SunPower to Sell Stake in Solar Farm to Its 8Point3 Yieldcoby
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.
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.