Nobody wants to be a bag holder. Losing a lot of money when only a few months ago was a huge gain is hurtful. When the bad news on SUNE mushrooms larger every day, a cogent investor knows bad things are about to happen. A share price less than 4 bits says the same thing.
Rather than an introspective, lucid analysis of the situation, retail investors launch the denial app. This behavior has the impact of an ostrich sticking his head in the sand. Any credible or non credible reason can be used to deny the impending doom. We had posters on this board pointing to a distressed asset sale in India that will forestall BK.
Denial is part of the process and for the most part, it must run its course. But don't go too far with it. Once BK is announced, there is nothing to stop the process of killing off your shares. Let the right brain vent by denying everything. But after a while, let the left brain take over and declare an end to the ludicrous denials.
The next steps are anger, bargaining, and then acceptance. Follow this pathway and you will be OK. You will be broke but your mind will be where it needs to be. If you find yourself in denial in 6 months time, something is wrong.
When you use your SUNE stock certificate as wallpaper, you will understand what is meant by holding the bag. Not an opinion. It will be in your future.
When SUNE was rocketing to the moon, it was the longs that benefited the most. The stock was over $85 at one point in time. But the situation has been reversed. SUNE has financial troubles which they cannot dig themselves out of. No worries. They need money to keep operating. And they need to restructure so they regain their growing ways. This will happen in due time. But as part of the process, the common stock will be cancelled as part of the process. Longs may ask, why me? The same forces that allow you to see your stock rise above $85 will also wipe you out if needed to assure the future of the company. It's a two edge sword.
Although it does not feel good and it sucks monetarily, longs can walk away with knowing they were part of an important process. It's a learning event for the next time, pulling out a bit early is not so bad. Put crudely, longs are stuck holding the bag.
OK, you have confirmed your stupidity.
Let me make this clear: SUNE does not have the money to make good on the missed interest payment. Does this make it through your slow processor? The grace period will end and they will still not have the money.
So rather than see a panoply of defaults rain upon them, they seek DIP financing and BK protection.
More to the point is that you are too stupid or myopic to understand what I wrote. Missing an interest payment is serious. If left uncured, cross defaults occur on all the debt. Nobody will lend to SUNE just to get even with the convertible debt. But they will lend as DIP financing.
This is simple to understand. SUNE has missed an interest payment which means they have defaulted on all their debt. They don't have the $12 bil to repay the debt. They are literally out of cash.
So the next best thing is to secure $310 in DIP financing to keep operations humming.
If SUNE manages to sell the Indian assets, the $462 mil goes to the lenders.
There is another group of poorly dressed men with foul mouths. MF this, MF that. They are dip shyts and most likely represent the investment bank that will front the DIP financing. Part of this financing goes to pay the BK lawyers. As expected they are dressed like lawyers
Hey bag holder:
Liberty Mutual increased their state in Q42015. Yes, last year.
After Monday you will only have $125k left.
You made two mistakes: First, it is totally OK to short a stock. Making money from the travails of others is OK as far as the bible is concerned. Have you ever seen videos of predators chasing down prey and eating it alive? This cruel act is bible-sanctioned or otherwise it would not exist. Therefore shorting is OK.
How do you know that solar energy is not bible-friendly? You assume it saves the earth from carbon emissions and therefore it's OK. Maybe the Lord thinks the technology is bad for the earth. In what way, I don't know.
Using the bible as a moral compass is OK. In investing, the best methods follow the Gorden Gekko' saying: "Greed is good."
SUNE has been trying for weeks to secure $300 mil cash. Nobody wanted to lend to them because their debt is so high.
On the other hand, it is easy to get $300 mil in DIP financing. These lenders are at the front of the line and get paid first from SUNE's collateral.
BK is a last resort type of thing. But SUNE was desperate for money and had to do something. They effectively wiped out the common.
Ownership of the yieldcos are in assets. The book entry of assets most of the time do not reflect how much they would fetch upon sale. In a fire sale, they would fetch much less.
SUNE ran out of cash to run their business. They tried to negotiate with current lenders to raise cash; all to no avail. They new face the situation where they cannot pay anybody: employees, vendors, debt holders. If they do nothing, the world will come crashing down quickly and the situation will become chaotic. BK protection avoids pandemonium and allows SUNE to reorganize. It's like putting up yellow tape around a traffic accident so the cops can pick apart the scene in an organized way. With BK protection, vendors and debt holders cannot hound SUNE for payment. To make it all work, cash is needed and that is in the form of DIP financing. Lenders of DIP cash are at the front of the line for repayment. A BK judge oversees everything to make sure all parties are treated per the law.
BK always comes down to this question: how are the debt holders to be repaid? Most of the time their bonds are replaced with new stock. The old stock is cancelled. Yes, this means it becomes worthless. In some cases, the stock may retain some value, but usually not.
In BK, all entities with a claim on SUNE will converge on the BK court to press their case. Shareholders see this activity and may also press their case with the judge. The judge usually placates the longs with big words and deferral of their motion. But make no mistake about it: equity holders in BK are like red headed step children; nobody cares.
In sum, SUNE's BK is typical. Nobody wants to tell longs that they are hosed, so they keep on hoping. There is no press conference where SUNE tells longs they are cancelled. It's usually a one sentence entry on the final BK decree.
Longs should recognize this situation and abandon hope early. In the circle of life, your money was put to use by SUNE but they failed. Shyt happens.
Work the math on your dollar cost averaging strategy. Because SUNE will go to zero (or close), you lose more due to DCA. If you can't do the math, have somebody do it for you.
DCA only works to reduce the breakeven point.
You are inexperienced. Courts are opened for filings. The judge may not be there but the BK can be timestamped on Sunday.
You will end up losing most of your investment.
Bad news always travels slowly. Before the weekend is over, SUNE will file BK and it will be all over the news. For the next 36 hours you can maintain your denial of the inevitable.