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MikeBK205: Hope for commons traded post filing? None. Hope for commons traded pre-filing? A glimmer but it will be years before resolved. SUNEQ has asked the Court for permission (i.e. to spend Estate funds) to "Examine" its relationships with D.E. Shaw/Madison Dearborn (Docket #2692) and EverStream (Docket #2694). In the first case, the principals sold First Wind to SUNE for $2.5 billion when FW was nearly insolvent. Who pays +25X Net Book Value for a company with a history of cumulative losses and negative cash flows? D.E. Shaw/Madison Dearborn have deep pockets. In the second case, TERP CEO and SUNE Board Member Carlos Domenech was a limited partner in an affiliate of EverStream that sold equity shares in energy projects which SUNE purchased. Following the bankruptcy filing, EverStream cancelled SUNE's interest in projects for failure to perform. Does Domenech have a conflict of interest?
I agree with your assessment of Shore but would disagree with your conclusion. Nobody from the outside of SUNE could have known how complicated and convoluted their financing structures were. SUNE issued guarantees all over the place in order to complete their projects but had no financial controls in place to monitor their exposure or cross collateralizations. They constructed a house of cards doomed to collapse. Did the DIP lenders go into bankruptcy with an agenda? Probably. But the constant delays and deferrals of PSA closings indicate a level of nuance no reasonable person could have expected. SUNEQ will get liquidated one way or another and it doesn't matter whose plan is used. However, the longer it takes the more cash gets eroded leaving less for ALL the creditors. Its a case now of pick your poison.
Okay Bulls! Do I hear $0.40? Do I hear $1.00? What about $10.00 in a year. The POR reflects what has been going on since its filing date: orderly liquidation. Docket #2672 lays it all out: Page 14 - Reorganized SUNE will be in the business of liquidating assets and winding down all of its businesses; Page 40 - SUNE had +7,300 employees as of October 2015, they had 1,610 employees as of the filing date and they now have 479 employees; Page 254 - if asset dispositions go as planned SUNE will generate less than $75MM in cash flow after October 2017. The lawsuits amongst the creditors will go on for years. Ask your broker for your stock certificates and wallpaper your walls. In a few years there may be a chance at a recovery from the DIP creditors.
The POR is due to be filed by end of day tomorrow. BTW. The Indenture Trustee for the unsecured notes filed an objection today (Docket #2667) which complains about the entire handling of the Chapter 11 process as handled by SUNE and the DIP Lenders. In their opinion, the amount of monies consumed since the filing has eaten into any reasonable recovery for unsecured creditors and the unsecured creditors would have been better served by a Chapter 7 filing.
Short Interest: Garbage In, Garbage Out! Where did the 126MM come from? Try: https://ycharts.com/companies/SUNEQ/short_interest
Better sources for the current Short status can be found at:
http://otcshortreport.com/index.php?index=SUNEQ&action=view
and
http://otce.finra.org/ESI
It seems the Court gadfly, the guy who wants the Court to make him CEO of SUNE, in his latest missive to the Court used the 126MM number (without attribution), and the ill-informed picked up on it without doing their own due diligence. Good Luck bulls!
FYI Fishing4Life: If you are inferring that "company" means SUNEQ you are way off base on your stock buyback theory. The Court would never approve of re-purchasing commons before the DIP Lenders are paid back in full. It would defeat the whole purpose of the Priority of Payments under Bankruptcy Law.
FYI prayforme: In the Peabody Energy Plan of Reorganization old "commons" gets cancelled.
As of Oct 27, 2016, +95% (5,008 MW) of the April “Subset of SUNE Project Assets” consisting of 5,257 MW of capacity has been sold, placed under contract for sale or remains dormant due to lack of funds to develop.
SUNE got the $300MM in "New Money" for the DIP Financing only after they agreed to add in the "Roll-Up" of $1 billion in prepetition first and second lien loans. The old "carrot and stick" negotiating tactic. If you bothered to read the DIP Financing documents you would know that the "Hierarchy" of payments requires that the Roll-Up loans get paid off first. The DIP Financing documents can found in both the Court Docket and Sunedison's 8-K filings.
