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SOL has an enterprise value of $779M if you want to include its net debt.
Sol has a market cap of 80 million
It was just a matter of time before all the new offices they opened and equipment being bought ate up all the profits and then some. I expected it to happen in Q4 or Q1 next year, but the delays this quarter did them in. Perhaps they will finish everything on time in Q4 and end the spending spree that they've been on recently and Q4 will be as good as Q3 was bad.
The threat of solar tax credits being reduced or eliminated may be what is needed to increase the demand in 2017. A new rush to get projects completed before the subsidies disappear may keep 2017 from being a down year for solar.
Fortunately Trump and the Republican leaders in Congress have different views of what needs to be done. The solar tax credits were approved by a Republican Congress, so it may be hard for Trump to get Congress to repeal them.
The SEC used the companies shareholder equity and August MOR to convince the judge that an EC was needed, so the the October MOR is what the judge will see as the current equity value.
That latest MOR is absolute garbage.
How the hell do you write down $300M in assets with notsomuch as a flipping footnote?
Get real man.
Any of the valuations are based on a projected oil price. Since the end of October, oil is down over $5/barrel. With proved reserves of 240M barrels, the value has dropped by over $1.25B (which is why I say shareholders need an OPEC production cut at the end of November).
They don't need to sell assets to show what the company is worth. Please read Martin Lewis" letter to the judge He values the company multiple ways (cash flow, comparable MLP's , lease rates, etc.) you name it and he has done his home work. Middle of the road analysis came back with a 4.2B valuation . That means 3B to bond holders 500MM to preferreds and 700MM left for common. This will be the starting point for the Equity committee . Deadline is tomorrow by the way.
I have the SEC letter right in front of me.
The SEC stated "POTENTIALLY "MORE" THEN ONE BILLION", that was put out 10/14/16, before BBEPQ put out or figured out the third quarter report! The value was based on the time BBEPQ filed BK! Then On 7/28, Bonuses payout of 33million! Then 8/21, "Wilbur Ross's next Big Bet: Oil and Gas" BBEPQ!
With respect to the hopeless insolvency prong,3 the Debtors’ financials indicate that the Debtors do not appear to be hopelessly insolvent here. The balance sheet as of the petition date shows more than $1.3 billion in stockholder equity. Even post-petition, in the Debtors’ most recently filed Monthly Operating Report for the period ending August 31, 2016, the Debtors’ balance sheet reflects an estimated $985 million in stated equity.4 At this time, Breitburn has not filed a plan of reorganization, but these numbers suggest that it is likely there will be some distribution available for shareholders. In a case that will likely involve a heavily negotiated plan of reorganization, the extent of any shareholder distribution could be determined by whether shareholders have adequate representation during the plan negotiation process.
The SEC sent in their letter on Oct. 7th and said that their ballance sheet at the end of Q1 showed shareholder equity of $1.3B and their Aug MOR still showed an estimated $985M in share equity. Oil prices were around $50/barrel when they sent in the letter. The most recent MOR has share equity down to $677M (this is before paying around $550M to the preferred shareholders).
The SEC never said $900 - $2B anywhere in their letter (the highest equity amount was $1.3B in the Q1 report). They said an EC should be appointed because they did not appear to be hopelessly indebted. The EC will certainly argue about what the value is of the assets, but until they shop the assets around, they won't know what someone else will pay for them.
I disagree. Oil was $26/Barrel when the company, BBEPQ filed Bankruptcy. The SEC letter to the court said the company asset outweigh debt and liabilities by $900M - $2B. If oil was $26/B then, and $45/B now, their assets are now more than what the SEC investigation produced.
Breitburn commons will only survive if the price of oil goes higher. Higher oil prices depend on the OPEC meetings at the end of November. If they can't agree to reduce production by at least 1M barrels a day and stick to the limits, the oversupply will continue.
The best chance for the commons was for asset sales when oil was over $50/barrel. Now oil is back under $45/barrel for WTI. BBEPQ trades up and down with the price of WTI because any valuation method for the company assets depends on what the reserves in the ground are worth.
The stock has been down ever since the polls show Clinton and Trump in dead heat. Trump would not be good for solar companies. The FSLR results and forecasts also are hurting all the solar companies. It won't matter how well SUNW does in Q3 if Trump is elected.
4 trading days before record Q and the stock slips 40 cents?
The lawyers will present many different valuations and it will be up to the judge to decide which to use. If they don't liquidate their assets, he will probably pick a valuation based on the average price of oil over some time frame. The best case for commons is for the company to sell their assets when the price of oil is over $50/barrel (if it gets back over $50). At $45/barrel, there is little or nothing for commons.
