First Solar Inc., the world’s largest thin-film solar producer, fell 9.1 percent, the most in almost two years, in New York trading after saying it’s in talks to sell a 550-megawatt project that won’t receive a U.S. government loan guarantee.
First Solar fell $6.67 to $66.85 at 4 p.m. in Nasdaq Stock Market trading. The drop was the biggest since October 2009 and left shares of the company at their lowest in more than four years.
The Topaz Solar Farm project in California won’t meet requirements to get a $1.9 billion U.S. Energy Department loan guarantee before the Sept. 30 deadline, the Tempe, Arizona-based company said today in a statement. Ted Meyer, a company spokesman, declined to say what requirements weren’t met.
Two other First Solar projects will receive loan guarantees, said Jesse Pichel, an analyst at Jefferies & Co. in New York. The company will still be able to sell the Topaz project “without the DOE loan guarantee,” Pichel said. The company may have to accept a lower price for that project without government backing, he said.
First Solar is in “advanced talks regarding the sale and financing” of the project, according to the statement, which didn’t name a buyer.
First Solar’s failure to secure a loan guarantee for the Topaz Solar Farm will have a minimal effect on the company’s earnings, Pichel said. He has a target price of $125 on the shares and a “buy” rating.
There is a “high probability” that two other First Solar projects will receive Energy Department loan guarantees before the deadline, the company told Hari Chandra Polavarapu, an analyst at Auriga USA LLC who wrote about it in a research note. Meyer, the First Solar spokesman, declined to comment beyond the company’s statement
First Solar currently has conditional commitments for a $680 million guarantee for a 230-megawatt project and a $1.8 billion guarantee for a 550-megawatt project, according to the Energy Department’s website. The company received a $967 million guarantee for a project in Arizona in August.
The Energy Department is working to close loan guarantees before the end of the month, spokesman Damien LaVera said this week. As much as $7.3 billion in loan guarantees to 13 renewable energy projects have not yet closed, according to Bloomberg News calculations and the Energy Department website.
The program came under congressional scrutiny after the failure of a solar-panel maker it backed. Solyndra LLC filed for bankruptcy earlier this month after receiving a $535 million guarantee. The Federal Bureau of Investigation later raided the company’s headquarters. House Energy and Commerce Committee Chairman Fred Upton, a Michigan Republican, said Solyndra’s failure means the Energy Department should stop giving out loan guarantees.
The political controversy might have contributed to First Solar’s failure to get a loan guarantee, Polavarapu said.
“We suspect it is a victim of the political fallout following Solyndra’s bankruptcy,” he wrote in the note today.