First Solar (NASDAQ: FSLR) was hit hard on Friday after the Department of Energy delayed a loan for the company’s Antelope Valley project.
The loan and loan guarantee, worth $646 million, were agreed upon in September, but now the DOE is withholding on what they say is a problem with a construction permit.
And First Solar was relying heavily on the loan for the completion of the project.
The Antelope Valley Solar Ranch is located in Los Angeles County in California and will be 230 megawatts.
First Solar was selling the ranch to Exelon Corp. (NYSE: EXC), and the deal was already in the making. Unless the loan delay is fixed by February 24th, First Solar will have to buy the ranch back.
And this will cost it $75 million.
Analyst Dan Ries of Collins Stewart downgraded First Solar on Friday from “buy” to “neutral.” He said in a statement:
“First Solar will not be able to recognize revenues from AVSR construction unless a sale is completed and funded.”
And he thinks that any profits from the first Quarter could be cancelled out.
But Hari Chandra Polavarapu of Auriga USA thinks differently:
“We believe Exelon will not exit (the Antelope project) over minor issues like a construction permit.”
And for now the loan guarantee has only been delayed, not cancelled completely. But First Solar still took a heavy hit at the possibility of losing the sale to Exelon.
First Solar fell 8.16% to $45.03 on Friday afternoon.
That’s all for now,