SunPower Reclassifying Convertible Debt (SPWR)

SunPower Corporation (NASDAQ: SPWR) price of its common stock on at least 20 of the last 30 trading days during the fiscal quarter ending June 29, 2008 has equaled or exceeded $70.94, which represents 125% of the conversion price for one series of its outstanding senior convertible debentures. 

As a result, the market price conversion trigger has been satisfied and the debentures may be converted at the holders’ option during SunPower’s third fiscal quarter ending September 28, 2008.  Given that the market value of the debentures substantially exceeds the value holders would receive upon stock conversion, the company believes that holders may not have a significant economic incentive to convert at current prices.  As the principal amount of any debentures surrendered for conversion must be settled in cash, SunPower must satisfy the remaining conversion obligation of the 1.25% senior convertible debentures due 2027 in shares of common stock and it will classify the $200 million as short-term debt on its June 29, 2008 balance sheet.

If the common stock price conversion test isn’t met in a subsequent quarter, the debentures may then be re-classified as non-current debt as of the end of such quarter.

Based on SunPower’s current financial condition, its management believes that liquidity from the current sources combined with the potential future sources of funding from debt and equity markets will be adequate to fund SunPower’s financial obligations and to fund its planned capital expenditures and business plans over the next 12 months.

To put this in perspective, SunPower Corp. has a market cap of $6.89 Billion and the company had raw liquidity of cash, cash equivalents, and investments of over $558 million as of its last year-end.  Shares also closed at $81.36 on Friday and its 52-Week Trading Range is $53.18 to $164.49.

Jon C. Ogg
June 23, 2008