Maxeon getting nearly $200M investment from Chinese firm

The company behind a more than billion dollar manufacturing project in Albuquerque is being investigated for violating federal securities laws, has seen a drop in stock value, delayed releasing its recent quarterly financial reports and now has received a significant investment from a Chinese company to help the company’s balance sheet.

Maxeon Solar Technologies officials said they remain committed to the project, and the company previously said it plans to break ground in the second half of 2024. The company’s CEO said it is making progress on restructuring initiatives.

“Maxeon has been facing a very difficult market environment since the third quarter of last year,” Maxeon CEO Bill Mulligan said in a Thursday news release. “These external factors led to underutilized manufacturing operations, increased product costs, and lower revenue and profit than planned.”

TCL Zhonghuan Renewable Energy Technology Co. Ltd., TZE, Maxeon’s largest shareholder which is based in China, agreed to invest $97.5 million via a debt investment and an additional $100 million equity investment, Maxeon announced Thursday.

“We believe that these transactions are necessary to provide sufficient liquidity to enable the company to return to profitability,” Mulligan said in the release. “These transactions, however, will result in substantial dilution to existing public shareholders, with TZE ultimately becoming a controlling shareholder, subject to regulatory approvals.”

Bruce Krasnow, a spokesman for the New Mexico Economic Development Department, said the state has a long history of partnering with foreign companies on projects. He gave five recent examples, which included three companies headquartered Taiwan, a Mexican company and an Australian company.

“EDD has pursued Foreign Direct Investments into New Mexico to help global companies diversify manufacturing and supply chains, to diversify our economy, and create jobs for New Mexicans,” he said.

In August, New Mexico and Maxeon officials gathered in Mesa del Sol to announce that the company was going to make an immediate $1 billion investment to build a 1.9 million-square-foot manufacturing facility in the master-planned community in south central Albuquerque. Once completed, they said, it would change the landscape of domestic solar cell manufacturing in the U.S. by onshoring production.

Construction was originally supposed to begin in early 2024, and the facility was expected to go online in 2025, according to the governor’s office.

The company is expected to receive a significant amount of public money over the coming decades, which state officials said was critical in recruiting it to New Mexico. Those government incentives could total more than $600 million over the next two decades, state officials previously have said.

The public support was expected to include $20 million in Local Economic Development Act funding, hundreds of millions of dollars in industrial revenue bonds and rebates on gross receipts for construction, plus additional incentives.

Krasnow said the LEDA money has been transferred to the city of Albuquerque for administration, but there have been no disbursements to the company yet.

“It’s not unusual for large industrial projects to take longer than expected, so please reach out to (Maxeon) for an update,” he said.

Meanwhile, Maxeon stock has dropped in value significantly in the past year. Its 52-week high was $32.58 per share, and its 52-week low was $1.71 per share. The company’s stock was trading at $2.02 on Thursday.

The Albuquerque manufacturing site would be the fruition of a key goal of the federal Inflation Reduction Act, which President Joe Biden signed into law in 2022. One of the goals of the law was to recruit major solar-cell manufacturers away from competitor countries to build sites here.

“These are some serious red flags and New Mexico’s elected officials should be demanding real answers before sending millions down this road,” said Larry Behrens, the communications director for Power the Future, a fossil fuel advocacy organization. “This is the biggest problem with the Inflation Reduction Act, taxpayers are on the hook for footing costs with little to no guarantee we will see the promised results. This is just more evidence to prove the green industry can’t stand on its own without massive handouts paid for by hardworking New Mexicans.”

Maxeon earlier this month announced it received a noncompliance notice from Nasdaq for delaying the release of its annual report. This week, two shareholder rights law firms announced they were investigating the company for potential violations of federal securities laws.

A Maxeon spokesman said in an email that the company remains committed to the Albuquerque project, and that it has been managing the complicated process of building an advanced manufacturing factory in an empty field.

“That work continues, and we are committed to meeting the demand for solar energy in the United States by providing more products made in the U.S., especially for the growing utility-scale market,” the spokesman said. “Market conditions necessitate, however, a deliberate approach to realizing this goal, along with policies that crack down on cheap imports and protect Intellectual Property.”