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SunEdison Torched As Banks Pull Vivint Solar Funds; Dividend Cut

Vivint Solar ( VSLR ) could join Appaloosa Management in suing SunEdison ( SUNE ) over the former’s pending — and imperiled — acquisition by SunEd, a Credit Suisse analyst suggested Thursday, as at least two other investment banks downgraded SunEd stock. SunEdison shares ping-ponged this week amid rumors that banks are balking at issuing the $1.2 billion needed to finance the Vivint Solar acquisition. This week, SunEdison delayed its 10-K filing and suspended a popular dividend program. Needham and Macquarie both downgraded the stock Thursday. In the long term, suspending SunEd’s 6.75% perpetual convertible preferred stock could save $8.3 million per quarter, Credit Suisse analyst Patrick Jobin wrote in a research report. But Thursday was another bad day for the shares, down more than 13% in midday trading on the stock market , near just 1.55. SunEd fell 12% and 24% on Monday and Tuesday, respectively, but rose 19% Wednesday. Shares of SunEd yield company TerraForm Power ( TERP ) and Vivint Solar were down 3.5% and more than 1%, respectively. SunEdison Cash Crunch Expected Company-specific uncertainty — not solar industry uncertainty — prompted Needham analyst Edwin Mok to downgrade SunEd stock to hold from buy. “We now believe SunEdison could face an even greater cash crunch ahead, preventing the company from reaching the important goal of operating cash flow positive,” Mok wrote in a research report. Although SunEd obtained financing in January, “it appears SunEdison is facing mounting financial challenges, with a sharp rise in cost of capital which could ultimately cripple the future prospects of the company,” he wrote. Looming capital cost increases have plagued the solar industry this year. No. 1 residential installer SolarCity ( SCTY ) has shaved 60% off shares this year on that worry. IBD’s 22-company Energy-Solar industry group is down 25% this year. SunEd’s outlook is further complicated by a liquidity question, Mok wrote. In January, SunEd said it had $619 million in cash at the end of Q4. Of that, $56 million was not committed to the project business. Cash Questions Delay 10-K On Tuesday, SunEd delayed its 10-K filing to investigate those cash claims. Banks have balked at financing the Vivint Solar deal without updated financials, according to the Wall Street Journal. And SunEdison can’t finance Vivint Solar on its own, Mok and Jobin wrote in separate reports. Jobin suggested a Vivint Solar breakup — worth a $34 million fee — would help SunEd preserve some short-term cash. SunEd has until March 18 to close the deal before opening itself to a specific performance lawsuit by Vivint Solar. Vivint also could terminate the deal before then. That’s unlikely, though, considering Vivint Solar’s shareholders “overwhelmingly” approved the bid on Feb. 24, Jobin wrote. Last month, Appaloosa sued to prevent SunEd from dropping Vivint Solar’s debt-laden rooftop portfolio down to yield company TerraForm Power. Appaloosa has a 9.5% stake in TerraForm Power. A judge tossed Appaloosa’s injunction request last week. Image provided by Shutterstock .

SunEdison Routs Appaloosa’s Vivint Solar Injunction; Stocks Rocket

Beleaguered SunEdison ( SUNE ) and Vivint Solar ( VSLR ) stocks brightened Friday, continuing a two-day liftoff after a Delaware judge cleared their merger path by tossing an injunction request from activist investor Appaloosa Management. SunEdison stock rocketed as much as 61% Friday, after rising 37% Thursday. But the stock still is trading below 2.50, up 35% in afternoon trading on the stock market today . Vivint Solar stock rose as much as 41%, and it was up 35% Friday afternoon, near 8. TerraForm Power ( TERP ) stock was up a fraction Friday afternoon. Appaloosa, which owns 9.5% of TerraForm Power, has waged war on SunEdison’s plan to drop Vivint Solar’s 523-megawatt portfolio down to yield company TerraForm Power. SunEd’s Vivint acquisition is pending. Last month,  David Tepper-managed Appaloosa demanded “immediate injunctive relief,” claiming SunEdison would force TerraForm Power to take on $960 million in debt. A judge denied that injunction late Thursday, SunEdison said. “We are gratified that the court denied the injunction and now look ahead to continuing to navigate current market conditions,” SunEdison said in a statement . Dropping Vivint Solar’s rooftop assets to TerraForm Power frees up some space on SunEdison’s constrained balance sheet, Credit Suisse analyst Patrick Jobin wrote in a research report. “This should also relieve some artificial pressure to sell the Vivint Solar operating portfolio as a distressed seller,” he wrote. “We think an asset sale is possible given the aversion TerraForm Power shareholders have for residential solar assets, but it is no longer a necessity.” Jobin maintained his neutral rating and 3 price target on SunEdison stock. But S&P Capital analyst Angelo Zino cut his price target on SunEdison stock to 3 from 7. He maintained his hold rating on shares. The ruling gives SunEdison some flexibility to close the Vivint Solar deal. “However, we are growing more concerned about SunEdison’s financial position given the lack of asset sales thus far announced,” Zino wrote in a report.

