Problem though is that at current bond yields there is no value in SUNE shares as a going concern. If they had to roll over the debt whenever it matures at 11%+ interest rates there is no business. So right now as with other energy stocks with large debt and blown out yields...the market is just mark to marketing the roll over of the debt at current rates which leaves no income potential for the common shares.
It is not an illegal scam like Enron. But financially it is equally as bad beause it needed 6% required rate of return to stay solvent...and now the yield cos and bonds trade at 15%+ So it doesn't work and it is insolvent mark to market
I don't know why Einhorn could of thought this was all a good idea. Creating yield co's to dump projects into using junk bonds priced at 5%. As soon as the yields rise the whole thing collapses and the yieldco's are basically insolvent mark to market forward when the debt matures. They can't roll over. Like imagine if yieldco's roll debt at 9% instead of 6%. There is no income. Not good.
SUNE seems bankrupt though....so not sure what this means I think there will be a lot of buyers around $7 for TERP. That is 20% dividend yield and would be trading at around 2/3 of tangible book value.
sadly this is how stocks trade these days. They don't trade on news or logic. They just make crazy moves for no reason...and then go the other way when you least expect it.
raised nearly 600 million and I have tcurrent market cap around $700 million. Of course when CHK bonds yield 25% nobody cares they just have to sell everything energy and hedge all the debt they can by shorting more shares.
I used $.35 cents times 4 or $1.40 annual dividend. I think the stock will hold $7 and settle out eventually in the $11-$13 range.
no reason to sell under $3 with crude up and market back toward high of year