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Principal Solar is on schedule to build the largest solar farm east of the Rockies. Principal Solar has tremendous potential in terms of expanding its solar utility distribution because of backing by wealthy investors. Principal Solar’s stock has significantly underperformed its competition. On June 1, I wrote an article on Principal Solar’s ( OTCPK:PSWW ) business strategy as the “world’s first distributed solar utility.” The company had issued a series of press releases announcing its plans. Starting on Feb. 4, 2015, it announced that it was building the largest solar project east of the Rockies, which was followed on March 9, 2015, by news that a second, equally large plant would be built in North Carolina. (See company press releases at principalsolar.com for more details.) PSWW then attempted to attract investors when a proposed IPO was announced on May 20, 2015, and an S-1 was filed with the SEC seeking to raise $27.5 million. On June 5, 2015, management announced a reverse 1:4 stock split. When these tactics didn’t work, management lowered the IPO to $12 million. When that proved unsuccessful in generating finds, management withdrew the IPO. One of the interesting notations in this article was that “The Dallas energy company [Principal Solar], backed by oil billionaire Ray Hunt.” Interestingly, a separate article on Bizjournals.com notes the following: A Nov. 3 date has been set for a hearing on whether to confirm a plan that could eject Energy Future Holdings from bankruptcy by allowing the Dallas-based energy giant to sell its transmission utility Oncor to a consortium led by Hunt Consolidated Energy. Ray Hunt’s son, Hunter, is CEO of Hunt Consolidated Energy. In a deal valued at about $19 billion, Energy Future’s revised plan calls for selling Oncor to a consortium that includes its junior creditors, Hunt Consolidated, the Teacher Retirement System of Texas and investment firms Anchorage Capital Group, Arrowgrass Capital Partners, Avenue Capital Group, BlackRock and Centerbridge Partners. As I mentioned in my June article: Texas has plenty of rich investors. With 93 billionaires with a combined net worth of $493.5 billion, California has the highest number of Forbes 400 members. New York claims the second spot with 65 members, followed by Texas (39), Florida (31), and Illinois (17). So a silk purse is PSWW’s relationship with Hunt, which in turn seems to have the connections to attract additional high-worth investors. On Aug. 26, Principal Solar issued its latest press release, which states: PSWW has agreed to terms to co-develop its first major solar asset with affiliates of Entropy Investment Management, LLC (‘Entropy’). The 100MW facility, located in Cumberland County, North Carolina, will produce enough electricity to power approximately 20,000 average American homes. Construction began the week of Aug. 17, 2015, and the project is expected to begin generating power before the end of 2015. In the transaction, PSI will continue to play an important role in completing the project’s development phase and sold its interest in the project to affiliates of Entropy. PSWW seems to be changing its contractors. A company press release from May 11, 2015, stated that Alpha Energy would be its contractor to build the Cumberland solar farm. Initially, PSWW announced that Spanish firm Isolux Corsan as its engineering, procurement and construction contractor. Additional confusion comes from a Feb. 5, 2015, article in CleanTechnica.com : Principal Solar acquired the right to develop the project from Innovative Solar Systems, LLC of Asheville, North Carolina. The acquisition of the project is expected to close no later than June 3, 2015, with construction to be completed in early 2016. In July, I phoned John Green, managing partner of Innovation Solar Solutions, and he told me that all contracts have been signed and the project was on schedule. So here are my big questions: Why did the company announce that it expected to close the deal on June 3 and never make the announcement, even though a month later John Green said the project was proceeding and on schedule? Why did management wait until Aug. 26, nine days after construction began and two months after the failed IPO and plummeting stock? Why is PSWW down from a high of $35.60 in April to close at $1 on Tuesday? I don’t want to speculate, but I thought executives of companies did everything they could to prop up the price of stock for investors. I would like to understand these questions, but emails to PSWW’s CEO, CFO, and VP went unanswered. Principal Solar is competing against some heavyweights in the solar power utility market — Solar City (NASDAQ: SCTY ), TerraForm Power (NASDAQ: TERP ), Canadian Solar, and First Solar ( OTCQB:FLSR ). However, TERP is down from about $40 per share in July to close at $21.63 on Tuesday. SCTY is down from $60 per share in August to $50.10 on Tuesday, and FLSR is down from $53 in June to $49 on Tuesday. Yet PSWW is down from $35.60 to $1. Principal Solar is a silk purse when it comes to investor potential, primarily through Hunt. If Hunt acquires Oncor, there are significant opportunities for PSWW. Hunt Consolidated would own Oncor and Ray Hunt, who is the father of Hunter Hunt, CEO of Hunt Consolidated, is a backer of PSWW. According to the Oncor website: Oncor is a regulated electric distribution and transmission business that uses superior asset management skills to provide reliable electricity delivery to consumers. Oncor operates the largest distribution and transmission system in Texas, providing power to 3 million electric delivery points over more than 103,000 miles of distribution and 15,000 miles of transmission lines. From an investor standpoint, PSWW certainly looks like a sow’s ear at this time. But the deep pockets and strategy of the company executives could turn the stock into a silk purse. The man question is whether stock investors will buy the incongruous events and look to the future. Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Scalper1 News
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