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Shares of First Solar Inc. tumbled then rebounded in a roller-coaster day of trading Friday, after the solar panel maker said its Topaz solar farm project will not meet a deadline to get a federal loan guarantee from the U.S. Department of Energy.
Jefferies & Co. analyst Jesse Pichel said the controversy surrounding a $528 million loan the U.S. Energy Department gave Solyndra Inc. in 2009 may be delaying the approval of loan guarantees now because Solyndra filed for bankruptcy protection this month.
Overall, shares of solar companies have taken a beating this year as a result of the global economic slump, competition from cheaper Chinese competitors and cuts to subsidies for solar energy in some European countries.
This year, the company's shares have shrunk to a fraction of what they once were. First Solar shares have fallen 58 percent from their April 1 peak. In just the past week, its shares have lost about 22 percent of their value.
THE SPARK: The Tempe, Ariz. company said Thursday that its Topaz solar farm project meets the program's standards and received a conditional commitment for a loan guarantee in June, but there wasn't enough time to process all the requirements before the Sept. 30 deadline.
THE BIG PICTURE: First Solar said it's in advanced talks for the sale and financing of the project with potential buyers, which would not need a Department of Energy loan guarantee.
The 550-megawatt solar farm in Central California is expected to be built over the next three years and use modules from First Solar factories in Ohio and Arizona. When completed, the Topaz solar farm is expected to generate enough electricity to power about 160,000 homes.
Meanwhile, the company's 230 megawatt Antelope Valley Solar Ranch 1 project and the 550 megawatt Desert Sunlight project, which also received conditional commitments, could still receive loan guarantees, First Solar said.
THE ANALYSIS: Pichel backed his "Buy" rating for the company and said he still thinks the Topaz project will still ultimately be sold, probably to a utility, even without the loan guarantee. And the impact on the purchase price will be minimal, if the buying company has a strong credit rating.
On Friday, Fremont, Calif.-based Solyndra's chief executive officer and chief financial officer declined to testify at a congressional hearing on the company's loan guarantee, invoking their Fifth Amendment rights against self-incrimination.
SHARE ACTION: First Solar shares initially lost $5.30, or 7.9 percent, sinking to a new 52-week low of $61.55 in early trading, before rebounding. As the Dow Jones industrial average also oscillated, First Solar shares then rose $6.30, or 9.6 percent, to $72.15. By early afternoon, they were trading at $68.43