Monday, December 28, 2015

SunEdison Continues to Struggle

SunEdison's market capitalization is only $1.68B while its debt is $11.7B, including the debt of TerraForm Power and TerraForm Global, its wholly owned subsidiaries. The financial crunch that the company finds itself in has forced the company to cancel or renegotiate acquisitions, stop paying selected vendors and cut jobs.

The financial turmoil has caused shakeups in senior management of the subsidiaries as funds were transferred from the subsidiaries to SunEdison against the wishes of ousted board members.

The company is negotiating a $650M credit line with Blackstone Group. Blackstone owns Vivant Solar which SunEdison is trying to purchase for $1.9B. The credit line will likely require SunEdison give up a large block of its equity in return for cash, which will make Blackstone a major shareholder. The credit line will also be used to pay back an existing second lien credit.

In a SEC filing the company admitted that it continues to incur significant debt to fund its activities and acquisitions and has substantial pending obligations. Investors Business Daily rates SunEdison stock at a near-bottom IBD Composite Rating of 6 out of a possible 99!

The City Council needs to closely follow SunEdison to assure there are no financial impacts on the City as a result of SunEdisons financial difficulties.

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