Maxeon Solar gives control to TZE to secure sufficient liquidity

Source: Maxeon Solar Technologies Ltd

Maxeon Solar Technologies Ltd (NASDAQ:MAXN) has resorted to support from its largest shareholder in order to meet its immediate liquidity needs, the Singapore-based firm said on Thursday in its first-quarter financial report which shows declining revenue and shipments.

According to Maxeon CEO Bill Mulligan, TCL Zhonghuan Renewable Energy Technology Co Ltd (SHE:002129), or TZE, has agreed to make a debt investment of USD 97.5 million (EUR 89.8m) and has also committed to an additional USD-100-million equity investment. The transaction, which hinges on regulatory clearances, will result in substantial dilution to existing public investors and turn TZE into a controlling shareholder.

In addition to the deal with TZE, substantially all of the holders of the USD 200 million convertible notes maturing in 2025 have agreed to exchange their bonds and accrued interest into new bonds due in 2028. The latter are convertible into equity at the noteholders' option starting July 2, with USD 137.2 million of the amount to be converted into equity upon TZE's equity investment.

"We believe that these transactions are necessary to provide sufficient liquidity to enable the company to return to profitability," said CEO Bill Mulligan.

In the first quarter of 2024, the solar cell and panel maker turned to a GAAP net loss attributable to its stockholders of USD 80.1 million against a profit of USD 20.3 million a year earlier. More details about its financial performance in that period are available in the table below.

Figures in US thousands, unless otherwise noted	Q1 2024	Q4 2023	Q1 2023
Shipments in MW	488	653	774
Revenue	187,456	228,775	318,332
GAAP gross (loss) profit	(14,871)	(34,461)	53,625
GAAP operating expenses	48,668	141,007	41,921
GAAP net (loss) income attributable to the stockholders	(80,148)	(186,334)	20,271
Capital expenditures	19,216	11,656	16,500
Adjusted EBITDA	(38,977)	(37,631)	30,984

"Maxeon has been facing a very difficult market environment since the third quarter of last year, with challenging industry pricing conditions and demand disruptions in our DG [distributed generation] business due to higher interest rates and policy changes, as well as project pushouts by two of our large-scale customers in the US. These external factors led to underutilised manufacturing operations, increased product costs, and lower revenue and profit than planned,” Mulligan noted.

Looking ahead, the company does not anticipate its Q2 and full-year 2024 results to surpass those achieved in the same period in 2023.

Figures in US millions, unless otherwise noted	Outlook Q2 2024	Outlook 2024
Shipments in MW	520 - 600	-
Revenue	160 - 200	640 - 800
Gross loss	(20) - 0	-
Non-GAAP gross loss	(20) - 0	-
Operating expenses	45 ± 2	-
Non-GAAP operating expenses	37 ± 2	-
Adjusted EBITDA	(51) - (31)	(160) - (110)
Capital expenditures	15 - 25	70 - 100

(USD 1 = EUR 0.921)

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