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SunEdison Won't Go Bankrupt... And David Einhorn Might Have Proved My Point

Citing Rule 10b5-1 and 10b5-2, Einhorn and Greenlight would be prohibited to sell with knowledge of material, non-disclosed information.

SunEdison in late stage negotiations to sell 450-MW to Hinduja Group.

The near term cash flow is the driver to get a deal done and emerge strategically forward.

Although battered, I am not yet convinced that a SunEdison bankruptcy is in the near term future for shareholders. Pulling from my last article, I proposed that SunEdison (NYSE:SUNE) would embark on a plan to sell some assets, change management and emerge badly bruised, but not dead. This week, nothing has changed that would cause me to change my thesis.

In fact, a couple of new reports and reliable deal speculation has worked to bolster my case and has provided the first step in the right direction.

First, it's now widely reported that a "company" is in direct talks with Hinduja Group, a company based in India, to sell a 450-MW power plant. The "company" in question is U.S. based, however, no actual name was provided. But, according to The Hindu Business Line, who published an exclusive to the story, directed investors to the likelihood that SunEdison would be the seller of the assets. If this is indeed the case, it sets in motion the plan I outlined prior, that with just a little bit of wiggle room, SunEdison could get enough footing to gain the traction necessary to see itself through the second half of 2016, which is the period that management has projected to realize a dramatic increase in cash flow, the kind of cash flow necessary and able to start the turnaround story at SunEdison. They just need to get there.

As was pointed out in a prior Seeking Alpha article, the projections offered by SUNE management on April 3rd and April 11th call for 2H2016 free cash flow of over $800 million dollars, a projection based on the completion of three solar projects, which are between 57% and 93% complete, according to the SunEdison filing. Now, whether or not investors can hold value to what management tells investors is a choice made and to each his own, but I believe that management is telling investors quite clearly that if an immediate cash injection is received to clear this current challenges, the company can emerge quickly and regain its strong position as a leader in the solar world.

I am not suggesting an immediate growth plan for SUNE, at least not yet. But, utilizing the yieldco concept does have its merit if managed properly. What happened to SUNE is a result of the easy money, Wall Street bubbles that seem to emerge every other year or so. With a bond market that has...


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