Here's The Report That Sent Sunedison Down 20%

Sunedison Inc SUNE shares are reacting negatively to a report out from Debtwire, published at 11:04 EDT on March 22. The stock is down 19 percent on the day.

Due to interest in the report, a larger breakdown of Debtwire's comments, titled "SunEdison engages in DIP talks with second lien holders," has been provided. Below are a few key highlights:

• "SunEdison is in negotiations with holders of its second lien loans to fund a DIP facility, two sources familiar with the matter told Debtwire."
• "The second lien investor group, which has organized with legal counsel Akin Gump, includes holders of the aggregated USD 725m Libor +1000bps second lien term loans A-1 and A-2, both of which come due in 2018, the sources continued. DIP talks this week have focused on providing the company with upwards of USD 300m in new post-petition liquidity."
• "There are also discussions about rolling up portions of the second liens as well as the company’s first lien letter of credit facility, added one of the sources. The USD 750m LC facility had USD 716m in outstanding LCs as of 3Q15. The company had just USD 56m of unrestricted cash at the end of 4Q15."
• "The onset of DIP loan talks with management and the lenders follows up on attempts by second lien holders to ink an out-of-court solution to the solar company’s liquidity and leverage problems, said the sources."
• "SunEdison’s USD 316m 2.375% convertible notes due 2022 traded at 8.75 on 21 March down from 11.25 on 15 March."

Response

In response to the report, not available publicly, Sunedison declined to comment to Reuters. Axiom Capital analyst Gordon Johnson told the outlet that DIP negotiation means a company has "effectively" used up its cash, meaning it will pay credits fair market value for secured assets instead of contracted value.

Sunedison shares are near $1.62 on the day.

Akin Gump could not be reached for comment.