Trina Solar Limited (NYSE:TSL) has planned a special shareholder meeting for December 15 at which shareholders will vote to approve or reject a deal that seeks to take the company private. A group of investors made an offer to acquire Trina Solar for $1.1 billion. The offer values the company at $11.60 a share. Those investors include Jifan Gao, the founder and chairman of Trina Solar.
But as the vote nears, Trina Solar stock has exhibited volatility, raising several questions, including whether the takeover deal could fall apart as investors who wanted to take the company private walk away. The surprise victory of Donald Trump in the U.S. presidential election earlier this month has complicated the picture for renewable energy companies. Trump is a climate change denier, claiming in a series of tweets before he was elected president that climate change is a hoax and a form of economic sabotage against the U.S.
Given Trump’s public comments about climate change, some are worried that the President-elect may not support clean energy programs as the outgoing Obama administration has done. But a lack of White House support for renewable energy may slow down the uptake of solar panels and other clean energy products and solutions that Trina Solar and its peers sell.
Besides Trina Solar, Trump presidency could also hurt Tesla Motors Inc (NASDAQ:TSLA), a maker of electric vehicles. Tesla benefits from emissions credit, which may dry up under Trump administration.
Soaring interest expenses
In addition to shareholder vote uncertainty and the Trump issue looming large, the picture in Trina Solar is further complicated by the company’s heavy debt load. The company’s interest expenses rose to $28.6 million in 3Q16, up from $26.0 million in 3Q15. Trina Solar’s short-term debt at the end of 3Q16 stood at $1.1 billion, while long-term debt was $649 million. The highly leveraged balance sheet is a cause for concern for many investors.
Trina Solar shares pulled back 8.4% to close at $9.18 in the last session, thus touching a new 10-month low. The stock is more than 16% YTD.
