Why Sunnova Energy Stock Is Tumbling Thursday

Sunnova Energy International Inc NOVA shares are trading lower Thursday following reports the company is exploring a debt restructuring that may include a bankruptcy filing.

What Happened: According to a Wall Street Journal report, Sunnova is working with JPMorgan and law firm Baker Botts to gather financial data to potentially begin negotiations with lenders about reducing its debt. The report indicates that the negotiations could take place in or out of bankruptcy court.

People familiar with the matter reportedly said holders of Sunnova’s 2026 bonds and convertible notes could potentially move to offer a debt load reduction through the exchange of near-term bonds for equity. A smaller group of debt holders is also reportedly considering a proposal.

The report indicates that Sunnova and other solar panel installers have faced weakening demand for rooftop installations, which has hurt several companies in the space. Lingering uncertainties surrounding U.S. Department of Energy tax benefits for solar panels are also impacting Sunnova’s business.

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Sunnova announced a $185 million loan from KKR earlier this month. That loan won’t be included in bankruptcy proceedings, according to people familiar with the matter.

Sunnova’s founder John Berger stepped down from his role as CEO earlier this week. On a conference call following earnings at the beginning of the month, Berger noted that the company may not be able to generate enough cash to stay in business, citing weakness in the residential solar market. The company said in the release that “substantial doubt exists” regarding the company’s ability to continue as a going concern.

NOVA Price Action: Sunnova shares are down about 94% over a one-year period. The stock was down 24.7%, trading just below 27 cents at the time of publication, per Benzinga Pro.

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