At the end of 2014 (before they wrote down the value of their assets) they had about $3.8B net shareholder value, but this was when they still had the assets on the books at $100/barrel. They bought a lot of oil assets in 2012, 2013, and 2014 when oil was over $100/barrel. They thought that they could just sell the oil to pay off the debt with a little left over for the investors. They paid way too much for the oil assets ($60 to $70 times proved reserves). Oil had been around $100/barrel for several years and they thought that Saudi Arabia would adjust production to keep oil prices high. They were wrong. Some of the oil assets they bought are now worth 80% to 90% less, so an investor presentation written at the end of 2014 is no longer accurate.
The latest MOR has further written down the value of their assets. If they don't write down the value next month, there is $0.60/share in shareholder equity after paying off their debt and preferred shareholders. However, the price of oil has dropped about $5/barrel recently. If it doesn't recover, there will be no equity for the commons.
Breitburn hiding 7.6Billion in assets?
Investor Proposal posted on Y Board first, but this should be stickied.
p.32 Total Assets 7.638 BILLION
Where did they all go less than a year later? Gee I wonder who's telling the truth. Equity Committee with a copy of this as well.
Since the judge approved the EC, the debtors have no choice but including the EC in negotiations.
They just recognized that the EC now has a place at the table. If this isn't proof that we are in a great spot here, then you clearly are only here to try and bash this stock down. Get the red capes out because the BULL RUN is officially on.
I will paste the passage verbatim from the Debtors. From Page 11 section (viii) the Debtors state:
The Debtors need the requested additional time to meaningfully negotiate with stakeholders, including the Equity Committee, and achieve a consensual plan.
They need to start selling off assets before the price of oil drops when Russia doesn't join OPEC in reducing output. OPEC meeting is at the end of November. Russia's largest oil company said that they will not reduce output, so Russia is unlikely to cut back. Without cuts by Russia, a small OPEC cut in production will just put supply and demand back into ballance. At $50/barrel, some US oil companies will start drilling again and oil prices will drop as US production increases.
I doubt the commons are headed to $7.
If the creditors don't get the whole company, I think best case is for shareholders to get 25% of the company when it comes out of bankruptcy with 15% common ownership and 10% perferred ownership.
If you use the companies Adjusted EBITDA of $183M for 2017 and give a market cap of 2x to 10x Adjusted EBITDA (similar to other oil and gas companies), then the post bankruptcy company could trade with a market cap of $1.83B.
$1.83B * 15% / 200M shares gives you an upper end value of $1.37 for each common share. If the post bankruptcy company only trades at 2x the Adjusted EBITDA, then you are looking at around 27 1/2 cents per share.
If the price of oil is higher when the judge makes his ruling, current common holders might get a slightly higher percentage, but if oil drops again, the creditors will get the whole company. $50/barrel is probably needed for current common share holders to get 15% of the post bankruptcy company. At $50/barrel, the company is worth around $15 * proved reserves (another way to value the company).
BBPPQ is the preferred class A symbol.
The company said their cell could be manufactured using standard semiconductor equipment. This is not the same as a regular assembly line that does convential panel manufacturing. The cost is much higher. The company is a solar installer and if they ever say they'll start manufacturing their patented cells, I'm out. If you want better efficiency, SunPower has been making high efficiency modules for many years now.
So what changed concerning the cell? It is still ready for market, it was designed to fit on a regular assembly line and at a manufacturing cost similar to conventional panels.
The office in Reno can still get a lot of business from California. Reno is right on the border between the 2 states so even if they are physically in Nevada, they should concentrate on California installations until Nevada changes their rules.
Reno is only 5% of revenue because Nevada Energy changed the net metering rules and the solar business in Nevada has been abandoned by most solar installers. There won't be much business in Nevada until they change the rules to make solar ROIs better. Paying wholesale rates for excess solar electricity makes the ROI much longer.
The $1.8M charge for stock based compensation because they issued shares for meeting performace goals took a big bite out of their earnings/share. They would have reported $0.13/share without this non-cash charge. So GAAP was only $0.03/share, but $0.13 non-GAAP.
I doubt most investors will realize this and the headlines will probably say that SUNW missed by $0.02/share.
If they sell more Canadian Solar modules and fewer SunPower modules, then the price per MW installed will go down by about 50%. SunPower has very high efficiency modules to get the highest wattage per square foot of roof, but if you do ground mounted systems or have more roof than you need, then you don't need the very expensive SunPower system.
I see no reason to file for bankruptcy. Cash went from $10M at the end of last year to $81M at the end of Q1. They only need about $33M to make their past due payment before the grace period expires.
Their hedging brought in $135M and they are 77% hedged for the rest of 2016, so they have the money to make the interest payments that are now due and the ones due in October.
2017 and 2018 both have low debt payments due as well, so the company has 3 years to wait for a recovery in oil prices. They can also wait to put on some more hedges when oil prices recover even more.
