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Appaloosa Sues Sunedison; Stock Crashing

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Appaloosa Sues Sunedison; Stock Crashing

Sunedison Inc (NYSE: SUNE)'s stock spiked down on Wednesday morning. Reuters reported that Appaloosa Management is suing the company.

According to Reuters, Appaloosa Management, led by David Tepper, is suing SunEdison's YieldCo, TerraForm Power Inc (NASDAQ: TERP) from taking over some of Vivint Solar Inc (NYSE: VSLR) assets.

Appaloosa owns 9.5 percent of TerraForm, according to Reuters.

TerraForm Power will receive Vivint Solar's residential solar rooftop business after SunEdison finalizes its acquisition of Vivint.

Shares of TerraForm Power were higher by 1.39 percent at $9.82, while shares of Vivint Solar were lower by 1.38 percent at $9.31.

As of 10:20 a.m. ET, Sunedison had been halted three times on a circuit breaker. The stock recently traded at $2.69, down 10 percent.

Related Link: Axiom's Gordon Johnson 'More Cautious' On Sunedison's Ability To Make It Through 2016

Can Sunedison Last 2016?

On Tuesday's edition of PreMarket Prep, Axiom's Gordon Johnson made some bearish commentary on the company: "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."

"Sunedison amassed a massive amount of debt... The majority of that debt was used to buy projects they intended to drop down into their yieldco," Johnson said, noting that Sunedison took on $10 billion in new debt from 2011-2015. "Essentially what happened is the yieldco story ended, and this was a company left with a lot of debt and a lot of projects which are extremely capital intensive. When the yieldco story fell apart, you didn't have that buyer of first resort."

The question now, according to Johnson, is whether Sunedison can sell these projects in the third-party merchant market. It's been trying since the second quarter of 2015, yet so far haven't been able to sell outside its own warehouses and yieldcos.

Johnson's comments sent the stock down more than 15 percent on Tuesday.

 

Related Articles (SUNE + TERP)

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