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Saturday, November 26, 2022

A Close Look at SunEdison Inc (OTCMKTS:SUNEQ)

SunEdison Inc (OTCMKTS:SUNEQ) has been one of the top most traded stocks on the entire OTC since hitting the exchange on April 22 after the Company filed for bankruptcy protection and said at the time it had secured commitments for new capital up to $300 million in debtor-in-possession financing from a number of lien lenders.

SUNEQ has fallen a long way since it was trading over $30 a share on the NYSE. It used to be the darling of solar energy and was held by many institutions and fund managers. SUNEQ comes to bankruptcy after disappointing earnings, the reclassification of more than $700 million worth of debt as well as a crushing debt load acquired as the company borrowed heavily to buy up wind and solar developers in the past.

SunEdison Inc (OTCMKTS:SUNEQ) develops, finances, installs, owns and operates renewable power plants, delivering predictably priced electricity to its residential, commercial, government and utility customers. The company is one of the leading renewable energy asset managers and provides customers with asset management, operations and maintenance, monitoring and reporting services. Corporate headquarters are in the United States with additional offices around the world.

SunEdison spent billions on acquiring third party assets in the last few years which they put into subsidiary yieldcos that were intended to help boost the multiples of SunEdison shares yet ended up being a weight around the neck of SunEdison.

The Company’s subsidiaries TerraForm Power (NASDAQ:TERP) and TerraForm Global (NASDAQ:GLBL) have seen massive drops over the past year yet they remain standing and are not planning to declare bankruptcy. Both firms have existing legal protections that should shield equity investors in the stocks from legal claims by SunEdison creditors.

On April 21 SUNEQ announced it has commenced a process to restructure its balance sheet and position the Company for the future. To facilitate this restructuring, SunEdison and certain of its domestic and international subsidiaries have filed voluntary petitions for reorganization under chapter 11 of the U.S. Bankruptcy Code in the Bankruptcy Court for the Southern District of New York.

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The Company said they secured commitments for new capital totaling up to $300 million in debtor-in-possession (DIP) financing from a consortium of first and second lien lenders. Subject to Court approval, these financial resources will be made available to the Company to support its continuing business operations, minimize disruption to its worldwide projects and partnerships, and make necessary operational changes.

Tuesday June 7 marks the start of the official hearing to decide whether an equity committee shall be granted. This gives common shareholders a seat at the table and lets them negotiate directly with creditors and debt holders. The Investor Recovery Charitable Trust which Trust represents 268 individual shareholders that together own over 13 million shares will lead the charge.

On June 28 SUNEQ announced it has appointed new leadership of its finance team, including Philip J. Gund, as Chief Financial Officer and Salvatore LoBiondo, Jr., as SVP, Corporate Controller, enhancing the Company’s financial operations as the Company moves through the chapter 11 process.

Both individuals are experienced restructuring executives and Senior Managing Directors with Ankura Consulting Group, LLC, a business advisory and expert services firm.  Their appointments are effective immediately.

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Currently trading at a $44 million market valuation SUNEQ hit the OTC after being de-listed by the NYSE after filing for bankruptcy protection with $16.1 billion of debt on the books. But there is still a chance the Company comes out with the commons intact; SUNEQ is one exciting story in small caps; the bankruptcy process will take a while and SUNEQ already has huge exposure, a huge following, ready liquidity and a massive short position that could get squeezed on any good news here. We will be updating on SUNEQ when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with SUNEQ.

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Disclosure: we hold no position in SUNEQ either long or short and we have not been compensated for this article.

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