SUNE stock was further bleeding on Thursday after SunEdison Inc (NYSE:SUNE) made a super-move that may deal more damage than regular special moves.
The beleaguered renewable energy developer, whose market value has slumped more than 90% since last summer, unveiled on Thursday what it described as an “asset-light” strategy.
The world’s biggest renewable energy developer has decided to close one production facility, sell another, and refocus a third as it is trying to “re-engineer this business” in the low-energy-price environment.
As a result of these actions, SunEdison said it will record non-cash impairment charges of $266 million and $171 million of restructuring charges in its fourth-quarter financial results.
Following the announcement, however, analyst Gordon Johnson of Axiom said SunEdison remains a “distressed company.”
In an e-mail sent to Benzinga, a financial web site, on Thursday following SunEdison’s announcement, Johnson questioned the company’s debt load.
“Does this resolve their debt issues?” the analyst wrote in his e-mail. “Or, is this yet another set of some form of cash charges that will further deplete SUNE’s all-to-important cash balance. This is a desperation move.” (Source: “The Analyst That Sent Sunedison Down 30% Says Co. Just Made A ‘Desperation Move’,” Benzinga, February 18, 2016.)
Johnson stressed on Thursday that SunEdison’s fate “remains one of a distressed company” and its announcement “does very little, if anything, to resolve that.” (Source: Ibid.)
During a show on Benzinga earlier in January, Johnson himself expressed concerns over the company’s debt load and financing raises. Benzinga says Johnson’s remarks sent SUNE stock plummeting, losing 30% at the time.
When asked if SunEdison’s new financing deal was a good move, Johnson responded, “Absolutely not. I think this deal makes me more cautious on the company’s ability to make it through 2016.” (Source: Ibid.)
SunEdison is struggling to conserve cash and pay down debt as it seeks to close a planned $1.9-billion takeover of Vivint Solar Inc, a solar rooftop developer.
The Maryland Heights, Missouri-based company said in its statement on Thursday that it plans to close its plant in Pasadena, Texas, sell its Malaysia factory to China’s Xi’an Longi Silicon Materials Corp., and shift production at its Portland, Oregon facility to focus on research and development. (Source: “SunEdison Takes Actions to Focus Solar Materials Operations on Asset-Light Strategy,” Yahoo! Finance, February 18, 2016.)
“We believe our actions to re-engineer this [upstream solar materials] business will maximize the value of our world-leading silicon production technologies, enabling SunEdison’s long term downstream growth and curtailing headwinds caused by trade actions and the commoditization of certain products,” said Ahmad Chatila, SunEdison’s CEO, in a statement. (Source: Ibid.)
SunEdison stock tumbled as much as 18%, to $1.37 per share, in morning trades in New York on Thursday, leaving SUNE stock with a market value of $480 million.