Author Archives: Scalper1

Vivint Solar ( VSLR ) could join Appaloosa Management in suing SunEdison ( SUNE ) over the former’s pending — and imperiled — acquisition by SunEd, a Credit Suisse analyst suggested Thursday, as at least two other investment banks downgraded SunEd stock. SunEdison shares ping-ponged this week amid rumors that banks are balking at issuing the $1.2 billion needed to finance the Vivint Solar acquisition. This week, SunEdison delayed its 10-K filing and suspended a popular dividend program. Needham and Macquarie both downgraded the stock Thursday. In the long term, suspending SunEd’s 6.75% perpetual convertible preferred stock could save $8.3 million per quarter, Credit Suisse analyst Patrick Jobin wrote in a research report. But Thursday was another bad day for the shares, down more than 13% in midday trading on the stock market , near just 1.55. SunEd fell 12% and 24% on Monday and Tuesday, respectively, but rose 19% Wednesday. Shares of SunEd yield company TerraForm Power ( TERP ) and Vivint Solar were down 3.5% and more than 1%, respectively. SunEdison Cash Crunch Expected Company-specific uncertainty — not solar industry uncertainty — prompted Needham analyst Edwin Mok to downgrade SunEd stock to hold from buy. “We now believe SunEdison could face an even greater cash crunch ahead, preventing the company from reaching the important goal of operating cash flow positive,” Mok wrote in a research report. Although SunEd obtained financing in January, “it appears SunEdison is facing mounting financial challenges, with a sharp rise in cost of capital which could ultimately cripple the future prospects of the company,” he wrote. Looming capital cost increases have plagued the solar industry this year. No. 1 residential installer SolarCity ( SCTY ) has shaved 60% off shares this year on that worry. IBD’s 22-company Energy-Solar industry group is down 25% this year. SunEd’s outlook is further complicated by a liquidity question, Mok wrote. In January, SunEd said it had $619 million in cash at the end of Q4. Of that, $56 million was not committed to the project business. Cash Questions Delay 10-K On Tuesday, SunEd delayed its 10-K filing to investigate those cash claims. Banks have balked at financing the Vivint Solar deal without updated financials, according to the Wall Street Journal. And SunEdison can’t finance Vivint Solar on its own, Mok and Jobin wrote in separate reports. Jobin suggested a Vivint Solar breakup — worth a $34 million fee — would help SunEd preserve some short-term cash. SunEd has until March 18 to close the deal before opening itself to a specific performance lawsuit by Vivint Solar. Vivint also could terminate the deal before then. That’s unlikely, though, considering Vivint Solar’s shareholders “overwhelmingly” approved the bid on Feb. 24, Jobin wrote. Last month, Appaloosa sued to prevent SunEd from dropping Vivint Solar’s debt-laden rooftop portfolio down to yield company TerraForm Power. Appaloosa has a 9.5% stake in TerraForm Power. A judge tossed Appaloosa’s injunction request last week. Image provided by Shutterstock .