Credit Suisse: Sunedison Selloff 'Appears To Be Appaloosa Related'

• Sunedison Inc SUNE shares have lost 83 percent in the last six months, and are trading close to the low end of their 52-week range of $2.55 - $33.45.
• Credit Suisse’s Patrick Jobin maintained an Outperform rating for the company, with a price target of $25.
• The weakness in SunEdison’s shares appears to be Appaloosa related, Jobin stated.

Appaloosa, which has a 9.5 percent stake of TerraForm Power Inc TERP, has expressed its intention to investigate the company for any breaches of fiduciary duties, analyst Patrick Jobin said.

Appaloosa has asked TerraForm to furnish documents and all written records related to meetings with SunEdison and Vivint Solar Inc VSLR, all transaction documents related to the VSLR asset acquisition and documents related to the take/pay agreement with SunEdison for VSLR assets.

Appaloosa has also enquired about why the companies did not do a ROFO instead, and has asked for details of offers received to purchase the VSLR assets, related minutes from meetings, details of competitive offers sought by TerraForm for VSLR assets, and minutes from meetings when counsel was replaced.

Jobin mentioned that the market seems concerned on the following accounts:

1. Conflicts may become apparent between the entities, especially after changing the entire independent committee
2. The VSLR acquisition terms could be shifted more to TerraForm’s favor
3. The investigation could result in a cancellation of the VSLR agreement, which would exert further pressure on VSLR’s liquidity.

“We note that if SUNE sells the VSLR portfolio (potentially at the same price as TERP was paying), all these points are moot,” the analyst wrote.