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

Goldman Sachs’ Brian Lee maintained a Sell rating for TerraForm Global Inc 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 SUNE. TerraForm Global also indicated that 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.

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.