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I find it almost bizarre that I have no position in SUNE; yet see virtually none of the holders 9short or long) posting any due dligence.
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CONFIRMATION HEARING
A hearing to consider confirmation of the Plan (the “Confirmation Hearing”) will be held before the Honorable Stuart M. Bernstein, United States Bankruptcy Judge for the Southern District of New York, in the Bankruptcy Court, One Bowling Green, Courtroom 723, New York, New York 10004, on July 20, 2017 at 10:00 a.m. (prevailing Eastern time), or as soon thereafter as counsel may be heard. The Confirmation Hearing may be adjourned from time to time without further notice to creditors, equity holders, or parties in interest other than by an announcement in open court or as indicated in any notice that is filed with the Bankruptcy Court, and the Plan may be further modified, if necessary, prior to, during, or as a result of the Confirmation Hearing, without further notice to parties in interest.
The outcome of their suits won't impact shareholders; who receive nothing regardless of ANY developments at Sunedison. [IMO] (Other than from potential lawsuits brought against SUNE via individual or class actions.)
Are you aware; one was a CEO of the Terraforms; and (IMO) their fraud case is well laid out. Their claims against other senior executives were made PRIOR to Sunedison's bankruptcy filing; and their dismissals sparked SEC & DOJ investigations; both of which remain OPEN! It is what became known as "The Friday Night Massacre". It is one of the clearest cases of (alleged) fraud I have witnessed.
I'd be surprised if someday in the future the alleged qualification could not be removed.
Due to important disclosure requirements for any share / right offerings Sunedison itself confirmed that the DOJ and SEC investigations have remained open in their own disclosures.
Interesting. This is the location Sunedison asked be recognized as their new corporate headquarters. Not the building; but a Suite [2nd Floor] in the building. I am assuming a Suite already in use by a tenant; and only needed as a mail drop-off!
[url]
https://www.google.com/maps/place/2+Cityplace+Dr,+St.+Louis,+MO+63141/@38.6725944,-90.4431523,127a,35y,60.59h,45t/data=!3m1!1e3!4m5!3m4!1s0x87df32a2a762b99b:0x965e803520159b14!8m2!3d38.6731288!4d-90.4414346
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I found some recent disclosures quite surprising.
...They intend to operate as a zombie business [my characterization] into 2020; so as to maximize "earnouts" of prior SUNE projects. Personally I give them at most 8 months; since they are unlikely to have any actual significant business activity post the Brookfield consummation.
...They currently have 305 employees. I expected them to have at most two dozen left. However; they include Singapore employees in the total. IMO they will be required to disclose the number of US employees prior to confirmation.
...They removed indemnity requests for prior executives. IMO the included clauses remain much too broad. I am certain multiple objects will arise regarding the indemnity clauses included.
...I was purposely looking to see if they disclosed the fact that DOJ and SEC have open investigations. I am almost surprised they did include this disclosure. [Although they would be in serious legal jeopardy had they failed to disclose the investigations.]
...They disclosed that there were over 30 suits filed against them; the majority being subsequently joined and brought before Judge Castel.
...They did not include audited financials. IF they intend to seek a public ticker; IMO such an inclusion will be required. Rights Offering are often a means of bypassing the inclusion of financials; but only with the intent of being available to companies already making regular filings. It is an absolute requirement to include audited financials with a prospectus. Here any financials provided are likely to be scrutinized by the SEC and DOJ due to their still open investigations.
Pursuant to the Plan, on the Effective Date, Interests in SUNE will be deemed automatically cancelled, released, and extinguished and the obligations of the Debtors and the Reorganized Debtors thereunder will be discharged. Accordingly, U.S. Holders of Allowed Interests in SUNE should recognize a capital loss for U.S. federal income tax purposes in an amount equal to the Holder’s adjusted tax basis of its SUNE common stock. The utilization of capital losses is subject to certain limitations under the Tax Code.
I disagree.
Although unsigned; lacking dates; and only in the form of a proposal it confirms:
1. Commons will be cancelled. (Equity holders will receive no consideration for their shares)
2. As an impaired class equity holders have no ote in the outcome
3. Unsecured creditors are ONLY satisfied at 2.8% of what they are owed. Far from sufficient to allow any consideration for equity holders.
