In a filing with the U.S. Securities and Exchange Commission (SEC) Friday morning, SunEdison Inc. (NYSE: SUNE) said it has entered into confidentiality agreements with certain of its first- and second-lien lenders related to proposed debtor-in-possession financing for the struggling solar PV maker. As part of the agreement, SunEdison filed a copy of a presentation it made to second-lien lenders on March 17, 2016, less than two weeks following the company’s termination of its deal to acquire Vivint Solar Inc. (NYSE: VSLR).
The presentation filed Friday morning identifies three key goals for SunEdison:
- Maximize value for all SunEdison stakeholders.
- Move through the process as quickly as possible to maximize value and future growth potential.
- Focus on core regions (North America, India, Latin America) while growth regions are on “hot idle” until liquidity improves.
To meet these goals the company specified four key enablers:
- Achieve $310 million of financing.
- Realize relief from select obligations, including earn-outs.
- Monetize residential and small commercial business unit.
- Reduce operating costs to $400 million or less.
To achieve its goal of $310 million the company would pledge all the assets it had already used to secure its first- and second-lien loans, and virtually every other asset the company had:
- All assets pledged by subsidiaries that own various operating projects
- All assets pledged by subsidiaries that own various projects being sold
- All assets pledged by subsidiaries that own various projects under development
- Assets of the Residential Services business
- Unencumbered real estate
This and the accompanying presentation slides look to us as though they form the basis for a debtor-in-possession financing package that gives SunEdison a path to stay in business for the rest of this year. SunEdison would maintain both its yieldcos, TerraForm Power Inc. (NASDAQ: TERP) and TerraForm Global Inc. (NASDAQ: GLBL), sell its residential and small commericial business, shift its focus to selling projects at full-notice to proceed (FNTP) and consolidate operations to drive efficiency. Cash flow at the end of 2016 is projected at $259 million under this scenario.
The full presentation was filed as Exhibit 99.1 with the Form 8-K.
The company’s stock is getting battered again, down about 34% at $0.39 shortly before noon on Friday. The stock’s 52-week range is $0.20 to $33.45.
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