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Goldman Cuts TerraForm Global's Price Target In Half, Still Selling On Sunedison Risks

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Goldman Cuts TerraForm Global's Price Target In Half, Still Selling On Sunedison Risks
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Goldman Sachs’ Brian Lee maintained a Sell rating for TerraForm Global Inc (NASDAQ: GLBL), while slashing the price target from $3 to $1.50, after the company announced a likely delay in its 2015 10-K filing.

The delay in filing results from the overlapping of financial reporting and control process with parent Sunedison Inc (NYSE: SUNE). TerraForm Global also indicated SunEdison may seek bankruptcy protection, which implies “delays and risks to c.500MW of projects Global has already paid SunEdison for,” analyst Brian Lee mentioned.

See Also: Sunedison Plunges Under $1 Following Report Of SEC Probe, TerraForm Global 8K

Implications

In case SunEdison does file for bankruptcy, the debt agreements involving three power plants in India have provisions to accelerate payments.

“Additionally, PPAs/debt for projects in South Africa have provisions triggered by change of control or bankruptcy at SunEdison (representing c.15% of our unlevered CAFD estimate),” Lee wrote.

TerraForm Global has pre-purchased 425MWs of Indian solar pre-purchased from SunEdison, and an additional 100MW of under construction projects “still require substantial costs and equity contributions from SunEdison, which puts the completion and eventual transfer to Global at risk,” the analyst commented.

TerraForm Global did mention, however, that it had enough liquidity for ongoing operations and plants maintenance, in the event SunEdison files for bankruptcy.

TerraForm Global fell 18.8 percent on Tuesday, while Sunedison fell 55.7 percent.

Latest Ratings for GLBL

DateFirmActionFromTo
Jan 2017JP MorganAssumesNeutral
Jul 2016Goldman SachsUpgradesSellNeutral
Jan 2016JP MorganMaintainsNeutral

View More Analyst Ratings for GLBL
View the Latest Analyst Ratings

Posted-In: Brian Lee Goldman SachsAnalyst Color Short Ideas Price Target Reiteration Analyst Ratings Trading Ideas Best of Benzinga

 

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