SunEdison Files for Chapter 11, Gamblers Rejoice (Or Cry)

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WSJ– Solar-power company SunEdison Inc. filed for bankruptcy protection on Thursday, pledging to curb a debt-fueled global expansion that pushed the company’s stock to great heights before fueling its rapid collapse.

The filing caps a dramatic decline for a company that was worth nearly $10 billion last summer, when it nurtured plans to become a global clean-energy giant. SunEdison used a combination of financial engineering and cheap debt to buy up renewable-power projects around the world before the market turned sour last summer and investors soured on its business model. 

SunEdison said it would use the bankruptcy process to reduce its borrowings, which stand at more than $16 billion, including the debt of two publicly traded subsidiaries, TerraForm Power Inc. and TerraForm Global Inc. Those subsidiaries—separate entities known as yieldcos that buy operating projects from developer SunEdison and pay out cash flow to their shareholders—didn’t file for bankruptcy and said in statements that they have sufficient liquidity to continue to operate, though much of SunEdison’s value is derived from its controlling stake in them.

In a move predicted by almost everyone, SunEdison ($SUNE) filed for Chapter 11 Bankruptcy Protection today in hopes of saving its bloated debt and sinking equity. For those of you that frequent high-volatile stocks, $SUNE should be almost all too familiar to you. Investors have been riding the highs and lows of this stock for much of the past four years. From a high of over $30.00 to a low of $0.30 today before the SEC halted trading, $SUNE has been an absolute clusterfuck of a stock to own.

Investors have been weary recently as $SUNE released their financial numbers to the public, showing that they have been hiding a large amount of debt that almost seemed insurmountable to sell off or mitigate. However, wall street bettors have been clamoring over both shorting and picking up stock, flipping their mind back and forth as news from the company shifted. Between 2013 and 2016, the company acquired over $18 billion in assets from various companies in an attempt to become the world’s leading solar power conglomerate. However, over the last 12 months, their stock plummeted to lose over 99% of its value. The SEC is currently looking into the company to see if SunEdison was honest with their investors in their financial assessments.

Some are arguing that once the stock returns to the market under the $SUNEQ designation, it will quickly plummet to zero dollars. Others are arguing that the company will be able to get enough outside help to cover its initial debts and get through the tough times. Personally, I am running the hell away from this stock as soon as it comes back, but only because I have been burned so badly in the past. Only time will tell.

P.S. Prince and $SUNE on the same day… I’m going to need a minute.

-KJ

 

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