SunPower Prices Offerings Of 9,000,000 Shares of Class A Common Stock & $200 Million Of Senior Convertible Debentures

April 29, 2009 by Jeff Shepard

SunPower Corp. announced the pricing of its public offering of 9,000,000 shares of class A common stock at $22.00 per share, and the pricing of its $200 million aggregate principal amount of 4.75% senior convertible debentures due 2014. SunPower has also granted the underwriters an overallotment option with respect to an additional 1,350,000 shares of class A common stock and an additional $30.0 million aggregate principal amount of senior convertible debentures.

The aggregate net proceeds from the sale of the debentures and the shares of class A common stock being offered are expected to be approximately $363.1 million, after deducting the underwriters’ discounts and estimated offering expenses payable by the company (including the cost of certain convertible hedge and warrant transactions entered into in connection with the debenture offering), assuming the underwriters do not exercise their option to purchase additional debentures or shares of class A common stock.

The senior convertible debentures will bear interest at a rate of 4.75% per year, payable on April 15 and October 15 of each year, commencing on October 15, 2009. The debentures will mature on April 15, 2014. Holders may require the company to repurchase all or a portion of their debentures upon a fundamental change (as defined in the applicable prospectus supplement) at a cash repurchase price equal to 100% of the principal amount plus accrued and unpaid interest. SunPower may not redeem the debentures prior to the maturity date.

The senior convertible debentures are convertible into shares of SunPower’s class A common stock initially at a conversion rate of approximately 37.88 shares (equivalent to an initial conversion price of $26.40 per share) per $1000 principal amount of debentures, at any time on or prior to the close of business on the business day immediately preceding the maturity date. The applicable conversion rate may adjust in certain circumstances, including upon a fundamental change. Additional details are available in the prospectus and the applicable prospectus supplement to which this communication relates, which are filed with the SEC.

The debentures will be SunPower’s senior unsecured obligations and will rank equal in right of payment with all of its existing and future senior unsecured indebtedness. The debentures will be effectively subordinated to the company’s secured indebtedness to the extent of the value of the related collateral and structurally subordinated to indebtedness and other liabilities of our subsidiaries. Closing of the public offerings of shares and debentures is expected to occur on May 4, 2009. The closing of each offering is not contingent on the other.

SunPower intends to use the net proceeds for general corporate purposes, including working capital and capital expenditures as well as for the purposes described below. From time to time, it will evaluate potential acquisitions and strategic transactions of business, technologies, or products, and may use a portion of the net proceeds for such acquisitions or transactions. Currently, however, the company does not have any agreements with respect to any such material acquisitions or strategic transactions. If the underwriters exercise their overallotment option with respect to the senior convertible debentures, SunPower intends to use a portion of the proceeds therefrom to increase the size of the convertible note hedge transactions and for general corporate purposes, and may also sell additional warrants.

Excluding any exercise of the overallotment option, SunPower intends to use approximately $23 million of the proceeds from these offerings to pay the cost of the convertible debenture hedge and warrant transactions. SunPower may use a portion of the proceeds from these offerings to repurchase some of its outstanding 1.25% debentures or 0.75% debentures. The company expects that holders of its outstanding 1.25% debentures or 0.75% debentures from whom it may repurchase such debentures (which holders may include one or more of the underwriters), may have outstanding short hedge positions in its class A common stock relating to such debentures.

Upon repurchase, SunPower expects that such holders will unwind or offset those hedge positions by purchasing class A common stock in secondary market transactions, including purchases in the open market, and/or entering into various derivative transactions with respect to our class A common stock. These activities could have the effect of increasing, or preventing a decline in, the market price of our class A common stock. The effect, if any, of any of these transactions and activities on the market price of its class A common stock or the debentures will depend in part on market conditions and cannot be ascertained at this time, but may be material.