SunEdison Now A Penny Stock, According To This Sum-Of-The-Parts Valuation

Axiom's Gordon L. Johnson II downgraded the rating for Sunedison Inc SUN to Sell, while reducing the price target to $0.39, following the cancellation of the company's power purchase agreements on 3 proposed Hawaiian solar energy projects. Hawaii Electric Co has cancelled its three PPAs with SunEdison, citing the latter's inability to secure financing. The three solar farms - the 47MW Waipio Solar Plant, 15MW Mililani Solar Plant, & 50MW Kawailoa Solar Plant - were worth ~$350 million; and SunEdison had already invested $42 million in development costs, analyst Gordon Johnson stated. He pointed out that the cancellation of the contract means SunEdison will now need to pay the Hawaiian utility a compensation of $50 per kW less any daily delay damages already paid. SunEdison had also announced a sale of a portfolio of projects, which included a contribution from the now cancelled Hawaiian assets to an investor group in exchange for an "extinguishment of ~$336mn in non-recourse debt due 2020," Johnson pointed out, while adding that this debt retirement now appears at a risk. The company is also facing an audit committee probe investigating claims made by the former employees about the misrepresentation of its liquidity position. SunEdison is now expected to develop only 1.9 GW of projects in 2016 as against its guidance of 3.3-3.7 GW, the analyst mentioned.