Shares of solar company SunEdison Inc (SUNE) were down more than 40 percent to roughly $0.25 per share during trading hours on Monday. According to a Wall Street Journal report, SunEdison is in the process of filing for bankruptcy amid questions over the company’s financial practices.
UBS analysts state:
The largest wildcard is the possibility of substantive consolidation into a SUNE bankruptcy which Moody’s currently incorporates at a “low” probability. Other risk areas include the potential for acceleration of borrowings based on delinquent 10K filing (April 14th appears to be deadline for the grace period on the revolver), SEC/DOJ review of “intercompany transactions” between SUNE-TERP, and numerous lawsuits. The bottom line is there are still several risk areas that are hard to assess the probability of having a material impact.
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TERP’s CEO stepped-down and the Board formed the new office of the chairman which is led by Peter Blackmore, the former board member of SunEdison. With eight of ten TERP board members having affiliations with SUNE still we view corporate governance as challenged.
Barclays notes some positive news, stating:
Inbound call activity for TerraForm Global and Terraform Power picked up significantly last week, with many of the calls focused on the value of the projects in YieldCos’ portfolio. Our analysis suggests that GLBL’s projects are worth ~$3 per share and TERP’s are worth ~$9, based on recent pricing for wind and solar assets in the relevant geographies (BNEF data). Neither company is current with filing so this analysis may not properly capture the current state of the Terraform balance sheets and portfolios.
See the following visualizations which highlight relevant financial figures regarding SunEdison’s dramatic fall.
Sunedison Inc. (SUNE) vs. S&P 500 Percent Change Over Time – 1 Year
Sunedison Inc. (SUNE) Historical Stock Price