SunPower to Sell Stake in Solar Farm to Its 8Point3 Yieldco

  • 8Point3 expects an equity offering to help fund acquisition
  • JP Morgan increases price target after yieldco raises guidance

SunPower Corp. agreed to sell its 49 percent stake in a 102-megawatt solar farm in California to 8Point3 Energy Partners LP, a yieldco it co-founded with fellow manufacturer First Solar Inc. 8point3 also raised revenue guidance for 2016.

The yieldco agreed to pay $134 million for the stake in the Henrietta project in San Luis Valley, San Jose, California-based 8Point3 said in a statement Tuesday. It expects to close the deal this month.

8Point3 plans to fund the acquisition through a combination of cash on hand, borrowings under its existing credit facility and issuing additional equity, according to a separate statement Tuesday. That credit facility may soon be enlarged; 8Point3 said a group of banks committed to funding a $250 million increase to the existing credit facility, including a combined $150 million from Bank of America Corp. and Wells Fargo & Co.

Michael Morosi, an analyst at Avondale Partners LLC in Nashville, said in a research note Wednesday that he foresees a $100 million to $150 million equity offering.

Annual Distributions

The yieldco expects the acquisition of Henrietta to add about $10.9 million in annual cash distributions. Henrietta, which is slated to begin operations next month, will sell power to Pacific Gas & Electric Co. for 20 years. Southern Co. remains the majority owner of the plant.

In the third fiscal quarter ending August 31, 8Point3 reported cash available for distribution of $24.1 million, revenue of $26.1 million and net income of $15.9 million.

As part of its third quarter report, 8Point3 raised its forecast for the year. It now expects revenue of $60.2 million to $61.3 million, up from June when it said it was expecting $57.1 million to $59.1 million. Net income for the year will be $7.7 million to $8.7 million and cash available for distribution will be $74.8 million to $76.8 million.

That prompted Paul Coster, an analyst at JPMorgan Chase & Co. in New York, to bump his price target to $20 from $19, according to a research note Wednesday. Henrietta will expand 8Point3’s portfolio to 637 megawatts of solar projects.

    Before it's here, it's on the Bloomberg Terminal.