At least members on this board know commons are being cancelled. I suggest those still holding equity use that to their advantage; before it is too late.
Rights offering. They intend to include 28.9 million "New TERP" shares in the rights offering.
Since only TERP can mint new TERP shares; I am assuming this is from conversion. ("Convertibles") of their TERP interest. Technically that should ALL have been allotted to SECURED and UNSECURED creditors; but I assume they received their creditors permission to convert and grant their TERP equity stake in the RIGHTS offering; which causes both of these classes to pay for something they should already own! (Be due as creditors).
If their TERP interest is not due to either creditor class; because they will have been made 100% whole; then they would be due to the current SUNE equity class; which would deny them the ability to include them in the rights offering.
[fyi: I see it as very unlikely both creditor classes will be made 100% hold before the rights offering]
This is obviously a dilutive measure; with TERP only having 91M shares. It increases the total registered TERP shares by 33%! (This is a common impact of convertibles hen converted).
It appears to me they lack disclosure to TERP holders of the potential dilution; which would be an SEC violation.
I didn't indicate there was one. I don't hold a position; long or short.
The SEC has affidavits from two high level executives; one being Domenech Carlos; informing them they had been pressured to misrepresent the financial position of the company.
Actually that is untrue!
Shortly after reporting having over a billion dollars in "liquid cash" on a 10K (or perhaps it was a 10Q) SunEdison received a margin call of $231 million dollars... but couldn't pay it! (Without financial maneuvering).
Essentyially that resulted in what is now known as "The Friday Night Massacre".
That led to the immediate dismissal of top level executives at the Terrafoms. (The executives dismissed were on boards to ensure financial due dilligence!)
... dismissals of some executives led to complaintsto both the SEC and DOJ claiming Sunedison had fudged their numbers. That led to subpoenas, and investigations that are still ongoing! [Needless to say; they both wanted to know what happened to their claimed billion dollars in liquidity!]
Brian Wuebbels [Sunedison CFO at the time] was assigned as CEO of both Terraforms. He reportedly sold terrfaorm Global on paying $231 million for a project in India. But instead the funds were used to pay down the margin call... with only minutes to spare!
Had the margin call not been met Sunedision would have been forced into bankruptcy. [Sooner then it actually was. In fact more financial transgressions occurred before their filing. In particular they allowed some unsecured creditors to become secured creditors via debt swaps before filing].
A shareholders committee requested to be present during mediations. Their request was denied for the simple reason that since shareholders will not receive distributions [in any shape or form]; there is no reason for their presence.
To quote the judge:
Correct.
I don't understand myself why it is backstopped; given a total lack of financials! Their creditors must believe it is an easy flip; despite their having put Sunedison in a position where they may not even be able to fully pay the $640 million dollars in additional financing they provided for the replacement DIP!
The proposed plan is cancellation of shares. The proposed rights offering will not be available to shareholders.
He has been performing a year long investigation of Sunedisons with respect to ERISA.
His sole concern relates to potential ERISA violations. Essentially, in the proposed rights offering Sunedison seeks complete indemnification for anything they have done or will do; including indemnification for all related and past associates. (Essentially they want a get-out-of-jail free card).
He is informing the judge he cannot grant such indemnification; even if he is willing to do so. He is also informing the judge that he intends to block Sunedison's rights offering unless Sunedison changes wording; solely with respect to ERISA; clearly stating they do not seek indemnification of any potential wrongdoing.
Seems their accountant can't even add!
On Page 21 of the MOR they add two negative numbers for net income (loss) ... and derive a samaller negative number as the total; ... when they should sum to a larger number!!!
SunEdison has proposed a (Backstopped) Rights Offering to their Secured and Unsecured creditors; proposing rights for the acquisition of "New SunE" shares.
Price will probably be sub-penny on or after Thursday....
Your friend Top Penny" might be getting giddy just at the prospect of being able to buy in at such prices!
Sunedison brought 9 additional affiliates into Chapter 11. (2762)
Out of time; and out of money...
I already estimated they would run out of cash before the end of June based on the MORs; despite having ONLY bank balances as reliable financials.
A rights offering? Seriously; with few employees and no assets; who would invest? .. Can they actually complete a rights offering before they completely run out of cash?
