Solar Power Inc. (OTCMKTS:SOPW) recently saw a spectacular rise in price from pennies to highs near $3 per share. There was a short attack the tanked this one to lows near $1.50 before SOPW regained its strength and has been moving upwards since.
SOPW has been busy purchasing 8 new solar plant contracts including plants in Jiangxi Province, WIRCON JV in UK, Shandong Province, United Kingdom, Hawaii, and another one in Shandong Province.
Solar Power Inc. (OTCMKTS:SOPW) commonly referred to as SPI Solar (“SPI”) is a vertically-integrated photovoltaic solar developer offering its own brand of high-quality, low-cost distributed generation and utility-scale solar energy facility development services.
From project development, to project financing and to post-construction asset management, SPI delivers turnkey world-class photovoltaic solar energy facilities and turnkey residential solar solutions to its business, government and utility customers.
Based in California, SPI has sourced most of its solar panels from LDK Solar Co, Ltd.(OTCPK:LDKSY), a financially-wounded Chinese solar panel manufacturer that is currently in the process of a debt restructuring.
On October 3, SPI announced that it has closed the acquisition of Sinsin Renewable Investment Limited (“SRIL”), a limited liability company registered in Malta, as announced on September 9, 2014. Under the terms of the agreement, SPI’s subsidiary, SPI China (HK) Limited, acquired all of the outstanding capital stock of SRIL from Sinsin Europe Solar Asset and Sinsin Solar Capital (collectively “Sinsin”) for an aggregate purchase price of 70,660,000 Euros (U.S. $91,780,000) using a mixture of cash and SPI shares, including $27.4 million in SPI shares at $0.72 a share.
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As a result, SPI immediately adds solar photovoltaic (“PV”) projects in Greece with an annual nameplate capacity of 26.57 megawatts (“MW”) to its global portfolio. In addition, following the close of the transaction, the agreement contains a provision specifying that Sinsin or its affiliates may appoint SPI and its subsidiaries to provide engineering, procurement and construction (“EPC”) services on up to 360 MW of additional solar PV projects that Sinsin intends to invest in and/or develop over the next three years.
SOPW announced 2 new private placements towards the end of September; on September 17 the Company announced the completion of its private placement of common stock for an aggregate $25.0 million, as announced on July 29, 2014. Net proceeds are expected to be used for expansion of SPI’s global PV project activities, continued investment in ramping its YES!®Solar solution for the residential and small business segments, and for working capital purposes.
Then on September 23 SOPW announced that it has entered into a definitive purchase agreement for the sale of $48.25 million of common stock in a private placement. The company intends to use the net proceeds from the sale of the shares for expansion of SPI’s global PV project activities, continued investment in ramping its YES!®Solar solution for the residential and small business segments and for working capital purposes.
Clearly the filings being put out by SPI read more like a big board stock than a Company trading on the OTCBB but confusingly (considering the chart action) the filings how a Company that looks to be winding down rather than one that is growing. SPI is a Company that was doing over $10 million a quarter in sales just 3 years ago. That number has now fallen to less than half that.
Over the past 5 years the Company’s employee count has gone from 495 back in 2009 to a current count of 13 total employees. Not a lot of people for a Company that still claims over $72 million in total assets.
Most troubling on SPI is the massive increase in shares! Looking at a 10q from 2 years ago the Company had less than 200 million shares out – at $0.25 per share SPI traded at a very reasonable $50 million total valuation. A lot has changed however; according to the latest 1b the Company has 341 million shares out add to that the last 2 private placement which happened after that quarter and the OS goes well into the 400 million range, possibly close to 500 million total OS.
Conclusion: SOPW continues to make impressive gains on the OTCBB as the stock has run from its $0.25 base a few months ago to current highs over $1.50 per share. Currently trading at a market valuation in the $600 to $800 million range SPI is valued over 15 times what it was trading for a few years ago at double the revenues. It seems SPOW has been growing fast through acquisition in recent months and investors clearly like what they see. One cannot argue with the fact that the significant private placements announced recently show a very strong believe in the Company securities by many. There is however some that suggest SPOW has run too far already.
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