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Lawsuit challenges SunPower disclosures

Trustees for a pension fund are suing SunPower Corp. for allegedly concealing the financial problems it has faced in recent months.

The complaint, which was filed Dec. 14 in U.S. District Court for the Northern District of California, focused on an August announcement that the solar panel manufacturer and power plant developer planned to cut 15% of its workforce and shut a panel facility in the Philippines in response to declining prices for power purchase agreements and a shift in customer timelines after Congress extended the investment tax credit in December 2015.

As a result, the company said it expected to incur up to $45 million in restructuring charges. It also lowered its 2016 earnings guidance and forecast a loss next year.

Robert W. Baird & Co. analyst Ben Kallo, who was quoted in the lawsuit, told SunPower executives on an Aug. 9 conference call that he felt "blindsided" by the news. "When you guys have publicly spoken over the past near couple of weeks, we didn't hear any kind of hint of this call, and we've heard about stuff at the marketplace, but nothing of this kind of size of realignment," Kallo said.

Trustees for the City of Warren (Mich.) Police and Fire Retirement System said company executives "knew or recklessly disregarded the negative factors" at the start of the year and made statements and SEC filings in February and March that "continued to highlight the strength of the Company's financial performance and maintain its positive, albeit false, guidance for 2016 and beyond."

SunPower did not immediately respond to a request for comment on Dec. 16.

SunPower Chairman, President and CEO Thomas Werner, on the Aug. 9 earnings call, said "the market developments" showed up beginning in May. "I can assure you, I'm not a liar," he said. "I understand the concern, but the fact of the matter is these changes materialized for us over the last few months."

On Dec. 7, the company said it will make further cuts, laying off a quarter of its workforce and taking up to $275 million in restructuring charges. Like other manufacturers, SunPower has been hit by continuing steep declines in solar panel prices.

"We do see some stabilization of pricing," Werner said on a Dec. 7 call with Wall Street analysts. "But we've been careful to, at best, put stable pricing into our 2017 [guidance], so that we're planning conservatively." The company expects positive cash flow from operations next year.

Shares in SunPower, which is majority-owned by Total SA, are down 50% since Aug. 9 and 75% since the start of the year.