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Sunpower Group’s \$99.6M Convertible Bond Rights Issue: A Game-Changer for Debt Restructuring and Potential Ownership Shift

Key Highlights:

• Sunpower Group plans to raise up to S\$99.61 million through a renounceable non-underwritten rights issue of convertible bonds
• The rights issue aims to repay existing convertible bonds due in 2025
• Potential change in controlling interest as BLP Capital may acquire up to 40.67% stake upon full conversion
• Whitewash waiver sought to avoid mandatory general offer
• 7.00% coupon rate on new convertible bonds with 5-year maturity

Rights Issue Details

Sunpower Group Ltd. has announced a significant financial move, proposing a renounceable non-underwritten rights issue of up to S\$99,609,642 in aggregate principal amount of 7.00% convertible bonds. These bonds are convertible into up to 398,438,568 new ordinary shares at an initial conversion price of S\$0.25 per share. The rights issue will be offered on the basis of 125 convertible bonds for every 1,000 existing shares held by entitled shareholders.

Purpose and Use of Proceeds

The primary objective of this rights issue is to repay existing convertible bonds issued to Glory Sky Vision Limited, Blue Starry Energy Limited, Green Hawaii Air Limited, and Alpha Keen Limited. These existing bonds, with an aggregate principal amount of approximately US\$130 million, are set to mature in April 2025. The company expects the balance due at maturity to be around US\$154.85 million. This refinancing strategy aims to strengthen Sunpower’s financial position and reduce its reliance on external funding sources.

Potential Ownership Shift and Whitewash Waiver

A notable aspect of this rights issue is the potential change in controlling interest. BLP Capital (Singapore) Pte. Ltd., along with other parties acting in concert (collectively known as the BLP Concert Party Group), could potentially increase their shareholding to 40.67% of the enlarged issued share capital upon full conversion of the bonds. To prevent triggering a mandatory general offer under the Singapore Code on Take-overs and Mergers, the company is seeking a whitewash waiver from the Securities Industry Council and shareholder approval.

Terms of the Convertible Bonds

The new convertible bonds offer a 7.00% per annum coupon, payable semi-annually, with a maturity of five years from the issue date. The initial conversion price of S\$0.25 represents a 9.09% discount to the closing price of S\$0.275 per share on December 6, 2024. Bondholders will have the right to convert their bonds into shares at quarterly intervals, starting 60 days after the issue date.

Shareholder Participation and Irrevocable Undertakings

Key shareholders, including Guo Hong Xin, Ma Ming, and Lin Yucheng, have provided irrevocable undertakings to subscribe to their pro-rata entitlements and, in some cases, apply for excess bonds. This commitment demonstrates insider confidence in the company’s future prospects.

Implications for Retail Investors

Retail investors should carefully consider the following points:

• The rights issue provides an opportunity to participate in the company’s refinancing at a discounted conversion price
• The potential change in controlling interest could impact future company direction and strategy
• The 7.00% coupon rate offers an attractive yield in the current interest rate environment
• The conversion feature provides upside potential if Sunpower’s share price appreciates above the conversion price

Next Steps and Timeline

Shareholders will be asked to vote on the rights issue, the whitewash waiver, and the potential transfer of controlling interest at a special general meeting to be convened. The company will issue a circular with further details and subsequently an offer information statement for eligible shareholders. The exact timeline for these events has not been disclosed but is expected in due course.

Market Reaction and Potential Price Sensitivity

This announcement could significantly impact Sunpower’s share price. Positive factors include the company’s proactive approach to refinancing and the attractive terms of the new convertible bonds. However, the potential dilution and change in controlling interest may cause some investor concern. The market will likely watch closely for the outcome of the shareholder vote and the level of participation in the rights issue.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. The information presented is based on a company announcement and may not reflect all risks or factors that could affect investment decisions. Investors should conduct their own research and consult with financial advisors before making any investment decisions. Share prices can be volatile, and past performance is not indicative of future results.

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