Morning Commentary: SunEdison convertibles quiet, shares lower after Tepper files suit

By Rebecca Melvin

New York, Jan. 13 – SunEdison Inc.’s convertibles complex, which includes eight issues, albeit some that have been thinned by an exchange deal, was not trading early Wednesday despite lower shares and news that David Tepper of Appaloosa Management has filed suit to prevent the solar technology company from buying Vivint Solar Inc. and funneling some of those assets to its yieldco.

“There aren’t any of those trading over $1 million bonds,” a New York-based trader said regarding SunEdison.

“There’s a lot of risk there, and I think clarity is wanted, so not many people would make those,” the trader said.

SunEdison’s shares were last down 17 cents, or 5.6% at $2.85, extending a 9.5% loss on Monday.

Last week, SunEdison’s securities were hammered after it said that it is raising $725 million of secured terms loans and reducing $740 million of convertible debt via an exchange agreement involving a new convertible note and stock.

The most recent markets seen in SunEdison were for its 2.75% issue due 2021 that traded down on Tuesday to 33.375 from about 35.

Also SunEdison’s 6.75% perpetual convertible preferred, which priced in August, was indicated down to about 217 from 247.50 on Tuesday.

SunEdison’s 5% convertibles due 2018, the new $225 million convertible the company agreed to issue in exchange for parts of its older convertible issues, was initially seen at 90 bid, 92 offered when it was issued last week.

The SunEdison 2.625% convertibles due 2023, 3.375% convertibles due 2025, 2.375% convertibles due 2022, 0.25% convertibles due 2020 and 2% convertibles due 2018 were not heard in trade.

On Friday, analyst Gordon Johnson of Axiom Capital Management told Prospect News that the new funds and exchange deal were not adequate to address SunEdison’s debt and that the company would likely have to follow up with additional measures.

© 2015 Prospect News.
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