SUNE's challenging financial position and heightened bankruptcy risk also contributed to the downgrade since it raises the possibility, although unlikely, that the yieldcos may be pulled into a SUNE bankruptcy. When SUNE added independent directors to the board in November 2015, the CEO and the CFO of both TERP and GLBL were replaced and two former independent directors resigned, in our opinion it strengthened each yieldco's connection with SUNE rather than reinforcing their independence. The new Chairman of both yieldcos was a director on SUNE's board, and the CEO also acts as SUNE's CFO. The current board of both yieldcos consists of 4 independent directors and 3 representatives from SUNE. SUNE's ability to sell assets to the yieldcos also illustrates this increasingly close relationship.
The yieldcos will face collateral consequences from a SUNE bankruptcy and at some point, it is possible that their boards may need to make an independent decision as to whether the yieldcos themselves may need to be filed into bankruptcy. In our view, there are a number of factors that reduce the risk of a voluntary bankruptcy filing by TERP or GLBL including: (i) The companies are currently able to meet all of their obligations and are not themselves insolvent; (ii) SUNE only has a minority economic interest in both yieldcos, though it controls both companies through class B shares; (iii) Both TERP and GLBL are publicly listed Delaware corporations rather than wholly owned SPVs and Delaware law imposes fiduciary duties on a company's directors; and (iv) a voluntary filing of either yieldco requires a vote of a majority of three independent directors on the yieldco's "corporate governance and conflicts committee".
The assets and cash flows of the yieldcos would only be available to SUNE's creditors in case of a SUNE bankruptcy if a substantive consolidation of the yieldcos into a SUNE bankruptcy were ordered by a bankruptcy judge. Although we consider the likelihood of this event to be remote, since all three companies have operated as clearly separate legal entities with their own boards, capital structures and financing documents, it is not impossible that a bankruptcy court might reach a different result. At the time of the original ratings of TERP and GLBL, Moody's was also provided with non-consolidation opinions from an external counsel.
Let's remember that Einhorn recently bought shares. As an activist investor, he will take actions that will be good for TERP. Tepper's lawsuit will serve that eyes are on management.
I seriously believe his behavior is symptomatic of bipolar disorder and the purchase of this project was during one of his manic phases. In any event, the long term value of SUNE stands as a proxy for management stewardship. It should comfort longs that Einhorn is pushing for asset sales and management changes.
Yes, that last sentence sums it up. SunEdison cannot deliver on it representation to earn a 17% margin on projects. I have a hard time understanding their path forward, and the silence from management makes me believe they are having the same problem.
Management seems content with keeping shareholders in the dark. Stay out of SUNE. The yieldcos at least have a fighting chance to continue without dilution or BK.
Teppers' activist stance is succeeding, one step at a time. GLBL will be fried by SUNE's BK. A new management's team will be in charge shortly.
I'm going to look into it. After the SUNE debacle, a solar with a strong balance should do quite well.
If, in fact, they counted cash available at the yieldcos, as cash available to SUNE, should be found as fraud committed by management.
I'm invested in TERP so I follow the news carefully. Your recollection is correct. As a matter of record, the departing directors stated in writing that they could longer serve the interests of shareholders. The referenced was abrupt and also probably quite heated.
I couldn't found the names of directors at SUNEs' website. Anybody out there can provide them? I'm baffled that they didn't perform their duties as directors besides just showing up to collect their fees.
Chatila earned a masters in management, I think perhaps from Stanford. He also had prior experience in executive management.
And what we don't know is what happened to the 231. My guess is that SunEdison didn't sink one penny into the intended project on behalf of Terraform. Tepper came just in time to prevent Sun Edison doing the same thing to the other yieldco.
We need to find more about this lawsuit. It has to be the new COB committee recently installed.