First Solar warns that construction permit issue that's blocking loan threatens to undo sale of large US$75M solar project to Exelon for Los Angeles County; terms of deal say First Solar must buy back project if loan does not come through
February 10, 2012
– First Solar is warning that a construction delay threatens to undo its sale of a large solar project planned for Los Angeles County to power producer Exelon Corp.
The company said in a filing with the Securities and Exchange Commission on Thursday that it has been unable to resolve a construction permit issue. That is blocking the distribution of funds from a federal loan guarantee to help pay for the construction of the project.
First Solar shares fell by $4.81 or 9.8 percent, to $44.22 in afternoon trading.
First Solar sold the project to Exelon for $75 million in September. Under terms of the sale, First Solar must buy the project back from Exelon if funding for the loan does not come through.
First Solar said it has until Feb. 24 to resolve the issue and receive funding.
First Solar also said that if it were forced to buy back the project it would still have enough cash to fund its business while it looked for another buyer.
First Solar is one of the world's largest makers of solar panels. Panel prices have fallen sharply in recent years as raw materials have gotten cheaper, a surge of new panel factories were built in Asia and demand from Europe, the world's biggest solar market, has waned.
In response to falling prices, First Solar has expanded its solar development business, which benefited from low panel prices.
First Solar is developing and building several large solar farms in California and the Southwest. It typically sells the projects to large power producers that then market and sell the electricity generated by the panels.
First Solar announced in September that it had received a loan guarantee from the Department of Energy of up to $646 million to help pay for construction of the project, a 230-megawatt farm in northern Los Angeles County called Antelope Valley Solar Ranch One.
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