Sunedison Crashes After 'Expensive' Restructuring, Now 90% Off 52-Week High

Sunedison Inc SUNE shares are down 40 percent on Thursday, about eight hours after the company said it will raise $725 million of secured term loans amid an agreement to reduce $738 million of debt.

As Benzinga previously reported, the company said a Second Lien Facility will be comprised of $500 million worth of A1 loans and $225 million of A2 loans, costing an interest rate of LIBOR plus 10 percent a year.

Investor confusion over Sunedison's price decline is related to the magnitude and duration of the stock's selloff. Shares have been in a prolonged freefall since market open, and initially traded up slightly after the news broke before market open.

Opening at $4.91, the stock fell to $4.21 by noon before hitting a low of $3.10 by 3:10pm ET. Sunedison was halted on a circuit breaker at 3:01pm and again a second time at 3:14pm.

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Traders who spoke with Benzinga attributed the continued decline to company restructuring and share dilution. A prospectus from the company noted 41 different selling shareholders totalling 56 million shares, including Greenlight Capital and Luxor Capital.

Analysts: Restructuring Is Expensive Relatively Speaking

Speaking with Bloomberg, RBC analyst Mahesh Sanganeria said the restructuring "appears expensive," adding that "if you get into a situation where there could be a liquidity concern, then your cost of capital is going to be significantly higher than what you have today."

Stifel's Sven Eenmaa, meanwhile, said the company's balance sheet will be healthier but at "substantial cost."

Shares of Sunedison are now 90 percent off their 52-week high.