They admit themselves that a sale of the Terraforms will not complete [if the complete] before the 2nd half of 2017; so there won't be any cash from that before the end of June.
IMO DIPs will not lend without collateral.
You misread the POR. It makes it absolutely clear the plan is to CANCEL commons. You are confused by their intent to issue new stock; and thrive post bankruptcy. The new stock (if issued) will not be issued to existing shareholders. Existing shareholders would get nothing.
New Stock Issue: [Old Stock Cancelled]
Authorization and Issuance of New SUNE Common Stock. On the
Effective Date, Reorganized SUNE shall authorize and issue the New SUNE Common Stock.
Distribution of New SUNE Common Stock hereunder shall constitute issuance of 100% of such
New SUNE Common Stock and in each case shall be deemed issued on the Effective Date. The
issuance of New SUNE Common Stock by Reorganized SUNE is authorized without the need
for any further corporate action or without any further action by the Debtors or the Reorganized
Debtors, as applicable. All of the shares of New SUNE Common Stock issued pursuant to the
Plan shall be duly authorized, validly issued, fully paid, and non-assessable.
SUNEQ Shares To Be cancelled..,
On the Effective Date, Allowed Class 9A Interests shall be deemed
automatically cancelled, released, and extinguished without further action
by the Debtors or the Reorganized Debtors and the obligations of the
Debtors and the Reorganized Debtors thereunder shall be discharged.
The Committee of Unsecured Creditors has requested permission; on behalf of Sunedison's estate; to pursue claims of fraudulent conveyance against the Terraform yieldcos.
Suits will only be temporarily halted (if their motion is approved); as the suits are valid. The committee's claims will be sealed. Thus we cannot know what they will contain. I expect their allegations to include one or more of the following points:
-- Sunedison made false statements and purposeful omissions
-- Sunedison defrauded one of their own yeildcos; Terraform Global; of $231 million to meet a margin call
-- Sunedison's officers purposefully incentivized their sales teams to over-inflate sales; knowingly allowing the regular inclusion of cancelled projects in sales figures
-- Sunedison's officers purposefully removed members of their own conflicts committee so as to evade the committee’s ability to perform their fiduciary duties
-- Sunedison's acquisition plans of Vivant Solar and Latin American Power were known to be unsustainable
-- Sunedison purposely misrepresented layoffs as "a vehicle to optimize business operations in alignment with current and future market opportunities and accelerate cash flow positive operations."
-- Sunedison lacked sufficient cash flow to maintain their operations
-- Sunedison lacked controls to monitor and limit usage of company assigned credit cards to business usage. At least one employee used their assigned American Express card to purchase a boat for personal use. Another used their card for a lavish European vacation.
-- Sunedison was over-leveraged with debt
-- Sunedison falsely stated that acquiring Vivint Solar would triple their value
-- Sunedison intentionally misstated loans as non-recourse when they were known to be recourse
-- Sunedison failed to disclose a breach of debt covenants on their margin loan
-- Sunedison raised $650 million in a Preferred Stock sale without disclosing having a usurious $169 million loan with Goldman Sachs with an interest rate of 15%
-- Sunedison purposely misled investors on their cash position
-- Sunedison purposely exchanged non-recourse notes with new recourse notes for a select group of unsecured creditors to make them secured creditors
-- Sunedison's misstatements and misrepresentations caused the DOJ to open a formal inquiry into their misconduct
-- Sunedison knowingly misrepresented their liquidity
-- Sunedison lacked effective internal controls
-- Sunedison made multiple breaches of Securities Acts
-- Sunedison made material misstatements in official SEC 8K; 10Q; and 10K filings
-- A high-ranking former officer of Sunedison stated "Sunedison wasn't being honest with investors about its financial problems."
-- Sunedison routinely failed to pay vendors for critical services; even when threatened with notices to cease services
-- Sunedison's own employees characterized Sunedison as having a complete lack of effective internal controls; contrary to statements made in the company's SEC filings
-- When investors became aware of Sunedison's true financial position the value of their preferred shares dropped by 98% from $1,000 per share to only $23 per share
-- At the same time Sunedison related having a solid financial position to their investors; some executive officers related having "concerns with Sunedison's Board about the extent of Sunedison's liquidity and the accuracy of Sunedison's public statements regarding its financial position."
