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SunEdison Will Survive, It's Simply Too Big To Fail

Summary

SunEdison has the assets to buy time and rebuild investor trust.

Bankruptcy filings, either 7 or 11, make little sense due to the complex financial structure.

Deep-pocketed activist investors have the incentive to take the company private.

Well, it's been almost three weeks since my article about SunEdison (NYSE:SUNE) drew awe from some and ire from others. Of the two hundred or so comments received, I'd say a slight majority of them ridiculed my position that Wall Street was creating a story line filled with half truths, a plethora of speculation and wild conclusions that would make a Hitchcock movie seem amateurish. The truth is that after three weeks of reading multiple stories and opinions about what might be in store for the company, the fact remains that no one outside of the SunEdison board room knows for sure what lay ahead for investors. And as for Bergseng's five-step program for survival after SunEd, well, let's just say that for now it is way, way presumptuous.

In fact, now that the all-but-certain conclusion drawn up by the Wall Street pundits has failed to materialize - the assertion that SunEdison was "in talks with lenders for debtor-in-possession financing" - the tone has changed quite a bit. Now, the WS contributors have added the word "may", "appear" or "might" file bankruptcy or debtor-in-possession financing. The rhetoric during the prior two weeks has certainly been lessened from its one-time barrage of negative prophetic remarks.

Being a shareholder has not been entirely easy. But for SunEdison, it's not only uneasy, the company can't get any respect - not even from its own yieldco, TerraForm Global (NASDAQ:GLBL), which filed a lawsuit seeking to recover over $200 million that it says SunEdison misappropriated. Then, the SEC and Department of Justice jump in to take a shot at SunEdison to let us know that they are investigating some of the deals that company management "might" have orchestrated during the prior year or two. But investors were already aware that the SEC was looking over SUNE's shoulder, so it was no real surprise to many of us. However, it provided for a nice headline shock and an additional 20% decline in the share price. As for GLBL, I consider the lawsuit just a bit of posturing and an attempt to demonstrate that there is no collusion between the companies when it comes to spending each other's money. And why wouldn't they take the prudent step to cover their derriere when they are fully aware that almost every enforcement agency in the country has a watchful eye over SUNE? Heck, jail cells hold quite a few people these days, with the overcrowding and all. Perhaps taking a preemptive strike at their overextended parent is wise just for the sake of showing how above board and independent GLBL is when it comes to potential liability for some of the decisions made by Big Poppa Sun.

Oh, I know, people will continue to lecture me that SUNE has absolutely no chance at survival, and further warn me in no uncertain terms that I am misleading investors down a road of doom. But to this day, I have yet to see a credible piece of information that can change my opinion that there is an absolute chance that SunEdison emerges from this ordeal badly bruised, but far from dead.

There are several indicators which provide the basis for my argument that SUNE will survive the bombardment of bad press and speculation and emerge to fight another day, albeit with far more discipline and perhaps a newly minted management team.

First off, I like to follow the money. Since its most recent Form 13D filing in January 2016, Greenlight Capital and its affiliate, DME, indicated ownership of 6.8% of the common shares of SUNE. Flexing its ownership and activist muscle, Greenlight added quite a few measures to provide a shot to reclaim fame. Here is an excerpt of the filing that has held my interest, and it provides insight into much of my bullish case for the emergence of a reformed SunEdison:

"Greenlight intends to evaluate on an ongoing basis its investment in the Company and its options with respect to such investment. In connection with such evaluation, Greenlight may seek...


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