SunPower (NASDAQ:SPWR) is down 4% off the open after the company entered into an amendment and waiver to its credit agreement with its lenders. The Amendment offers a brief exemption lasting until January 19, 2024 from current and expected breaches of financial and reporting covenants.
As part of the agreement, a new lender Sol Holding will provide $25 million of new revolving commitments while existing lenders will provide access to $25 million of existing revolving commitments.
During the Waiver Period, SunPower is subject to additional affirmative and negative covenants including, among others, (1) a requirement to deliver updated budgets every four weeks and variance reporting weekly (subject to certain permitted variances) and to use proceeds of the loans in accordance with the budget, (2) a covenant limiting material changes to the compensation of officers and directors and (3) additional limitations on debt incurrence, investments in non-loan parties and unrestricted subsidiaries and junior debt payments.
Commenting on the news, analysts said: "While the amendment should give SPWR marginal breathing room to pursue alternative options to raise capital, given the short waiver period we doubt the update will provide equity investors much confidence over the near term particularly as we expect 4Q cash flows to be impacted by panel purchases under the company's revised Maxeon (MAXN, NR) agreement. Until a more concrete solution is established, we see a potential equity raise continuing to act as a headwind to shares. Given the relatively limited terms of the amendment/waiver (short waiver period, $25mm of new revolver commitments, limitations on debt incurrence, etc.) we'd expect minimal share price reaction."