SunEdison's Latest Disclosure Supports Bullish View, Credit Suisse Argues

Credit Suisse analysts commented that Sunedison Inc SUNE disclosure supports a constructive view.

"We believe the increased clarity should further help instill confidence that SUNE can weather the perceived liquidity challenges as the business model pivots following the YieldCo dislocation," wrote Credit Suisse analysts. "A second-lien capital raise ~$650m is still contemplated and potentially selling the VSLR operating portfolio to improve TERP's liquidity and validate the value of residential assets, would serve as further catalysts and improve liquidity."

SunEdison's business update disclosure was announced on December 24. The disclosure was due to the Reg. FD requirements from the contemplated second lien capital raise.

Credit Suisse maintained an Outperform rating with a $25.00 price target for SunEdison.

Over the last two weeks in December, the company entered into a forbearance agreement for First Wind earnouts, extinguished $336 million of exchangeable notes, and dropped a 33 percent ownership interest in the 336 MW Dominion portfolio into the JP Morgan Asset Management warehouse.

SunEdison also had a quasi-guided cash flow walk for Q4 and 2016.

Credit Suisse noted that the minimum cash balance forecasted for the company was $575 million in 2Q16, was "already stale and conservative given subsequent First Wind earnout restructuring."

In addition, the company's earnouts were pushed out. "First Wind sellers have also agreed on forbearance agreement for SunEdison to pay ~$231m of earnouts due in the next year," Credit Suisse commented. SunEdison had forecasted its First Wind earn out to be $340 million over the next five quarters, however the disclosure occurred before the restructuring of the earnout timing.