SunEdison Inc: 2 Things That Could Save SUNE I w
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Posted On: 04/01/2016 1:20:01 PM
SunEdison Inc: 2 Things That Could Save SUNE
I wouldn't bet the mortgage on it, but SUNE stock does have a couple of slight chances at escape
By Aaron Levitt, InvestorPlace Contributor | Apr 1, 2016, 9:37 am EDT
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Dark clouds are swirling around solar stock SunEdison Inc (SUNE). For the past few months, nothing has gone right for SunEdison and SUNE stock holders. Failed deals, high unpayable debts and unreported earnings statements have met investors head-on.
SunEdison Inc: Is There ANY Hope for SUNE?That alone would be enough to drive any stock into the toilet, but the hits kept coming for SUNE stock. Now, the bankruptcy rumors have continued to escalate. And those rumors are so bad, they’ve begun to spill over into its yieldco TerraForm Power Inc (TERP).
All of this has pushed SUNE stock into penny stock territory, and has many investors fearing the worst.
So the question from here is: Is SunEdison a dead stock walking, or can the sun actually shine once more?
The Problems At SUNE Get Worse
March was particularly bad for SunEdison. Vivint Solar Inc (VSLR) terminated a merger agreement, then followed that up by suing SUNE. About a week later, SunEdison announced it would be delaying filing its quarterly and yearly earnings report for a second time. Shortly thereafter, the Department of Justice began investigating the firm.
5 Bottomed-Out Energy Stocks to Buy in Q2
April might not be much better, as SUNE could soon be filing for bankruptcy protection.
Top 10 Stocks for 2016
Get immediate access to the names of 10 explosive stocks set to soar... no matter what happens in Washington or on Wall Street. Click here for the Buy List — yours FREE!
SunEdison spent a ton of money buying up various entities in an effort to become the renewable energy company. Since 2014, SUNE sank about $3.3 billion in wind and solar developers to expand beyond being just a panel maker into one that builds grid scale projects for utilities. The VSLR deal was supposed to cement the firms place in the residential market.
However, all of these deals pushed SunEdison far into debt — at nearly $12 billion the last time SUNE filed an earnings report.
That debt burden might be too much to bear. According to corporate bankruptcy watchdog Debt Wire, SUNE is in talks to obtain a debtor-in-possession financing facility. That’s basically step one if you plan on filing for bankruptcy protection.
What’s telling is that source of the information was the recent regulatory filings of TerraForm Power and SunEdison’s other yieldco, TerraForm Global Inc (GLBL), which concluded that SUNE is at “substantial risk” of bankruptcy. Incidentally, Brian Wuebbels — CEO for both TerraForms and CFO for SunEdison — just resigned from the TerraForm posts, “and it was unclear whether he remained employed at SunEdison,” according to the Wall Street Journal.
That’s a pretty telling sign that SUNE is going to file.
SunEdison’s Two Glimmers of Sunshine
The outlook is certainly pretty bleak. Bankruptcy is pretty much a foregone conclusion — that is, if one slight thing doesn’t happen.
At the beginning of the month, SunEdison tapped financial adviser Rothschild to look at restructuring its debt. It’s unsure whether this is still in play, but restructuring would give SunEdison more time and would allow the company (potentially) to keep operating in its current form. Debt holders could either take a haircut and accept less for their investment or receive equity stakes in SUNE.
Either way, a restructuring would take bankruptcy off the table for now.
Another possibility would be that someone — say, a hedge fund with a big stake already in SunEdison — could step in and either offer to buy it outright, or buy up all of SUNE’s debt and take it private. David Einhort’s Greenlight Capital had a 4% stake in SunEdison as of January, and Einhorn himself owned even more, at 6.8%.
I’m sure he wouldn’t want those investments to go up in flames.
However …
The problem for SunEdison is that while both scenarios sound nice, neither have a good chance of happening.
It would take a lot for a restructuring to happen, and the fact that SUNE hasn’t supplied its financials makes it unlikely. There’s perhaps less of a chance when you consider that many of these debt holders have basically just started in with SunEdison.
As for a buyout? Much like sports trade rumors, when it comes to Wall Street M&A, there’s always a lot more smoke than there is fire. And while Einhorn has a significant stake in SunEdison, the only way he would buy the company out is if he thought a chance existed of actually turning the boat around at this point. We just don’t have any clue whether that’s the case.
In a nutshell, the likeliest path from here is bankruptcy protection. Equity holders would be wiped out, and bond holders would be made whole (or at least as whole as possible).
As we argued before, SUNE is strictly a trade and is even more so now. There is a chance that SunEdison may pull off a miracle and restructure its debt instead of filing for Chapter 11 — and if that does occur, brave speculators are going to enjoy. Heck, at roughly 50 cents per share, SUNE stock is essentially a call option on the company’s future!
If you like the odds of survival, it’s a cheap, risky, high-reward bet.
I just wouldn’t wager my mortgage on it.
As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.
