8-KOther Events

FIRST SOLAR, INC. 8-K Report, Corporate Update (Feb 9, 2012)

Filed February 9, 2012For Securities:FSLR

Summary

This 8-K filing from First Solar, Inc. provides an update on the Antelope Valley Solar Ranch One (AVSR) project, a 230-megawatt solar facility developed by First Solar and sold to Exelon Corporation. The U.S. Department of Energy (DOE) has provided a loan and loan guarantee for the project, but initial funding has been delayed due to an outstanding construction permit issue. The deadline for initial loan funding has been extended to February 24, 2012. Investors should note the potential for First Solar to repurchase the AVSR project from Exelon for approximately $75 million plus certain costs if the DOE loan does not fund by the extended deadline. First Solar states that it has sufficient cash resources to manage this potential repurchase while also meeting its operational and capital expenditure needs. The company expects to begin recognizing revenue from AVSR only after the DOE loan is initially funded, highlighting the direct link between project financing and revenue recognition for this significant development.

Key Highlights

  • 1Update on the Antelope Valley Solar Ranch One (AVSR) project financing with the U.S. Department of Energy (DOE).
  • 2Initial DOE loan funding for AVSR is delayed due to an unresolved construction permit issue.
  • 3The deadline for initial DOE loan funding has been extended to February 24, 2012.
  • 4First Solar may be required to repurchase the AVSR project from Exelon if the DOE loan does not fund by the deadline.
  • 5The potential repurchase price is approximately $75 million plus certain costs incurred by Exelon.
  • 6First Solar asserts it has sufficient cash resources to fund a potential repurchase and meet ongoing business needs.
  • 7Revenue recognition for AVSR is contingent upon the initial funding of the DOE loan.

Frequently Asked Questions

The primary reason for the delay is an outstanding construction permit issue that needs to be resolved before the U.S. Department of Energy (DOE) can disburse the initial loan funding for the project.

If the initial DOE loan funding does not occur by February 24, 2012, and the deadline is not extended further, First Solar is obligated to repurchase the AVSR project from Exelon Corporation for approximately $75 million plus certain costs Exelon incurred. The reacquired project would then be available for First Solar to sell to another party.

Yes, First Solar stated in the filing that its current cash and other capital resources are expected to be sufficient to enable the repurchase of AVSR, if necessary, while also meeting the company's working capital and capital expenditure needs.

First Solar expects to begin recognizing revenue for the AVSR project only after the initial funding of the DOE loan has occurred. This means revenue recognition is directly tied to the successful resolution of the financing delay.