Sunedison Inc (SUNE), the clean-energy giant, announced today that it was looking to secure $310 million in loans just to get it through the midpoint of the year. The company realizes that it has “no assurance” that it will reach a deal for debtor-in-possession (DIP) financing, but it does mark the first time that the company has spoke to the restructuring talks it announced in March.
SunEdison to look for bankruptcy court protection?
Well, that’s anyone’s guess right now and will certainly depend on how the talks go and whether or not the company is willing to allow lenders to credit-bid or swap money owed for SunEdison assets in lieu of DIP loans.
SunEdison’s went a bit mad in purchases last year with the purchase of numerous solar and wind farms on six of the world’s seven continents. Buy the time it was finished, the company was showing debts of $11.7 billion before the calendar page flipped to October last year.
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In addition to creative accounting, SunEdison looked to cheap debt as it underwent its shopping spree from Australia to Africa and then north.
Gordon Johnson, an analyst at Axiom Capital Management, suggests that this is nothing more than a stall ahead of bankruptcy protection.
“We firmly believe that they’re going to file for Chapter 11,” he said in an interview Friday with Bloomberg. “It’s just a matter at this point of who wins the negotiations to provide the DIP facility.”
That battle will occur between banks and their interest in a sell off and the second-lien lenders that will include hedge funds looking to sell undervalued assets.
SUNE was counting money it didn’t have
On Thursday, the company admitted that many executives overestimated the amount of cash the company would have on hand to make debt payments and even went so far, without naming names to say that management was “overly optimistic” about the future shape of its cash coffers. In an additional admittance of blame the company also acknowledged unnamed “wrongdoing” by a former employee in the debacle that was the failed purchase of Vivint Solar Inc.
The disclosure yesterday, was by many estimations a bit of sleight of hand as the company was also prepared to file its 2015 annual report.
SunEdison clearly didn’t fool anyone, the stock is presently (2:23 EDT) trading at $0.37 down $0.21 or nearly 37%.