You knew the selloff was coming. Remember ex-dividend? And now Moody's has joined the side of us who believe yieldco's go down with the parent if BK happens.
From the 8-K...... "Effective November 20, 2015, Carlos Domenech Zornoza, Executive Vice President of the Company and President and Chief Executive Officer of TERP and Chief Executive Officer of GLBL, was removed from his respective officer roles at TERP and GLBL by the respective boards of directors of such companies and was terminated by the Company."
How could the current problems be his fault? Is he just a scapegoat? It's known he didn't like the VSLR deal.
Yea right, Brian Wuebbels isn't connected at the hip with Ahmad Chatila...ha Not a thing has changed accept for the game of musical chairs.
Good point. But, during the Q&A something was said about the India deal being really high quality because it didn't require any land if I remember correctly.
I am curious why you believe the yieldcos will be fine? Sune may decided to force projects into yieldcos to get higher margin sales(when thing start to get really bad) as long as yieldcos have an abundance of cash. With low levels of cash, sale of yieldcos will much more difficult. If Sune holds onto yieldcos into BK, courts may view all as one entity. This whole thing is very convoluted.
danzingbeck, what is your view on the companies 2Q2016 cash flow positive statement? Are they wishing or trying to delaying complete sentiment collapse? I get it that none of us on the outside really know what's going on but it seems unlikely that layoffs and OPEX synergies can get them there. Gross margin improvement is the goal of every company but increasing margin on sales very difficult unless you have pricing power and the yieldcos were their answer to pricing power (so much for that idea). Just not sure how they can get even close to cash flow positive.
My guess is the recent India and Brazil contract wins will die on the vine. I would be shocked if they were able to get financing for these projects.
It not clear you understand how the warehouses work. Completed projects are housed in warehouses until TERP or GLBL can purchase or they are sold to 3rd parties. Warehouses only provide SUNE funds to recupe costs not profits. Profits are not made until dropped into yieldcos or sold to 3rd parties. Margins are much smaller in 3rd party sales so think how difficult selling the yieldcos would be (fire sale). Revenue from PPAs goes to investors in warehouses while projects are housed there.
We don't know the actual ownership numbers because they are not provided by SUNE. GLBL board is controlled by SUNE so decisions for GLBL are made by SUNE. Even if SUNE decided to sell TERP and GLBL, it would be a fire sale after SUNE used took as much as they could to survive. Warehouses do nothing for SUNE/TERP/GLBL cash or profit because they are just a holding place for projects until they are able to purchase.
The problem is, we don't know what GLBL can or can't do because they don't disclose enough. SUNE can force them to take bad deals i.e. TERP required to take Vivint (take or pay). Even more concerning is how the court will view the relationship between SUNE & GLBL. If we knew for sure GLBL was safe from BK decisions related to the parent, I would purchase GLBL now. You can't trust any of the banks or analyst ratings right now because they all have an agenda/position to protect. This whole thing is just a bad situation and the risks are very very high.
Paying down some or part of existing loans and purchasing projects in queue with current cash doesn't seem possible. Also, the recently awarded India and Brazil projects need financing to build out. Not sure how that's going to happen.
Referring to the GLBL 8K under Liquidity...."As of September 30, 2015, TerraForm Global had $1.1 billion in unrestricted cash on hand, and an undrawn revolving credit facility of $485 million. We intend to use the cash on hand for pending project transactions, de-levering of the fleet, and general corporate purposes."
De-levering and expanding the portfolio.....hummmm? Seems probable that GLBL and TERP must go the way of the mother ship. I also believe that is the way the courts will see it too.
I wonder how long SUNE will be willing to give up their share of dividend payments to help save cash. Also wonder exactly what is meant by using cash for "de-levering of the fleet"?
Management has lost credibility and analysts have proven not to know anything. SUNE has gone from the stock you waited a lifetime for to just a another nightmare.
If SUNE, TERP, and GLBL keep losing money every quarter and margins continue to get crushed, CAFD can evaporate in a heart beat. Growth is not going to mask the fact that they aren't carrying their own weight.
Since the announcement of the signing of the Merger Agreement, SunEdison, Merger Sub, Vivint Solar, 313 Acquisition LLC (“313”), a majority holder of the voting power of Vivint Solar common stock, TerraForm Power and Vivint Solar’s directors have been named as defendants in several putative shareholder class actions challenging the proposed Merger and may be named as defendants in future such litigations
“ Risk Factors—Completion of the Vivint Solar acquisition is subject to conditions and if satisfaction of these conditions is delayed or these conditions are not satisfied or waived, the acquisition may be delayed or may not be completed at all. ”