SUNE - Sunedison Inc.

[topofeaturellc]

Hes related to a high profile politician he's locked a lot of things down.  He tweets now at @keshik. I believe.

[KJP]

I just sold out of the shares I purchased fairly close to the lows.  Lot of bag holders in this price range and I'm not sure the Tepper involvement changes the situation very much.  It helps out TERP shareholders more than SUNE shareholders.

 

Yes - I was asking about both because I didnt see a TERP thread. I would think its bullish for TERP and bearish for SUNE because SUNE just rips off TERP a la most YieldCo structures. But I just started looking.

 

I agree that it's a good thing for TERP shareholders to have Tepper looking over SUNE's shoulder.  Have you come to any conclusions about TERP in light of the recent news? 

[jay21]

I just sold out of the shares I purchased fairly close to the lows.  Lot of bag holders in this price range and I'm not sure the Tepper involvement changes the situation very much.  It helps out TERP shareholders more than SUNE shareholders.

 

Yes - I was asking about both because I didnt see a TERP thread. I would think its bullish for TERP and bearish for SUNE because SUNE just rips off TERP a la most YieldCo structures. But I just started looking.

 

I agree that it's a good thing for TERP shareholders to have Tepper looking over SUNE's shoulder.  Have you come to any conclusions about TERP in light of the recent news?

 

Got long a little. It's a little bit of a melting ice cube (i.e. run off), but I think the price is lower than run off value. I also think they start acquiring more projects in a year or two when the situation and cost of debt improves.

[KJP]

I just sold out of the shares I purchased fairly close to the lows.  Lot of bag holders in this price range and I'm not sure the Tepper involvement changes the situation very much.  It helps out TERP shareholders more than SUNE shareholders.

 

Yes - I was asking about both because I didnt see a TERP thread. I would think its bullish for TERP and bearish for SUNE because SUNE just rips off TERP a la most YieldCo structures. But I just started looking.

 

I have been in and out of it in the past. I'm considering it again, but I'm not sure I have a complete understanding of TERP's upcoming capital commitments. 

 

I agree that it's a good thing for TERP shareholders to have Tepper looking over SUNE's shoulder.  Have you come to any conclusions about TERP in light of the recent news?

 

Got long a little. It's a little bit of a melting ice cube (i.e. run off), but I think the price is lower than run off value. I also think they start acquiring more projects in a year or two when the situation and cost of debt improves.

[LounginMKL]

https://www.sec.gov/Archives/edgar/data/945436/000094543616000314/0000945436-16-000314-index.htm

 

Rumor is that Greenlight is looking to sell down some assets or sell the entire company.

[Palantir]

^That is one particular option, not necessarily the end goal.

[Picasso]

Anyone else looking at the VSLR deal as a merger arb since they already amended the deal?  Mix of cash, debt and good ol' SUNE stock.  Cash is $7.89 versus VSLR at $6.17 which is kind of crazy.  Even if the SUNE stock and debt is close to worthless (which it already is) the market is saying SUNE goes into bankruptcy by the end of March.  I mean Einhorn just joined the board.... 

 

Anyway curious if anyone has thoughts.  From what I gathered there is pretty much no way out of this deal outside of bankruptcy, they've already started shopping the VSLR assets, and there's some seller financing involved with Blackstone.  Blackstone wants this deal done so why not up the seller financing if it comes down to that?

[KJP]

Anyone else looking at the VSLR deal as a merger arb since they already amended the deal?  Mix of cash, debt and good ol' SUNE stock.  Cash is $7.89 versus VSLR at $6.17 which is kind of crazy.  Even if the SUNE stock and debt is close to worthless (which it already is) the market is saying SUNE goes into bankruptcy by the end of March.  I mean Einhorn just joined the board.... 

 

Anyway curious if anyone has thoughts.  From what I gathered there is pretty much no way out of this deal outside of bankruptcy, they've already started shopping the VSLR assets, and there's some seller financing involved with Blackstone.  Blackstone wants this deal done so why not up the seller financing if it comes down to that?

 

What happens to TERP if the VSLR deal falls apart for whatever reason?

[Picasso]

My interpretation is that it doesn't fundamentally impact TERP if SUNE backs down and says to VSLR "sue us."  Actually it would be a positive because TERP won't get the VSLR assets that the market hates.  SUNE would be worthless under that scenario but then you have to also worry about the Tepper lawsuit.

