ace up its sleeve, it sure looks like DOE and the WH have again wasted our taxpayer dollars. Only time will tell, and we’ll be watching for an announcement from SunPower.