Does anybody do financial analysis anymore? All the outstanding proceeds from the unclosed Purchase & Sale of SUNE assets, including the sales of the yieldcos, are going to go to the DIP lenders who are stilled owed over $1 billion. Once the DIP lenders are paid off they will exit the bankruptcy process along with the liquidity they have provided. Who is then going to fund SUNE's liquidity problems after having lost over $600 million in the last 9 months when all the low hanging fruit has already been picked?
SUNE is a US company and filed for bankruptcy in a US Court. The article you refer to is based on Canadian bankruptcy law where the laws are not the same as in the US.
The "SC 13 S/A's" were filed yesterday. SUNE now owns just Class A stock in the yieldcos. They have given up their 10X1 Voting Majority with Class B shares. Upon sale they may get from $500MM to $750MM (at 100% stock sale). The last of assets available for sale above book value are now gone. Where is the Plan Of Reorganization ("POR")? It may take many months, even years, but according to the Priority of Claims under Bankruptcy Law this baby is cooked well done. The fog of war? Anybody trading this stock other than for dead cat bounces since the filing is clueless.
FYI: "Brookfield Office" is in the real estate business and not renewables. The new Preferred Share issue is part of an ongoing program to fund new real property acquisitions. And, the issue is for CN$200 MM which equates to US $152 MM, and is not 200 million shares.
SA: the Pumper of all Pumpers. Just spread some ignorance and hope the sheep will follow. ARRA tax grants (i.e. cash) and energy tax credits vest at the project owner level. Project owners are virtually always single purpose legal entities which only own and operate the project. The owner/tax payer of the energy project (i.e. the Tax Equity) claims all of the tax benefits and liabilities generated by the project. So when a developer, e.g. SUNE, completes and sells a project placed in-service to an investor, i.e. the Tax Equity, all the tax grants and tax credits stay with the project (as prescribed in Federal Tax Law). The value of the tax grant and/or tax credit is always a primary factor in establishing the purchase price the Tax Equity pays for the project. The fact that SUNE couldn’t make a profit selling projects is another story in itself. FYI, the 1603 grant program for wind expired in 2013. Since SUNE didn’t get into substantial wind development until it acquired First Wind in January 2015 the idea that large amounts of tax grants and credits were “misplaced or mishandled” is pure foolishness.
You are missing the fundamental flaws in SUNE that were present from the moment they got into the renewables development business.
First, they grossly overpaid and overspent to buy and/or develop projects and NEVER made a profit doing so. For example, they paid over a $1 billion premium for First Wind who in turn never made a profit in almost a decade. Energy projects have always been financed with high levels of debt but SUNE took it to the next level with complicated and convoluted cross-collateral guarantees. It was in affect a pyramid of air.
Second, SUNE never had the financial controls and processes in place to reflect the scope and depth of its complicated financings and cash flows. They were living on a false sense of security since they had a history of being able to borrow more funds (there are lots of dumb lenders out there). The Bankruptcy process has clearly shown over the past nine months how difficult it has been to unwind and sell their assets.
And third, the yieldcos are no picnic either. They were FORCED to take projects from SUNE they didn't want at high prices they didn't want to pay. If you think that there is going to be a claw-back from two public companies that are on their path to total independence then you do not understand bankruptcy law.
The unsecured creditors have now acknowledged to the Court that they are not going to get paid (Docket #2305) given the huge difference between monetization of assets and debts owed: “…it is unlikely that there will be meaningful, if any, recovery for unsecured creditors absent litigation or a comprehensive settlement. In other words, as suspected, these cases are in fact being run for the benefit of the secured lenders.”
SUNEQ has also been given approval by the Court once again to push out deadlines, e.g filing the Plan of Reorganization with exclusivity until April. So when is current commons going to realize that there are no more days of 50 cent or 1 dollar per share let alone a viable future for SUNEQ?