 

If Tepper successfully blocks the sale of assets to TERP before the deal is done, then that is likely a big positive for TERP but a negative for SUNE since they'll need to come up with more cash for the VSLR deal.  That would also likely render SUNE even more worthless than it already is and I could see them fall apart before the deal is completed.  So maybe that's what the market is saying here.  Tepper blocks the asset sale to TERP before the VSLR is consummated.

[KJP]

My interpretation is that it doesn't fundamentally impact TERP if SUNE backs down and says to VSLR "sue us."  Actually it would be a positive because TERP won't get the VSLR assets that the market hates.  SUNE would be worthless under that scenario but then you have to also worry about the Tepper lawsuit.

 

If Tepper successfully blocks the sale of assets to TERP, then that is likely a big positive for TERP but a negative for SUNE since they'll need to come up with more cash for the VSLR deal.  That would also likely render SUNE even more worthless than it already is and I could see them fall apart before the deal is completed.  So maybe that's what the market is saying here.  Tepper blocks the asset sale to TERP before the VSLR is consummated.

 

I agree no VSLR deal is a positive for TERP.  So, does a long TERP, long VSLR position look better to you than just long VSLR?

[Picasso]

Well if the deal goes through and the Tepper lawsuit fails then TERP is likely to be much less inexpensive than would otherwise be the case and Tepper probably bails.  So that makes for three outcomes and it's a question of what you think happens.  Owning just VSLR is a bet that Blackstone pushes the deal through with extra seller financing even if Tepper wins.  And that's about a 30%+ return over six weeks....

 

Tepper could also win after the deal is done and in that case a VSLR long wins, TERP wins, and SUNE is screwed.

 

Gun to my head I think Tepper wins but you never know...  Right now I'm just thinking about approaching VSLR as simply being the trade with the highest probability of success over a short time frame.  There's more variables with figuring out TERP on its own.

[Pelagic]

I thought this was a good article on placing a value on Vivint's assets that SUNE will be trying to sell.

 

http://seekingalpha.com/article/3874886-sun-edison-valuation-vivint-solar-residential-portfolio-assets

 

 

[dbuch]

(Bloomberg) -- David Tepper can’t block key part of SunEdison Inc.’s $1.9b buyout of Vivint Solar, a Delaware judge ruled Thursday in rejecting the hedge fund manager’s claims the deal isn’t fair to some investors.

 

[jay21]

(Bloomberg) -- David Tepper can’t block key part of SunEdison Inc.’s $1.9b buyout of Vivint Solar, a Delaware judge ruled Thursday in rejecting the hedge fund manager’s claims the deal isn’t fair to some investors.

 

Obviously good for SUNE.

 

Weighing the reduced esoteric BK risk for TERP vs the reduced quality of asset pool and contractual purchases. Overall, negative but price is still low. Maybe GLBL was the best play here.

[Picasso]

Why GLBL?

[awindenberger]

Why GLBL?

 

GLBL is definitely the best play at current price levels. As of 9/30/15: Net Assets were about $8/share, vs current price of $2.60. Cash made up $6/share at that time.

 

They are planning to buy additional assets with all the cash, which would generate more than enough CAFD to cover minimum quarterly dividend of $.275. If some of the asset purchases fall through, then they have lots of cash to delever, or even better, buy back some Class A shares, which would lower the amount of dividend payments needed to cover MQD.

All this and SUNE Class B shares are subordinated for at least 11 more quarters.

 

I haven't addressed everything here, just some highlights in my mind. There are risks of course, but I believe at current prices they are more than priced in.

[kab60]

One thing regarding GLBL I haven't seen anyone mention (not even in 600 comments on SA) is that according to GLBL's 10K (from the top of my mind) their project counterparties can terminate the PPA's if SUNE defaults. I'm inclined to like GLBL but renegotiating PPA's in Brazil etc. does seem like a serious risk.

[awindenberger]

One thing regarding GLBL I haven't seen anyone mention (not even in 600 comments on SA) is that according to GLBL's 10K (from the top of my mind) their project counterparties can terminate the PPA's if SUNE defaults. I'm inclined to like GLBL but renegotiating PPA's in Brazil etc. does seem like a serious risk.

