Sunedison Inc (SUNE) Shares Plunge on Debt Restructuring

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Shares of Sunedison Inc (NYSE:SUNE) are down big today after the company announced that they had priced $725 million of second lien secured term loans, as well as entered into an exchange transaction which will reduce their total debt by $738 million. The transactions, which will close on January 11, will provide Sunedison Inc (NYSE:SUNE) with $725 million in cash and allow them to pay off their existing second lien debt along with interest, and transaction costs. The remainder of the cash will be used for general corporate purposes.

The reason the stock may be down is that the new credit facilities will bear interest of LIBOR + 10% annually, and will be tied to warrants which can convert into as many as 28.7 million shares. While this is not terrible news for shareholders as the company can pay off debt while also continuing operations for quite some time, dilution may in fact be a factor down the road. The stock decreased 0.09% or $0.01 during the last trading session, hitting $5.51. Approximately 3.42 million shares traded hands. SUNE shares have declined 82.01% since June 3, 2015 and are currently downtrending. It has underperformed the S&P500 by 77.32%.

From a total of 15 analysts covering SunEdison Inc (NYSE:SUNE) stock, 10 rate it a “Buy”, 2 a “Sell”, and 3 a “Hold”. This means that 67% of the ratings are positive. The highest target price is $42 while the lowest target price is $6.0. The mean of all analyst targets is $18.61 which is 237.75% above today’s ($5.51) stock price. SunEdison Inc was the topic of 41 analyst reports since July 21, 2015 according to the firm StockzIntelligence Inc. FBR Capital initiated shares on December 18 with a “Outperform” rating. JP Morgan maintained shares with a”Overweight” rating and a $19 target share price in their report from a September 29. UBS downgraded SUNE stock in a recent report from November 25 to a “Sell” rating. S&P Research maintained the rating on September 9. S&P Research has a “Strong Buy” rating and a $32 price target on shares. Finally, Axiom Capital downgraded the stock to a “Sell” rating in a report they issued on a November 12.

SunEdison, Inc. is a developer and seller of photovoltaic energy solutions, an owner and operator of clean power generation assets, and a developer and maker of silicon wafers. The company has a market cap of $1.75 billion. The Firm operates in three divisions: Solar Energy, TerraForm Power and Semiconductor Materials through SunEdison Semiconductor Ltd. (SSL). It currently has negative earnings. The Company’s Solar Energy segment provides solar energy services that integrate the design, installation, financing, monitoring, activities and maintenance portions of the downstream solar market for the Company’s customers.

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