Homer Parkhill has spoken once again (Docket #2216) and stated that recovery by commons is "entirely unlikely".
The SUNE Court docket is here:
https://cases.primeclerk.com/sunedison/Home-DocketInfo
SUNE motions Court (Docket #2114) to sell entire remaining C&I business including unsold pipeline for gross $15MM less deductions. SUNE states they have lost too many key employees to complete projects and must sell quickly to retain current value before expiry of various individual project deadlines. It doesn't look likely that SUNE will be in the energy project development business going forward.
Mr. Dubel has now responded to the Court (Docket #1979). In essence, forget the MOR's and read his Status Report. Then run!
For the last time, SUNE issued new shares in Jan 2016 when it refinanced some of its debt (it is in the 8-Ks). SUNE reported the common shares outstanding as of April 21, 2016 in Docket #2, Page 2 as 405,4787,651. As to it really doesn't matter, you piece of the pie just declined by about 1/3rd.
My interpretation is that SUNE has exhausted the monetization potential of asset sales in its DIP portfolio of entities (excluding the yieldcos) and is now tapping into its non-DIP assets to raise cash to pay off the DIP lenders. The further SUNE dips into its non-DIP entities for cash the less it has left over for creating a "going concern" in its restructuring plan. Despite what SUNE has said about a likely plan coming in January, this is still SUNE and they have been making overly optimistic statements for over a year. Tread carefully.
FYI. SUNE did two refinancings of debt in early January 2016 which included the private issuance of 91.7 MM warrants for commons to the lenders. SUNE reported that most of the warrants were executed at the time of the refinancings. You'll find them in the 8-Ks for 1/7 and 1/13.
To the contrary, TERP stated in its 8-K Nov. 29th that it was pursuing a strategy to make it totally independent of SUNE by the end of January 2017, and stated in both its most recent 10-K and 10-Q in the section Going Concern:
"The risk of substantive consolidation of the Company with SunEdison and inclusion in the SunEdison Bankruptcy as well as the existing covenant defaults and risks of future covenant defaults under a number of our financing agreements, raise substantial doubt about the Company's ability to continue as a going concern."
TERP is running as fast as it can to get away from SUNE. If SUNE needs TERP's assets to sell in order to raise cash to pay off its creditors what does that tell you about SUNE's real position?
Following their latest request from the Court for an extension for "exclusivity", maybe January? maybe February? maybe after their next request for an extension? maybe never? The only thing you can count on from SUNE is it will be delayed.
Please read the Purchase and Sale Agreement with GCL-Poly. ALL tangible and intangible (i.e. patents) property and technology go with the sale.
FYI. SUNE is selling its entire solar panel development and manufacturing businesses to GCL-Poly. It will be difficult for SUNE to be a leader in USA made solar products when they don't make them anymore.
TERP needs to demonstrate that it is making progress to meet various SEC requirements in order to avoid suspension of its public listing. While the Briefing provides numerous alternatives to its resolution of issues with SUNE it cannot do anything without the support of both SUNE and the Bankruptcy Court. SUNE has super-majority control of TERP with its ownership of Class B shares. TERP, i.e. its non-SUNE major stockholders, is threatening lawsuits if it doesn’t get what it wants.
In my opinion, we will both stop posting because there will not be anywhere to post to a defunct SUNE.
Did you miss the quote "violent agreement"? The SUNE bankruptcy is a soap opera. SUNE only discloses the bare minimum and much of what they disclose makes no sense. Participants not included in the DIP process get frustrated with the lack of disclosure. So, all we can do is enjoy all the peripheral stuff. Can you imagine punches getting thrown? These are silk stockings lawyers so they probably just slapped each other. If they were in agreement why would they get violent? The SUNE stock price goes up and down on whims. Make money while you can. SUNE does not have a lot of time left. But most of us know that already.
The Greenko sale is old news. SUNE filed with the Court (Docket #1459) on 10/21/16 and reported the cash proceeds were $38MM.
