Sunedison Inc (NYSE: SUNE)
Sunedison had a rough day in the market yesterday, and for good reason. On top of the company facing headwinds from the energy sector, there was a report released with regard to debtor-in-possession talks surrounding SUNE. Today, we’ll talk about what we saw from the energy sector as a whole yesterday, the talks with regard to debts, how investors are reacting to the news, and what we can expect to see moving forward. So, let’s get right to it…
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The Energy Sector Took A Dive Yesterday
Yesterday was an incredibly rough day for the energy sector. As the value of oil took yet another dive, companies in the sector started to feel the pain in a big way. Unfortunately, solar stocks were not immune to the declines. In fact, yesterday, SUNE fell by 14%, SCTY fell by about 10%, and just about every other solar stock was in the dumps.
SUNE Gets Pushed Further Down On Debt Talks
On top of the pain that solar stocks were already feeling yesterday, SUNE got pushed further down thanks to a report by debtwire. According to the report, Sunedison is currently in the midst of what is believed to be debtor-in-possession talks with creditors about second lien loans. According to the report, about $300 million worth of SUNE debts are involved in these conversations. As a result of the conversations, more reports of a possible filing for Chapter 11 bankruptcy protection started to pop up.
Should You Be Concerned About SUNE Declines?
While any talks with regard to bankruptcy and debtor-in-possession can be a bit scary, I’m not quite as concerned as many others seem to be. The truth is that there is a possibility of Chapter 11 bankruptcy protection. However, I don’t believe that this is the direction SUNE is headed. Instead, I’m expecting that Sunedison is in talks about debt restructuring – not bankruptcy!
Why I Remain Bullish On SUNE
Over the past several months, I’ve been very clear about my bullish position on SUNE, and as a result, I’ve gotten tons of emails. Some of these emails have been people telling me that I’m absolutely crazy while others have been thanking me for getting the positivity surrounding SUNE out into the web. The truth is that there are plenty of reasons to be bullish on Sunedison. Here are just a few:
- Changes In Energy – Even while oil prices are down in a big way, we are seeing big increases in the installation of solar panels on homes in the US and around the world. The same is going for business, and other buildings as energy consumers start to realize that the burning of fossil fuels is horrible for the environment. Ultimately, over time, SUNE will realize the fruits of this change.
- Long-Term Revenue – Sunedison has built several solar power plants. However, they don’t need to worry about the power they produce. The truth is, it’s already sold. On each one of the power plants, SUNE has signed contracts with utility companies for the sale of the power for the next 20 years. This will guarantee long-term revenue for the company.
- Debt – Debt is a big issue for SUNE, I get that. However, every major company has their share of debt. When it comes to SUNE, I will admit that the company went a bit overboard with debt, however, they do have the assets to back it up, and that will likely keep them far away from bankruptcy. So, I’m not very concerned about debts either.
The Bottom Line
The bottom line here is that SUNE is in the midst of a rough patch. However, every large company has felt growing pains, and this is no different for SUNE. All in all, I have no doubt in my mind that Sunedison will make it beyond the hurdles. At the end of the day, I’m expecting to see long-term growth.
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What Do You Think?
Where do you think SUNE is headed moving forward? Let us know your opinion in the comments below!
[Image Courtesy of Wikipedia]