 

Hmmm, Global hasn't actually published a 10-K yet. Did you mean a 10-Q? If you don't mind, you could find that info? I've looked through all their docs too many times and don't remember seeing that, but I could have missed it.

[jay21]

One thing regarding GLBL I haven't seen anyone mention (not even in 600 comments on SA) is that according to GLBL's 10K (from the top of my mind) their project counterparties can terminate the PPA's if SUNE defaults. I'm inclined to like GLBL but renegotiating PPA's in Brazil etc. does seem like a serious risk.

 

Hmmm, Global hasn't actually published a 10-K yet. Did you mean a 10-Q? If you don't mind, you could find that info? I've looked through all their docs too many times and don't remember seeing that, but I could have missed it.

 

Should be in there. TERP had similar language

[kab60]

I might have been imprecise or just couldn't find it quick (on a mobile) but there is a change of control provision in some PPA's (from propectus).

 

"Certain of our PPAs and project-level financing arrangements include, and PPAs and project-level financing arrangements with respect to our future projects may include, provisions that would permit the counterparty to terminate the contract or accelerate maturity in the event our Sponsor ceases to control or own, directly or indirectly, a majority of our company.

Certain of our PPAs and project-level financing arrangements contain, and future PPAs and project-level financing arrangements may contain, change-of-control provisions that provide the counterparty with a termination right or the ability to accelerate maturity if a change-of-control consent is not received. Generally, these provisions are, or will be, triggered in the event our Sponsor owns, directly or indirectly, less than 50% of the combined voting power which is equal to approximately 0.9% of our outstanding capital stock, or, in some cases if our Sponsor ceases to be the majority owner, directly or indirectly, of the applicable project subsidiary. As a result, if our Sponsor ceases to control, or in some cases own a majority of, Global, the counterparties could terminate such contracts or accelerate the maturity of such financing arrangements. The termination of any of our PPAs or the acceleration of the maturity of any of our project-level financing as a result of a change in control of Global could have a material adverse effect on our business, financial condition, results of operations and cash flows."

[Guest Grey512]

Is anyone here convinced that SUNE equity is worthless? Maybe the outcome is binary - either SUNE is a zero, or it heads back to $12+ over time.

I am seeing some attractive out-of-the-money calls (e.g. strike $10 or something) with a term of 1yr+, and these will yield over 20x if sentiment recovers.

 

[awindenberger]

Is anyone here convinced that SUNE equity is worthless? Maybe the outcome is binary - either SUNE is a zero, or it heads back to $12+ over time.

I am seeing some attractive out-of-the-money calls (e.g. strike $10 or something) with a term of 1yr+, and these will yield over 20x if sentiment recovers.

 

I don't believe it is worthless, but the dilution will hit the longer term price per share. Back in December, I predicted the stock would end 2016 between $12-18, but thanks to dilution since then, I think it will have a hard time getting higher than $10 now. Shares are going from about 310mil in Dec to anywhere from 450-480mil, depending on Vivint final dilution.

[Palantir]

^No, they suggested former employees, so I'm guessing Mr. Domenech et al may be responsible.

[Palantir]

Vivint Solar Terminates Merger Agreement for SunEdison’s Breach

http://www.sec.gov/Archives/edgar/data/1607716/000119312516495891/d155146dex991.htm

 

LEHI, Utah, March 8, 2016 — Vivint Solar (NYSE: VSLR) announced this morning that it had delivered a letter to SunEdison, Inc. last night notifying it that, as a result of SunEdison’s failure to meet its obligations under the merger agreement pursuant to which the Company was to have been acquired by SunEdison, Vivint Solar has terminated such agreement. Vivint Solar reserves all rights under the merger agreement. In particular, SunEdison’s failure to consummate the merger when required pursuant to the terms of the merger agreement constitutes a willful breach of the merger agreement, and Vivint Solar intends to seek all legal remedies available to it in respect of such willful breach.

 

Allah be praised!

[Guest roark33]

I am not sure who you think this is good for, but they are all basically screwed.  VSLR has no business model, and SUNE is staring down BX with a lawsuit that would push them into bankruptcy.  It's a game of chicken. The market's reaction, SUNE up big pre-market, is a great example of retail day traders not understanding the implications.