First Solar, SunPower In Talks To Form Joint Yieldco

(RTTNews) - Solar products companies First Solar Inc. (FSLR) and SunPower Corp (SPWR) said they are in advanced talks to form a joint yieldco vehicle that will hold a portfolio of selected solar generation assets of both companies.

Yieldco is a publicly traded company formed to own operating assets that produce stable cash flows, which are then paid out as dividends to the shareholders or reinvested.

The dividends may be a valuable source of funding for parent companies that own a sizable stake in the yieldcos. Such yieldcos are commonly used in the renewable energy industry.

Tempe, Arizona-based First Solar and San Jose, California-based SunPower, the two largest U.S. solar panel makers, said they expect to each contribute a portfolio of selected solar generation assets from their existing portfolio of assets to the yieldco.

Upon the execution of a master formation agreement, the two companies plan to file a registration statement with the Securities and Exchange Commission or SEC for an initial public offering of limited partner interests in the yieldco.

First Solar had said in November 2014 that it was not prepared to pursue a listed yieldco at that time. Meanwhile, SunPower said last year that it was reviewing a plan to form a separately-traded company by shifting some of its solar power plants.

Both the companies are slated to report their financial results for the fourth quarter on Tuesday.

Among others in the industry, SunEdison Inc. (SUNE) spun off its own yieldco, TerraForm Power Inc. (TERP), which went public in July 2014. TerraForm Power owns and operates solar as well as wind generation assets serving utility, commercial, and residential customers. Shares of TerraPower have risen 36 percent since the IPO.

In 2012, NRG Energy Inc. (NRG) spun off its conventional power plants as well as wind and solar farms into NRG Yield Inc (NYLD).

First Solar said earlier in February that technology giant Apple Inc. (AAPL) has committed $848 million for clean energy from First Solar's California Flats Solar Project in Monterey County, California. Apple will receive electricity from 130 megawatts of the solar project under a 25-year power purchase agreement.

FLSR is trading at $57.34, up $7.70 or 15.51 percent on a volume of 3.86 million shares. SPWR is trading at $32.69, up $4.89 or 17.59 on a volume of 2.45 million shares.