Sunedison Inc (NYSE: SUNE)
Sunedison had an incredibly rough day in the market on Thursday, and for good reason. The stock was falling as the result of a New York Supreme Court Ruling. While the ruling isn’t great for the short term, I still remain relatively bullish on SUNE. Today, we’ll talk about the ruling, what we saw in the market on Friday and what we can expect to see from SUNE moving forward.
Trade smarter and make more money with Tradespoon!
New York Supreme Court Ruling On SUNE
Relatively recently, Sunedison agreed to acquire Latin America Power, an alternative energy developer in Peru and Chile. Unfortunately, however, that deal fell through. As a result, shareholders in Latin America Power started to take action against SUNE, which led to a $150 million lawsuit against the company. One of the concerns among Latin America Power shareholders was that SUNE would not be able to pay a potential $150 million award to the company given their current financial position. As a result, they looked to the Supreme Court to halt the transfer of SUNE assets in any way.
On Friday, it was announced that the New York Supreme Court Justice Charles E. Ramos issued a temporary restraining order. The order prevents SUNE from “transferring assets without fair consideration or in the ordinary course of business”, and will remain in effect until the hearing with regard to Latin America Power takes place on February 25th. Under the temporary restraining order, SUNE, its holding company, and Terraform Power are prohibited from “concealing, transferring or removing their assets, accounts or any other property that may be subject to attachment” with the exception of fair value and in the course of regular business. Overall, SUNE has announced that it is happy with the judges decision as it allows the company to continue forward with business while awaiting the hearing.
What We Saw In The Market As A Result
As investors, we know that negative news tends to lead to negative movement in the market. Unfortunately, the fact that a restraining order has been issued against SUNE is incredibly bad news for the company and ended with poor movement in the market on Friday. By the close of the trading session, Sunedison shares had fallen to $1.42 per share after a loss of $0.62 per share or 30.39% on the session.
What We Can Expect To See From SUNE Moving Forward
Moving forward, I have a very mixed opinion of what we can expect to see from SUNE. Unfortunately, fear seems to be driving the short-term movement on the stock, and I’m not expecting this to change over the next couple of weeks. With high debt and legal action fresh on the minds of investors, we’re likely to see a mix of relatively flat and downward movement in the short term. However, in the long run, I’m still very bullish on the stock for two reasons.
First off, debt is the primary concern for SUNE investors. It is why the stock has been falling so hard. However, when comparing debt to assets, it’s really not much of an issue. In fact, as mentioned in previous posts, if SUNE were to sell all of its assets today, it would have more than $4 billion left over after paying off debts, working out to about $14 per share. Another reason I’m still bullish is the change of tides in the renewable energy industry. As time passes more and more people are realizing a need for a tidal shift away from the burning of fossil fuels and toward the use of clean, renewable energy resources. Ultimately, this will increase the demand for the company’s products. All in all, the short term outlook is pretty grim, but the long term view on the stock is incredibly appealing, especially considering the current price at which SUNE is trading.
Don’t waste your time! Click here to find winning trades in minutes!
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]