SunEdison Inc.’s SUNE wholly owned subsidiary — Seller Note, LLC — recently struck a deal to extinguish 3.75% Guaranteed Exchangeable Senior Secured notes worth $336 million due 2020.
Per the deal, roughly $121 million of the Notes will be redeemed, while the rest would be extinguished upon the transfer of the allied projects.
Further, holders of the notes will have the option to receive consideration in the form of SunEdison's membership equity interest as well as a specified number of Class A shares of TerraForm Power, Inc. TERP.
According to SunEdison's CFO, Brian Wuebbels, ”We are very pleased to reach an agreement with the holders of the Exchangeable Notes to extinguish the debt. We believe this was a mutually beneficial solution to deleverage our balance sheet by selling our under development assets as well as the Company's shares of TerraForm Power."
We believe that the extinguishment of the Notes will further leverage SunEdison’s balance sheet. As such, the company’s outstanding debt (including current portion) nearly doubled to $11.7 billion at the end of third-quarter 2015 from $6.3 billion a year ago.
Going forward, the world’s largest renewable energy developer should look for such ownership and financing structures to secure the much-needed funds to finance its energy projects while lowering investors’ risks.
The two YieldCos that the company listed in the past two years are positives in this regard, helping it to boost its liquidity position, while maximizing returns for investors.
Also, SunEdison has gained some value over the past few weeks on the back of a series of initiatives undertaken to improve its liquidity position, such as lowering the offer price for the Vivint Solar buyout and quitting the development projects in Brazil.
However, the pricing environment and competition from SunPower Corp. SPWR and First Solar Inc. FSLR remain the headwinds for the Zacks Rank #3 (Hold) stock.
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