-- Sunedison related to investors having $1.4 Billion in liquidity; when in fact; they only had $90 million in available cash
-- To meet a margin loan; executives Chatila and Wuebbels fired their Yieldcos most senior executives; replacing them with Wuebbels; allowing them to effectively exercise control over the independent Yieldcos.
-- Chatila and Wuebells re-constituted their Board level conflicts committee allowing them to overstep the board's fiduciary duties
-- Wuebells mischaracterized usage of a $231 million payment to the remaining original members of the conflicts committee as a purchase of assets in India; when in fact the funds would be used to meet a margin call
-- After learning the above facts the SEC opened a formal investigation into Sunedison's financials
-- Wuebells intentionally created a presentation slide for investors listing Recourse and Non-Recourse debt where Recourse Debt was included on the non-recourse column
-- Sunedison revised their own compensation plans to unjustly enrich themselves by basing compensation on projected earnings instead of real earnings
-- In 2015 Sunedison often kited funds between projects to give the appearance of liquidity; when in fact they had difficulty paying vendors' bills
-- Sunedison was so acute of funds in 2015 that at times power was cut-off to their own project facilities
-- Sunedison's delinquent payments to vendors was a common practice
The Committee of Unsecured creditors has filed a motion requesting more than 20 suits filed against Sunedison and/or their officers and directors be temporarily put on hold. It is not that they believe the suits lack merit. In fact, they point out the merits of the suits; even alluding briefly to the Friday Night Massacre; although not by name.
Their concern is that the suits will fully deplete Sunedison's $150 million in D&O liability coverage... before they have had time to assert the same allegations raised in the various lawsuits!
Caesar's Entertainment - Operating (CEOC: Ticker CZR) commons are being wiped out... but the company will be giving 6% equity in the "NEW" CEC company to current common shareholders. ie: A CZR holder will receive 600 shares in the "NEW" CEC for every 10,000 shares they own.
By contrast; I doubt SUNE holders will receive any equity in a "NEW" Sunedison should the company; by some miracle; emerge from bankruptcy.
Hired both a CFO and a Corporate controller; having salaries of $1.5 million each.
Most stunning is a statement indicating all financial reports they prepare can be released: without verification or warranty of accuracy or validity.
No price mentioned. Only that they would come to a mutual agreement; and then add a 12% discount.
From what little I could find; which may not be correct; is that Novartus is directly affiliated with JPM. I wouldn't be surprised if there are potential insider conflicts in the transaction(s) anticipated; but I wouldn't be surprised if there are none either.
Novartus did express an interest in additional SunEdison projects.
Sunedison has requested permission to begin liquidation sales of specific assets; commencing with the sale of Project "Sunflower" in North Dakota to Novartis Holdings. It is unlikely they would find any other buyers interested in the property; and warns:
Both Sunedison yieldcos; today; in bankruptcy court; formally accused Sunedison of fraud; and breaches of fidicuary duty; and included a reminder that the company; and separately Brian Wuebbels; are subjects to open SEC and DOJ investigations. (At least one of the yieldcos made similar allegations in the past; prior to Sunedison's bankuuptcy filing).
[The yeildcos are objecting to the granting of access for Sunedison to a DIP 2nd Lien Rollup Facility.]
Is their currency adjustment of positive $20 million reported in their latest 10Q fact or fiction? How is it possible most companies are reporting negative currency adjustments in their financials while HLF reports a positive adjustment of $20 million?
Herbalife's own 10Q reports that South America is their biggest market! Whether conversions are reports from the Brazilian REAL; Mexican Peso; CDN Dollar; or various African currencies it makes no sense; at least to me; that their foreign currency adjustments would have a positive impact; as reported in their 10Q on 'Comprehensive Income' by $20 million!
I found one line on their 10Q reports:
They either had their facts wrong; or the trade was cancelled. June 16 $8 calls show less than a 500 contract open interest!
FYI: Notice analysts have been mis-reporting earnings for the prior quarter as $ 0.39 WITHOUT stating that it was based on NON_GAAP fantasy numbers! The GAAP earnings as reported by JCP in their own filing s was ($0.44) EPS ... that is a loss of 44 cents per share.