More From InvestorPlace
I wouldn't bet the mortgage on it, but SUNE stock does have a couple of slight chances at escape
By Aaron Levitt, InvestorPlace Contributor | Apr 1, 2016, 9:37 am EDT
Twitter Logo Google Plus Logo RSS Logo
Aaron Levitt
Popular Posts:
3 Boring Utility Stocks With Sexy Staying Power
5 Bottomed-Out Energy Stocks to Buy in Q2
SunEdison Inc: 2 Things That Could Save SUNE
Recent Posts:
SunEdison Inc: 2 Things That Could Save SUNE
5 Bottomed-Out Energy Stocks to Buy in Q2
Want Real Emerging Market Growth? Look Towards Indian Stocks
View All Posts
Dark clouds are swirling around solar stock SunEdison Inc (SUNE). For the past few months, nothing has gone right for SunEdison and SUNE stock holders. Failed deals, high unpayable debts and unreported earnings statements have met investors head-on.
SunEdison Inc: Is There ANY Hope for SUNE?That alone would be enough to drive any stock into the toilet, but the hits kept coming for SUNE stock. Now, the bankruptcy rumors have continued to escalate. And those rumors are so bad, they’ve begun to spill over into its yieldco TerraForm Power Inc (TERP).
All of this has pushed SUNE stock into penny stock territory, and has many investors fearing the worst.
So the question from here is: Is SunEdison a dead stock walking, or can the sun actually shine once more?
The Problems At SUNE Get Worse
March was particularly bad for SunEdison. Vivint Solar Inc (VSLR) terminated a merger agreement, then followed that up by suing SUNE. About a week later, SunEdison announced it would be delaying filing its quarterly and yearly earnings report for a second time. Shortly thereafter, the Department of Justice began investigating the firm.
5 Bottomed-Out Energy Stocks to Buy in Q2
April might not be much better, as SUNE could soon be filing for bankruptcy protection.
Top 10 Stocks for 2016
Get immediate access to the names of 10 explosive stocks set to soar... no matter what happens in Washington or on Wall Street. Click here for the Buy List — yours FREE!
SunEdison spent a ton of money buying up various entities in an effort to become the renewable energy company. Since 2014, SUNE sank about $3.3 billion in wind and solar developers to expand beyond being just a panel maker into one that builds grid scale projects for utilities. The VSLR deal was supposed to cement the firms place in the residential market.
However, all of these deals pushed SunEdison far into debt — at nearly $12 billion the last time SUNE filed an earnings report.
That debt burden might be too much to bear. According to corporate bankruptcy watchdog Debt Wire, SUNE is in talks to obtain a debtor-in-possession financing facility. That’s basically step one if you plan on filing for bankruptcy protection.
What’s telling is that source of the information was the recent regulatory filings of TerraForm Power and SunEdison’s other yieldco, TerraForm Global Inc (GLBL), which concluded that SUNE is at “substantial risk” of bankruptcy. Incidentally, Brian Wuebbels — CEO for both TerraForms and CFO for SunEdison — just resigned from the TerraForm posts, “and it was unclear whether he remained employed at SunEdison,” according to the Wall Street Journal.
That’s a pretty telling sign that SUNE is going to file.
SunEdison’s Two Glimmers of Sunshine
The outlook is certainly pretty bleak. Bankruptcy is pretty much a foregone conclusion — that is, if one slight thing doesn’t happen.
At the beginning of the month, SunEdison tapped financial adviser Rothschild to look at restructuring its debt. It’s unsure whether this is still in play, but restructuring would give SunEdison more time and would allow the company (potentially) to keep operating in its current form. Debt holders could either take a haircut and accept less for their investment or receive equity stakes in SUNE.
Either way, a restructuring would take bankruptcy off the table for now.
Another possibility would be that someone — say, a hedge fund with a big stake already in SunEdison — could step in and either offer to buy it outright, or buy up all of SUNE’s debt and take it private. David Einhort’s Greenlight Capital had a 4% stake in SunEdison as of January, and Einhorn himself owned even more, at 6.8%.
I’m sure he wouldn’t want those investments to go up in flames.
However …
The problem for SunEdison is that while both scenarios sound nice, neither have a good chance of happening.
It would take a lot for a restructuring to happen, and the fact that SUNE hasn’t supplied its financials makes it unlikely. There’s perhaps less of a chance when you consider that many of these debt holders have basically just started in with SunEdison.
As for a buyout? Much like sports trade rumors, when it comes to Wall Street M&A, there’s always a lot more smoke than there is fire. And while Einhorn has a significant stake in SunEdison, the only way he would buy the company out is if he thought a chance existed of actually turning the boat around at this point. We just don’t have any clue whether that’s the case.
In a nutshell, the likeliest path from here is bankruptcy protection. Equity holders would be wiped out, and bond holders would be made whole (or at least as whole as possible).
As we argued before, SUNE is strictly a trade and is even more so now. There is a chance that SunEdison may pull off a miracle and restructure its debt instead of filing for Chapter 11 — and if that does occur, brave speculators are going to enjoy. Heck, at roughly 50 cents per share, SUNE stock is essentially a call option on the company’s future!
If you like the odds of survival, it’s a cheap, risky, high-reward bet.
I just wouldn’t wager my mortgage on it.
As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.
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I'm in it to win it!
NASDAQ DIP and RIP
Here is the best word that describes what i do here.
Intuitive;
means having the ability to understand or know something without any direct evidence or reasoning process.
I was born with it, I'm truly blessed!
Alway's searching for winners'
NASDAQ DIP and RIP
Here is the best word that describes what i do here.
Intuitive;
means having the ability to understand or know something without any direct evidence or reasoning process.
I was born with it, I'm truly blessed!
Alway's searching for winners'
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