SunEdison (SUNE) Shares Crater after Announcing Debt Issue

Shares of SunEdison Inc. were trading up +0.33 or +9.88 percent to $3.67 per share in Friday’s premarket after the company issued a new presentation this morning on its plans for debt reduction. SunEdison shares were down -2.17 or -39.38 percent to $3.34 per share in Thursday’s regular trading session after the company announced its new debt issue and other financial transactions yesterday.

Maryland Heights, Missouri based SunEdison Inc. is a world class alternative energy company that is revolutionizing the way energy is owned, generated and distributed.
The company provides electricity for commercial, residential, government and utility customers, as well as providing asset management, monitor and reporting services for solar systems around the world through the company’s Renewable Operation Center or ROC. SunEdison created TerraForm Power TERP, to own and operate its renewable energy power plants, which had their IPO in July. SunEdison has offices in North and Latin America, Europe, Africa and Asia.

The company announced yesterday that it was restructuring its debt in a transaction that would extinguish approximately $580 million in convertible debt along with $158.3 million in preferred stock. The “Second Lien Secured Term Loans” as the company referred to them, are expected to close on January 11th. The company expects to receive $725 million in cash as a result of the restructuring with SunEdison will retaining $555 million for “corporate purposes” after paying off about $170 million on its existing second lien credit facility.

In addition, SunEdison said that it would issue warrants for 28.7 million shares of its common stock along with $244.3 million in convertible notes, as well as issuing approximately 11.8 million shares of common stock in exchange for $158.3 million in preferred stock. SunEdison amended its prospectus showing as many as 41 different selling shareholders with more than 56 million shares for sale. The shareholders included Luxor Capital and Greenlight Capital.

Last month, SunEdison entered into a transaction to eliminate $336 million in debt by trading equity in some of the company’s developed assets in addition to 12 million Class A shares of TerraForm Power, one of SunEdison’s two yieldcos. News of the transaction sent the stock up as much as eight percent after the announcement.

The cost of the transaction according to the company’s press release: “The Second Lien Facilities will be comprised of $500 million of A1 loans, and $225 million of A2 loans, each of which will bear interest at a rate of LIBOR + 10.0% per annum and will mature on July 2, 2018. Lenders under the A1 portion of the facilities will receive warrants exercisable at any time for an aggregate of 19.8 million shares of common stock, and lenders under the A2 portion of the facilities will receive warrants exercisable at any time for an aggregate of 8.9 million shares of common stock, in each case at an exercise price of $0.01 per share.”

Analysts say the deal’s interest expense is exorbitant, with one analyst saying that SunEdison’s interest expense could grow by as much as $40 million a year. In addition, shareholders will have to take an 18 percent dilution to the value of their stockholdings.

SunEdison stock has been hammered on news of the restructuring. Nevertheless, shares are recovering somewhat in this morning’s premarket. SunEdison stock is now trading at a fraction of its former value that saw the stock was trading over $30 per share as recently as last July.

Other News About SUNE

SunEdison Helps City of Watervliet, New York Save More Than $1 Million with Solar

SunEdison signed a 20 year power purchase agreement with the city.

Kessler Topaz Meltzer & Check, LLP Reminds SunEdison, Inc. Shareholders of Class Action Lawsuit

Class action lawsuit is for investors that purchased SunEdison stock between June and October of 2015.

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Published on Jan 8, 2016
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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