If you read the fine print you would find he sold ALL of his COMMON holdings. Everything else is in CONVERTIBLES and WARRANTS. A keyword in CONVERTIBLES is CONVERT. He can CONVERT quickly; but it's not instantaneous. His notes (IOUs) are essentially worthless; so even at depressed prices they are worth more as equity.
He cannot sell "CONVERTED" shares UNTIL they show as shares in his accounts!
An example:
I am astounded Valeant won the suit filed against them by R&O! I remain convinced it was R & O / Russell Reitz that was defrauded by Philidor AND/OR by Eric Rice AND/OR by Valeant.
There were many purposeful omissions in the affidavit of Eric Rice:
Affidavit of Eric Rice
Perhaps the most significant is that in his affidavit he includes 455 pages of prescriptions for which Philidor claimed to be due Insurance Reimbursements; but failed to include page headers that would show it was printed on computers AT Philidor; and failed to indicate that the prescriptions were sold AND shipped from Philidor.. to many states outside of California. .. 455 Pages of prescriptions fulfilled by Philidor in a 3 month period; or about 30,000 prescriptions. That simply is not possible to have been performed by a one or two man pharmacy! It would require a huge mail order company .. which Philidor just happened to be!
Some short quotes:
6/16/2015 1ZX101A60242161814 6/16/2015 40024569 Caremark $902.30 IL
6/16/2105 1ZX101A60240754571 6/15/2015 40047832 BCBS $1,032.04 IL
6/16/2015 1ZX101A60242805208 6/15/2015 40050447 Caremark $898.34 CO
6/16/2015 1ZX101A60242391594 6/15/2015 40050851 Express S. $291.23 CO
6/16/2015 1ZX101A60242821655 6/16/2015 6751851 BCBS-Minn $342.80 MN
6/17/2016 1ZX101A60241426647 6/17/2015 40053637 Humana $810.39 IL
6/17/2015 1ZX101A60241363894 6/17/2015 40012808 ESI-Medco $741.16 WA
6/17/2015 1ZX101A61342204613 6/17/2015 40042812 AGS-BCBS $339.84 CO
6/17/2015 1ZX101A60242041784 6/17/2015 6962873 Caremark PA $204.32 IL
6/17/2015 1ZX101A60340008401 6/17/2015 40053665 FEPRX $435.59 CA
6/17/2015 1ZX101A61342642202 6/17/2015 40048827 BCBS NJ $389.20 MN
Few things are as they seem. Shkreli has left a trail of destruction.
Lehman Brothers, Merrill Lynch, Edwards, Angell, Palmer & Dodge and others had been ShkrelliD.
By now you must be aware of reports that his bail was secured with "his $45 million E*Trade" account. By my estimate it would be closer to $48,949,250.
But... that's on paper. His account may not have much physical cash! It would be held in stocks. One stock in particular; having an obscure ticker: "KBIO".
According to one of his own SEC filings Shkreli holds 2,075,200 shares of KBIO stock: (I'll round it down).
Shkreli - Kalobios Holdings
To estimates net worth use simple math. Simply multiply the current market price of his stock by the number of KBIO shares he holds. Oddly the market price today is the same price as it was 10 days ago. Why, It's almost as if the price has been frozen at a point in time!
So... his worth is at least:
$23.59 * 2,075,000 ! Giving $48,949,250.00
... Or is it??
...
Now you know. Like so many others before him; if and when his Bail Bonds Man needs to liquidate Shkreli's "secured assets"; he is likely to find he too has been ShkreliD!
If you pay attention to the filing you will learn that while Shkreli's net worth may be based on a share market price of $23,59; his actual cost for all but 10,000 shares was under $2.50 per share.
Quotes from their petition (verbatim):
In their bankruptcy filing to "process the Dec 31 payroll"; requiring a payment totaling less than $60,000 to eight employees; all deemed to be "non insiders".
From appealing a Nasdaq listing to filing for bankruptcy in less than 24 hours. Might be a new record!
Did anyone notice Kalobios listed their assets and debts in reverse order on their filing! They can't even get that right.
Their major asset is a PV voucher that will probably be seized. .. That and a wu tang album.