SunEdison (SUNE) Stock Drops -40 Percent as Company Faces $1.4B Potential Default

Shares of SunEdison Inc. were trading down -0.52 or -40.89 percent to $0.74 per share in Tuesday’s premarket after one of the company’s two “yieldcos” announced it would join its parent company and SunEdison’s other yieldco in delaying the release of their annual report for its fiscal year ended on December 31st.  SunEdison shares closed at $1.26 per share, up +0.05 or +4.13 percent in Monday’s regular trading session.

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), and TerraForm Global Inc. (GLBL). The two companies are “yieldcos”, set up to own and operate SunEdison’s renewable energy power plants. SunEdison has offices in North and Latin America, Europe, Africa and Asia.

In a press release this morning, citing their relationship with controlling shareholder, SunEdison, TerraForm Global Inc. announced that they anticipated the filing of their Annual Report on SEC Form 10-K would be delayed beyond March 30th, the day its annual report is due. TerraForm Global is joining both SunEdison and its other yieldco, TerraForm Power Inc. in delaying their annual reports and expects to file a Form 12b-25 Notification of Late Filing on or before March 30th.

SunEdison was already in the process of being investigated for overstating their cash position according to a Wall Street Journal article published just hours before the TerraForm Global press release. SunEdison filed a Form 12b-25 Notification of Late Filing on March 16th.

SunEdison stated that the delay was in large part due to the additional scope of work required from SunEdison’s management’s identification of material weakness in financial reporting. Because of the additional procedures, management has not been able to complete SunEdison’s annual financial statements and related documents.

According to TerraForm Global’s statement, “There is a substantial risk that SunEdison will soon seek bankruptcy protection.” SunEdison is currently saddled with $11.67 billion in debt due to its aggressive acquisition strategy.

TerraForm Global also stated that due to not relying on SunEdison for liquidity or funding, the company would have sufficient liquidity to continue operations despite its parent company seeking bankruptcy protection.

According to the TerraForm release, “SunEdison has not performed as obligated under the Management Services Agreement, in particular with respect to financial reporting and control matters. Additionally, SunEdison has not or may not be able to perform under other agreements, including agreements with respect to the pending contribution of the projects in Uruguay and India, which were part of TerraForm Global’s IPO portfolio, and the pending dropdown of the additional India project portfolio aggregating 425 MW purchased by TerraForm Global, LLC (“Global LLC”) in the fourth quarter of 2015.”

SunEdison shares are now trading under $1 per share and have lost more than 96 percent of their value in the last year. The company’s valuation is now under $400 million, down from $10 billion last July. The stocks of the TerraForm Global and TerraForm Power were also under pressure in this morning’s premarket.

Other News About SUNE

SunEdison being investigated by SEC over liquidity disclosures: Report

SunEdison told investors it had $1 billion in cash, which the SEC is investigating.

SunEdison in talks with creditors: Report

The company was discussing the possibility of $300 million in new loans with holders of second lien loans.

Other Stocks in the News

Chrysler to recall 60,000 SUVs in China over ABS braking issue: watchdog

The Chinese regulating agency said that under certain conditions, the ABS system could malfunction.

Microsoft Apologizes After Twitter Chat Bot Experiment Goes Awry

Chatbot Tay spewed racist sexist and offensive remarks on Twitter.

Published on Mar 29, 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 2016. Content published with author's permission.

Posted in ...