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SunEdison Could Overcome Its Liquidity Issues

Summary

It seems all but imminent that SunEdison (SUNE) will file Chapter 11.

We believe that there is a coherent case for SunEdison to avoid bankruptcy filings.

Should the company not file for bankruptcy we believe SunEdison could increase 40.0x in value.

It seems all but imminent that SunEdison (NYSE:SUNE) will file Chapter 11, especially after the April 15th 8-K SEC filing, which described that the company was looking debtor in possession ("DIP") financing on March 17th 2016 from its 1st and 2nd lien holders.

While we agree that SunEdison is under significant financial distress and facing liquidity issues, we believe that there is a coherent case for SunEdison to avoid bankruptcy filings and that there is a coherent case for a long thesis.

On April 2nd 2016, SunEdison management projected that the company would run out of cash in 2Q2016. The company would start with $34.0MM in cash in April 7th 2016, but this cash balance would quickly dwindle. The company would have additional working capital requirements, pushing its cash balance to negative ($240.0MM), thereby requiring DIP financing.

The chart below provided by management on April 2 2016 describes the company's cash situation.

Source: Management Estimates

However, later, on April 3rd, 2016, Management revealed that they had ~282.0 mega-watt of completed solar projects, representing approximately $423.0MM in asset value (assuming an average selling price of $1.5 per watt net of 25.0% tax equity as per the business update in December 2015). Selling these projects to third parties or warehousing these projects could generate a significant amount of cash.

The chart below provided by management on April 3, 2016 illustrates the company's completed and in progress projects.

Source:...


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