Solar Stocks Eclipsed: Any impact on SunPower's BILLION RINGGIT M'sian project?

Forbes has reported that:

The solar power industry may be about to deliver investors some bad news. Analysts at two big banks say leading solar companies may miss expectations when they announce profits and could lower their forecasts for the rest of the year. Leading to the disappointment are rapidly falling prices for photovoltaic systems amid fierce competition for customers during the recession as well as scarce financing for new projects.

The Forbes report goes on to state:

SunPower ( SPWR - news - people ) illustrates the industry's woes. The San Jose, Calif. firm can afford to charge more than competitors because its solar cells produce more electricity from the same amount of sunlight than rivals'. Nevertheless, SunPower's prices fell 10% in the first three months of the year and sales dropped 50%. Both declines are smaller than the industry's as a whole, notes O'Rourke, who rates the company a "Hold." He thinks the firm could lower its 2009 forecast.

Analyst Timothy Arcuri of Citigroup isn't as optimistic. He rates SunPower a "Sell" in a recent report, explaining that falling prices will likely whittle away the premium prices the firm currently charges customers. If this bearish thesis is correct, it could spell bad news and downward revisions for First Solar ( FSLR - news - people ), Evergreen Solar ( ESLR - news - people ) and Suntech Power Holdings ( STP - news - people ) as well.

On 26th December 2008, I made a post on a report by Bloomberg that SunPower Corp. had announced that it could borrow as much as USD288 million (ONE BILLION RINGGIT) from the Malaysian government to fund a solar-panel project in the southeast Asian country. The San Jose, California-based company is said to have plans to use the funds to build a factory in Malaysia to produce more than 1,000 megawatts a year of the panel components, the company said in a statement. The unit, the company’s third in Malaysia, may start output in 2010:

To be clear, SunPower's solar products are regarded as top-notch compared to its competitors because its solar cells produce more electricity from the same amount of sunlight than rivals'.

Nevertheless, SunPower's prices fell 10% in the first three months of the year and sales dropped 50%. Both declines are smaller than the industry's as a whole, notes Steve O'Rourke, of Deutsche Bank who rates the company a "Hold." He thinks the firm could lower its 2009 forecast.

Forbes concludes thus:

One possible bright spot for the industry is the American Recovery and Reinvestment Act, signed into law in February. The bill includes grants for renewable energy projects, including solar, and reimburses buyers for 30% of their total cost. Last week the government announced guidelines for applications and reimbursements could go out later this year. The Energy Department estimates it will disburse perhaps $3 billion of such grants, boosting investment by $10 billion to $14 billion, notes O'Rourke. Citigroup ( C - news - people )'s Timothy Arcuri, however, cites "widespread skepticism" that the program will bring new investors.

This brings me to the question of how Malaysia's economic managers and planners conduct their feasibility studies when evaluating which FDIs are deserving of "soft" loans to the tune of RM1,000,000,000-00 and, which ones do not.

I also wonder how much of the "soft" loan has been disbursed to date.

And, I wonder how the SunPower project in Malaysia will pan out in the coming years.

Can anyone enlighten me and the rest of the taxpaying Malaysians?

SunPower (U.S.) Gets RM1 BILLION loan from Malaysian government for Solar-Panel Plant

Bloomberg reported that SunPower Corp., the second-biggest U.S. solar-cell maker, said it can borrow as much as USD288 million (ONE BILLION RINGGIT) from the Malaysian government to fund a solar-panel project in the southeast Asian country.

The San Jose, California-based company plans to use the funds to build a factory in Malaysia to produce more than 1,000 megawatts a year of the panel components, the company said in a statement. The unit, the company’s third in Malaysia, may start output in 2010, the company said in a statement in May.

“The loans within the agreement are divided into two tranches, and the weighted average interest rate applicable to the two tranches is competitive with the cost of borrowing under SunPower’s existing line of credit,” the statement said.

The loans can be drawn upon through 2010 and the principal is to be repaid in six quarterly payments starting in June 2015, it said.

Some questions that need answers

Perhaps the Malaysian government can clarify why an FDI from the U.S. is entitled to RM1 billion of funding?

Typically, FDIs are given a slew of incentives such as pioneer status, tax and duty exemptions and waivers, cheaper land, cheaper electricity and water and the like.

It is unusual, to say the least, that a publicly-listed U.S. technology company is entitled to loans from the Malaysian government.

• RM1 billion is a lot of money to set aside. Where is the source of these funds?
  
• Was this part of the 2009 Budget?
  
• What are the terms of repayment?
  
• What is the interest charge?
  
• What is the collateral for the loan?
  
• Can the loan agreement be made public?
  
• How many Malaysians will be employed?
• Will there be any transfer of technology?

So many questions.

It would be good if the Malaysian government can issue a public clarification on this deal in light of the RM7 billion package, part of which comprises the RM5 billion Valuecap package which is to be borrowed from EPF.

Again, where is the source of funds for the ONE BILLION RINGGIT loan to SunPower?