SunEdison Nears Penny Territory After Bankruptcy Report, Pass Under Gordon Johnson's $0.22 Price Target
Sunedison Inc (NYSE: SUNE) shares were off almost 50 percent in Friday's after-hours session, amid a fresh report from Dow Jones that the solar company plans to file for bankruptcy protection in the next few weeks, according to the outlet's sources.
The stock, which opened the year above $5.00 per share and traded near $30.00 in early 2015, has fallen 90 percent year-to-date.
"The company is preparing a chapter 11 filing and is in talks with two creditor groups to obtain a loan to fund its operations during the process," Dow Jones said, adding, "[c]reditors are likely to take control of the company and its portfolio of power projects."
According to the report, creditors include Deutsche Bank, other bank lenders and a group of distressed asset-focused hedge funds.
On Thursday, an 8-K filing showed Sunedison disclosed it has been approached by the SEC and revealed it is under a new subpoena from the Department of Justice.
Axiom Saw Signs Early
Of the dozen or so Wall Street analysts who cover Sunedison, the only two firms with Sell ratings on the stock on record are Axiom and UBS. Axiom's Gordon Johnson, in particular, saw signs of trouble early.
"Given the number of deals and the type of deals that they've done...if they're unable to sell those projects, I don't know how much longer the equity can last," Johnson told Benzinga's PreMarket Prep on January 12. "[T]his deal makes me more cautious on the company’s ability to make it through 2016," he added, speaking of new financing the company reached a couple weeks earlier.
Johnson's comments on the Benzinga broadcast sent shares as low as 30 percent that day.
After warning Sunedison would miss its preferred dividend payment in mid-February, Johnson cut his price target on the company to $0.39 on March 1, following the company's cancellation of power purchase agreements in Hawaii. He later cut his target to $0.22 on March 23 after a Debtwire report said Sunedison was exploring Debtor-in-Possession (DIP) negotiations with second lien load holders.
After Friday's after-hours report, Sunedison's share price fell below Johnson's for the first time. The stock rests near the $0.27 mark as of 7:00 p.m. ET, down 37 percent.
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