They invested in the business by opening the design center, offices, and trucks and installation equipment. I hope they don't invest more in subsequent quarters and eat up all the profits like they did in Q1.
Jim didn't say that the cell would work on a solar panel line, he said it could be made using standard SEMICONDUCTOR manufacturing equipment (a much more expensive way to build cells). There is no way to use semiconductor manufacturing equipment and make it cost competitive with $.60/watt panels that are currently made in China.
SUNW is in an out of favor sector right now. Until the other solar installers recover (sune, run, vslr, scty), it will be difficult for SUNW to make a run up. The seasonality doesn't help either. Nobody wants to see a sequential decline in sales like SUNW had from Q3 to Q4.
SunPower high efficiency panels with trackers are not cheap. It looks like someone wanted US made and the highest output possible in a small amount of space, so they went with SunPower and Trackers for $10M. The city council seems to want cheaper Chinese panels without any trackers (if they are willing to pay for a solar system at all).
It looks like the managers of the Wastewater Treatment Facility wanted the best solar system available and the City Council wants the cheapest solar system they can get (if they even want one at all). Apparently Fresno doesn't have the money to spend up front to save even more later. Solar3D probably should have provided a few alternative proposals so that they could pick the one they can afford.
Fresno agenda out with ID#15-871 to kill the 2 megawatt solar project:
Reject all proposals received for the 2-Megawatt Solar Energy
Facility at the Fresno-Clovis Regional Wastewater Reclamation
Facility (Bid File 3380) (Council District 3)
This is probably why SLTD missed the rally on Friday.
They don't have the minutes or video available yet.
I don't get the newsletter and subscribing did nothing. Perhaps it only enables me to get future newsletters.
Solar3d needs to put out an official PR on something this important.
Do you have a link to an official PR for this postponement PR or did you just make it up?
The Fresno Agenda last updated on Aug. 27th shows that it was still on the agenda:
https://fresno.legistar.com/DepartmentDetail.aspx?ID=24367&GUID=3F2858EB-369B-4203-B7B5-EF33E643E2AD&Mode=MainBody
Click the agenda link from the 8/27/2015 meeting. You should also be able to see the meeting video once they make it available.
The Fresno City Council wanted answers to their questions in July, so they are provided with 8 documents. Now they can't make a decision because they have too much information to consider. It would be hilarious if it was for a stock that I wasn't invested in.
Someone needs to remind them that there is a deadline for cheap loans, so they need to move quickly.
I'm here because I believe in Solar3D as an installer and I'm trying to prepare the people that think that the 3D patent is worth anything for the day when they have to admit it publicly. I don't want to see a big drop when the dreamers have to face the reality that Solar3D is nothing more than a solar installer with a bright future installing panels with a >32% gross margin (which is why I invested).
I got my information from reading the patents. The diagrams are where they show what they are trying to do. I then compared their process to the way the Chinese make modules (they create a very large silicon ingot, slice it as thin as possible into wafers, glue electrodes to each wafer and wire them up into a module). Solar3D says they will etch paterns on the wafers, glue up a stack of wafers, and then slice them up and apply electrodes. These extra steps and the machines to do them will add a lot to the cost. I doubt that the added cost will be offset by enough of a performance improvement to justify the higher price.
I also read the PRs about the Solar3D prototypes. Their first prototype was built in 2012. They announced a version 3 prototype last year, but they said computer simulations were used to calculate the performance. If they have a prototype, why do they need computer simulations? Most likely they have just a few small cells made by hand. There isn't an automated manufacturing process, so they are just guessing that they could be cost competitive and they are guessing about the efficiency. I'm also guessing that the extra steps and extra equipment needed will make the 3D cell too expensive to manufacture (compared to the Chinese $.60 to $.70 per watt). If they want to demonstrate their performance/efficiency, build a 5 foot x 2.5 foot panel and do some real comparisons to off the shelf panels from SunPower, First Solar, Trina Solar, Canadian Solar, and Jinko Solar.
Solar3D went into the installation business because their 3d cell would be too expensive to manufacture (more steps) than the processes currently used. More steps would add to the cost/watt. They'd also need to convince a semiconductor equipment manufacturer to build the equipment needed to perform these additional steps. Unless Solar3D builds the equipment themselves (very expensive) and sets up their own solar module manufacturing plant to use the new equipment (also very expensive), there will never be a 3D cell. The extra cost will result in higher prices that can't be justified by the 40% (unproven) higher efficiency.
The Chinese module makers have gone into the installation business because that's where the money is. Solar3D should stick with installations and forget about the 3D cell. This is probably their plan, but can't announce it until they are turned down by all the potential manufacturing partners. They need to say they tried to find a partner, but couldn't and they don't have the money to go it alone.