Shares of SunPower (NASDAQ:SPWR) plunged over 35% intro-day today following the company’s announcement of a going concern warning. This warning suggests that the company might not have sufficient liquidity to meet its financial obligations when they are due.
The company disclosed that it had lost access to its remaining revolving credit facilities due to breaches, which now allows lenders to demand immediate repayment or to pursue other remedies.
On Dec 8, SunPower obtained an Amendment and Waiver to temporarily address these defaults. This provided a waiver until Jan 19 and altered the available commitments. After this amendment, SunPower borrowed the entire $50 million available. However, projections indicate that the company might not comply with certain debt covenants in the future, which could lead to additional defaults.
Once the waiver expires, and without any further waivers, lenders will have the right to demand immediate payment or to take other actions. In response to these liquidity challenges, SunPower’s management is actively seeking additional waivers and exploring various funding options. These may include raising more funds through the issuance of equity, mezzanine, or debt securities, or through partnerships with strategic partners.