(Reuters) - First Solar (FSLR.O) said the U.S. Department of Energy has not released loan funds for a big California solar project because of construction permit issues, sending its shares down as much as 11 percent.
The DOE loan delay threatens to cancel a sale of the project to Exelon Corp (EXC.N), potentially leaving First Solar on the hook for $75 million.
In September, the DOE had finalized a $646 million loan guarantee to support the 230-megawatt Antelope Valley Solar Ranch One project in northern Los Angeles County.
If initial funding for the project does not come by February 24, it will have to buy the project back from Exelon, First Solar said in a regulatory filing on Thursday.
The DOE's loan program has faced intense scrutiny after the high-profile collapse of Solyndra, a solar panel maker that was the first company to receive funding under the program.
"We believe Exelon will not exit (the Antelope project) over minor issues like a construction permit," Auriga USA analyst Hari Chandra Polavarapu wrote in a note to clients.
First Solar, which developed and sold the Antelope project to Exelon for $75 million, said it can buy back the project with its existing cash and resources.
"We note the DOE loan/loan guarantee itself is not under any threat," Polavarapu said.
First Solar had secured DOE loan guarantees for three major projects last year. They were then sold to NextEra Energy (NEE.N), NRG Energy (NRG.N) and Exelon.
GERMANY PRODUCTION CUT
The world's most valuable solar company, which has been hit by falling renewable energy subsidies in top market Europe, also said it will idle half of its production capacity in Frankfurt (Oder), starting March 1.
"To minimize the impact on our 1,200 associates there, we plan to evenly divide shifts amongst the workforce and have applied to German authorities for temporary short-time support. We intend to meet demand in the EU with production from our German factory," a First Solar spokesman said in Germany.
The German factory's capacity is about 500 megawatt (MW). About 46 percent of the company's 2010 net sales came from the country.
Shares of the Tempe, Arizona-based company were down 9 percent at $44.65 in morning trading on the Nasdaq. The stock has dropped more than 66 percent in the past year.