Just a week ago solar PV maker SunEdison Inc. (NYSE: SUNE) paid a $336 million loan off five years early and investors rewarded the company by pushing the stock price up by 8% at one point. Thursday the company restructured more debt and investors pummeled the stock, sending it down 46% at one point.
What SunEdison announced today is that it is restructuring debt in a deal that extinguishes about $580 million in convertible debt and $158.3 million in preferred stock. The so-called ‘Second Lien Secured Term Loans’ are expected to close on January 11th and SunEdison expects to receive $725 million in cash. After paying off approximately $170 million on its existing second lien credit facility, SunEdison will retain $555 million for, among other things, general corporate purposes.
What does all that cost? Here’s what SunEdison says:
The Second Lien Facilities will be comprised of $500 million of A1 loans, and $225 million of A2 loans, each of which will bear interest at a rate of LIBOR + 10.0% per annum and will mature on July 2, 2018. Lenders under the A1 portion of the facilities will receive warrants exercisable at any time for an aggregate of 19.8 million shares of common stock, and lenders under the A2 portion of the facilities will receive warrants exercisable at any time for an aggregate of 8.9 million shares of common stock, in each case at an exercise price of $0.01 per share.
SunEdison also said it would issue warrants for 28.7 million shares of common stock and $225 million in convertible notes.
The transactions will dress up the company’s balance sheet, but the price is very high according to one analyst cited by Bloomberg. SunEdison’s interest expense is likely to grow by $40 million a year and existing shareholders are being slapped with about 18% dilution to the value of their shares.
SunEdison stock closed at $3.34 on Thursday, down nearly 40% in a 52-week range of $2.55 to $33.45. Amazingly the low was not posted today; shares dropped only as far as $2.95 before recovering somewhat.
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