SunEdison breaks even, to spin off some solar plants in 2014

Reuters

* Says may spin off some solar plants into a public entity

* Move to lower cost of capital, maximize returns

* Shares rise 8 pct

Nov 6 (Reuters) - SunEdison Inc broke even in thethird quarter after posting two straight quarterly losses andsaid it could spin off some solar power plants next year into anew publicly listed company.

SunEdison shares rose 8 percent to $11.22 on Wednesdayafternoon on the New York Stock Exchange.

The company is focusing on its higher margin business ofdeveloping solar farms and already has plans to spin off itssemiconductor business in a $250-million initial public offeringin the first quarter of 2014.

SunEdison said on Wednesday that it could drop some solarpower plants into a new entity rather than sell them tocustomers, like it usually does.

"Basically it's a public vehicle that will be spun out andit's going to generate $40-$50 million in cash flow. It's just away for them to maximize return potential for shareholders," S&P Capital IQ analyst Angelo Zino said.

U.S. companies are experimenting with innovative financingstructures to lower cost of capital and maximize returns. Forexample, SolarCity Corp launched bonds backed by solarassets earlier this month.

"Now that we are starting to see some stability in the solarspace, it's starting to create opportunities for companies toraise cheaper financing and new vehicles to raise capital to domore projects," Zino said.

He said other U.S. solar companies such as First Solar Inc and SunPower Corp could also look atinnovative financing options in the coming months.

BREAKING EVEN

SunEdison said it expected to retain 100 megawatt (MW) to105 MW of solar energy projects in 2013, higher than itsprevious estimate of 75 MW to 100 MW.

"When we retain (the projects), we can drop them into any ofthe various public vehicles that are available or that we willbe developing," Chief Financial Officer Brian Wuebbels toldanalysts on a post-earnings conference call.

However, retaining projects could lower SunEdison's revenueas it will not be able to recognize revenue or marginsassociated with the sale of a project, Wuebbels said.

A 75 percent rise in SunEdison's solar energy businessrevenue helped the company break even on an adjusted basis inthe third quarter ended Sept. 30. Analysts on average hadexpected a loss of 12 cents per share, according to ThomsonReuters I/B/E/S.

However, continued weakness in prices in the company'ssilicon wafer and solar businesses pushed it to a net loss.

Net loss was $108 million, or 47 cents per share, in thethird quarter compared with a profit of $37 million, or 16 centsper share, a year earlier.

View Comments (0)