KBRA Continues to Monitor SunStrong Developments
2024年7月13日 - 1:15AM
ビジネスワイヤ(英語)
KBRA continues to monitor developments relating to SunPower
Corporation’s (SunPower or the Company) financial status following
the filing of its most recent 8-K on July 3, 2024. KBRA rates the
Class A of SunStrong 2018-1 ‘A’/Watch Developing, a residential
solar lease ABS transaction . The Watch Placement was effectuated
on December 21, 2023 due to the financial health of SunPower. In
the 8-K, the Company indicated that its independent auditor, Ernest
& Young LLP (EY), has resigned. SunPower also reiterated
statements from its April 23, 2024 8-K, that its audit committee
determined recent financial statements should no longer be relied
upon and should be restated due to accounting errors. The filing
further indicated that the Securities and Exchange Commission (SEC)
had subpoenaed the Company in regard to certain accounting matters
related to revenue recognition.
According to the 8-K, on June 27, 2024 EY notified the Company
that it was resigning as the Company’s independent auditor. EY had
advised SunPower’s audit committee that information has come to its
attention that has made EY unwilling to be associated with the
financial statements prepared by management. The 8-K also states
that there was a disagreement between the Company and EY regarding
EY’s auditing scope or procedures at the time of EY’s
resignation.
The SEC subpoena was dated February 28, 2024, and related to
certain accounting matters surrounding revenue recognition focused
on the periods discussed in the Company’s April 23, 2024 8-K and
the Company’s fourth fiscal quarter of 2023. In response, the
Company’s audit committee authorized an internal review which is
ongoing and is being conducted by an independent outside law firm,
with the assistance of an independent forensic account advisor. The
Company states that it intends to fully cooperate with the SEC
investigation.
In SunPower’s December 18, 2023 10-K/A, the Company stated it
breached a covenant in its credit agreement due to a delay in
filing their 10-Q caused by them identifying a material weaknesses
in their internal controls over financial reporting. As a result,
creditors at that time could have demanded immediate repayment of
amounts owed under their credit facilities. In connection with
this, and also reported in the 10-K/A on December 18, 2023,
SunPower stated that substantial doubt exists about their ability
to continue as a going concern. Since that time, it has received
waivers from lenders of its credit facilities as it raised
additional financing commitments and was working to provide
restated audited financial statements as required under the credit
facilities. With the resignation of EY, there may be a substantial
delay until audited financial statements are available. It still
remains uncertain if the credit facility providers will continue to
provide waivers or for how long. If they don’t provide waivers and
it results in SunPower filing for bankruptcy it could cause a
manager termination event, which could negatively impact
transaction performance.
SunStrong Capital Holdings, LLC (Sunstrong), as manager of the
Sunstrong 2018-1 transaction, is responsible for providing all
administrative, collection and other management services for the
Issuer and in respect of the managing members. Sunstong was formed
in 2018 and is jointly owned 51% directly by SunPower and 49%
indirectly by HannonArmstrong. SunStrong, although obligated to
ensure all services are performed, has delegated substantially all
of its responsibilities to SunPower Services, an indirect wholly
owned subsidiary of SunPower, as sub-manager. SunStrong has
replaced GreatAmerica Portfolio Services Group LLC with Launch
Servicing, LLC., (Launch) and also Launch has transitioned to
performing warm backup servicing for SunStrong 2018-1.
Additionally, Launch will be the sub-servicer for billing and
collections activities on SunStrong 2018-1.
The involvement of Launch in the transaction could help mitigate
potential performance disruption should the situation surrounding
SunStrong continue to deteriorate. KBRA will continue to monitor
the developments and implications of SunPower’s financial health,
as well as possible manager transitions and performance of the
SunStrong 2018-1 transaction.
To access ratings click here.
Related Publications
- KBRA Maintains Watch Developing Placement on SunStrong 2018-1
Issuer, LLC
- KBRA Places Rating on SunStrong 2018-1 Issuer, LLC on Watch
Developing
About KBRA
KBRA is a full-service credit rating agency registered in the
U.S., the EU, and the UK, and is designated to provide structured
finance ratings in Canada. KBRA’s ratings can be used by investors
for regulatory capital purposes in multiple jurisdictions.
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Kenneth Martens, Senior Director +1 646-731-3373
kenneth.martens@kbra.com
Eric Neglia, Head of Commercial and Consumer ABS +1 646-731-2456
eric.neglia@kbra.com
Business Development Contact
Arielle Smelkinson, Senior Director +1 646-731-2369
arielle.smelkinson@kbra.com