Sure, why not? I am still downloading and converting the Docket #1503 PDFs into spreadsheets for all 1,088 companies listed so I will not have exact figures for a while. However since "hawkmd" said there was lots of cash coming in and to load up I decided to eyeball the unrestricted "Cash and Equivalents" for all 1,088 companies: approximately minus $11MM in the aggregate. The same pattern fits the Net Asset Values for 6/30/2016: dozens of small positives going down the list followed by a company with a BIG negative value.
There are also too many companies in this report with material numbers that have been sold or are about to be sold. There are some big numbers for companies that SUNE doesn't own, e.g. Oakfield Wind, Blue Sky West (Bingham Wind) and Milford. These deals have third party debt and tax equity so the SUNE numbers make no sense.
In summary, the non-debtor companies are not in much better shape than the debtor companies: they need cash and lots of it.
Until there is a plan to deal with the disposal of the yieldcos, excluding any earth shattering event, SUNEQ should remain a flippers paradise for the next 2-3 months. If you enjoy playing price movements than have fun. Just be careful. The bogeyman in the closet is the actual cash position of SUNE at any point in time. Since the public doesn't have access to that number any missed cash flow projection inflow could cause serious problems and the house of cards could collapse quickly.
The SUNE Canadian Unit bankruptcy is a microcosm of what SUNE has been and will continue to be as it moves forward. The Balance Sheet is untrustworthy, it has negative operating cash flow and it no longer has access to funding. Essentially all of its units (except FW California Holdings), either in or out of bankruptcy, will be sold off or cease operating because they have no cash flow or access to funds. FW California Holdings is the Boston unit that provides all the services to the yieldcos. It will go wherever SUNE's investments in the yieldcos go (IMO).
The Court Judge rejected Mr. Stephen Miller and all of his requests to the Court on Oct. 19th (Docket 1434). This included the "secret" chambers meeting with BOA (Docket 1266) reported/rumored in the media. The judge cited Mr. Miller and all of his missives for providing no evidence to contradict the facts before the Court, making unsubstantiated charges and allegations, insulting the Court, the SEC, the DOJ, the current SUNE management, all the third party experts and advisors and telling the Court to take actions it is not empowered to take. Mr. S. Miller has clearly demonstrated that he has zero credibility, expertise and judgement.
SUNE has filed for another extension (Docket 1492) for exclusivity to reorganize until Feb 15, 2017. They report that they have agreed to 19 sales for $609MM in gross proceeds which includes sale of the entire solar materials business and their platforms in India, Latin America, Honduras and South Africa. U.S. sales include all the stalking horse agreements. They now need the extension to best determine how best to monetize the value of their yieldcos. It should be noted that SUNE stated in the filing that they successfully rebuffed establishment of an equity committee as it is unnecessary at this time.
SUNE has just filed its first report for some its non-debtor companies' financials (Docket 1488). If this sampling is indicative of all the "hidden assets" then some are going to be rudely awakened.
D.E. Shaw has been playing this game all the way back to its ownership of First Wind. They went thru the same exorcism of consistently bad cash flows when SUNE became their white knight. You do know that SUNE's ownership of the Class B yieldcos shares prohibits their sale, unless converted to Class A shares where they lose 10-to-1 voting rights, and that SUNE must maintain not less 25% ownership at all times? The only way D.E. Shaw gets control of the yieldcos is if they buy SUNE at a economically supportable price and that will not happen under the current SUNE shareholder structure.
Merger? +95% of the April 2, 2016 Pipeline has now been sold, is under contract for sale or is worthless with revenues of less than $500MM projected. Non-paid liabilities accrued during bankruptcy are over $800MM. The non-DIP creditors with +$2 billion owed them are seeking to stop the DIP lenders from taking all recoveries. Any Merger partner would have to absorb all the unpaid liabilities under current commons. Any restructuring which facilitates acquisition of the yieldcos would mean current commons gets cancelled. Please explain how, or why, any party would agree to be a new partner when any remaining assets can be purchased for a song. Didn't SUNE just give away its undeveloped pipeline in India for free?