Needham: $SUNE Assets to Fetch Little in Bankruptcy; $GLBL, $TERP Might Survive

And the fucking stock doubles on this news.

We’ve seen this play our numerous times over the year. XYZ goes bankrupt and the stock flies in anticipation of a bankruptcy court breaking up the assets. This is a dangerous game, especially for the debt laden SUNE. Some analyst who called himself ‘Mok’ thinks the assets are essentially worthless, an entire waste of time for all people involved in this God foresaken company.

“We are dropping our coverage of SUNE with a final Hold rating,” writes Mok, “following multiple media reports suggesting SUNE is preparing to file for bankruptcy amid a cash crunch as the result of an over leveraged balance sheet and unclear accounting of its liquidity.”

“With no other options for accessing additional liquidity, we believe bankruptcy is the only viable outcome for SUNE.”

Mok thinks the two YieldCos., TerraForm Global (GLBL), and TerraForm Power (TERP), will survive “assuming they are able to unwind from SUNE” and to “find buyers for SUNE’s stake.”’

‘Pennies on the dollar’, equates to 90% gorilla raping run on Wall Street.

Unfinished projects likely sold for pennies. A vast majority of the cash on hand is committed to projects, but SUNE does not have the liquidity to complete those projects. A bankruptcy proceeding would likely force the company to sell its project portfolio and pipeline to raise capital for debt repayment. The completed projects should be able to fetch market value, but given the uncertain status of those unfinished projects in its pipeline, we expect those would be sold at a substantial discount.

What went wrong? Mok sums it up.

Part of SUNE’s trouble comes from its aggressive plan to ramp-up renewable project development, requiring substantial capital to complete. Management was relying on the combination of yieldco funding, debt project financing and its own liquidity. Additionally, SUNE was counting on dropping down projects to its yieldcos, which would also need to raise capital to fund those purchases from SUNE. While the yieldco strategy was initially successful, the dividend yield eventually became too low and the need to grow the portfolio pushed those entities to become more aggressive in fund raising. Finally, the strategy to become the world’s largest renewable energy company through multiple acquisitions overextended SUNE’s financial liquidity and ultimately accelerated its cash crunch.

These stocks are idiotic and without decorum.