U.S. Crushes Solar Installation Record In ‘Monumental’ 2015

U.S. solar installations boomed in 2015 to a record-stomping 7.3 gigawatts as legislators bandied about the fate of the Investment Tax Credit on solar, the Solar Energy Industries Association said Monday. For the first time ever, solar energy beat out natural gas capacity additions. Solar energy generated 29.5% of all new electric-generating capacity in the U.S. California, North Carolina and Nevada led the charge, and the three states now top 25 GW in cumulative installations. There’s still plenty of headroom for growth, said Shayle Kann, Greentech Media Research senior vice president. The top 10 states account for 87% of installed capacity, but 24 of 35 states Greentech tracks saw market growth in 2015, he said in a statement. SEIA CEO Rhone Resch, in the association’s press release, called 2015 “a monumental year for the U.S. solar industry.” The year was also marked by Obama’s Clean Power Plan, a pledge to cut carbon emissions by power plants, and a 196-country agreement to cut carbon emissions during the COP21 (Conference of Parties) climate change summit in Paris. “Over the next few years, we’re going to see solar continue to reach unprecedented heights as our nation makes a shift toward a carbon-free source of energy that also serves as an economic and job-creating engine,” Resch said in the release. In 2015, residential installations jumped 66%, outgrowing the commercial and utility markets, which were flat and up 6%, respectively. Still, utility installations — First Solar ( FSLR ) and SunPower ‘s ( SPWR ) wheelhouse — continued to account for more than half of all installed capacity. Overall, installed capacity has grown 1,150% since 2010, when U.S. solar capacity touched just 2 GW. Last year, the residential segment alone eclipsed 2 GW in installations — a first. Residential installations now comprise 29% of the entire U.S. solar market, its largest share since 2009, the SEIA said. Commercial installations trailed but managed to break 1 GW for the fourth year running. Solar Stocks Got Late-2015 Boost From Congress The results shine light on the recently shadowed industry. IBD’s 23-company Energy-Solar industry group is down 31% for the year after sharply rising at the end of 2015 on Congress’ decision to extend the Investment Tax Credit (ITC) on solar for five years. The ITC has been slated to expire Dec. 31, 2016, and Wall Street expected solar demand to hit a floor in 2017. Shares of installers First Solar, SunPower, SolarCity ( SCTY ) and Sunrun ( RUN ) lit up on the extension. Tesla ( TSLA ) CEO Elon Musk chairs SolarCity. But the rally was short-lived. Less than two weeks later, stocks plunged after Nevada regulators opted to cut net-metering payments to solar customers, or what utilities pay solar customers for excess energy fed back into the grid. Warren Buffett’s Berkshire Hathaway ( BRKA )-owned utility NV Energy pushed for the cut, which will take place in five steps over 12 years. Utilities dislike net-metering mandates, which forces them to buy energy at a high cost. This month, Nevada regulators voted against grandfathering in existing solar customers under the old rate scheme. Sunrun executives have said they will sue. In 2015, California regulators  went in the opposite direction. The California Public Utilities Commission voted to retain net metering but add interconnection costs, new minimum bill requirements and time-of-use rates, according to Greentech. Other states are likely to take up the issue. Net metering is mandated in 44 states. Last year, 13 states each added at least 100 megawatts in installations, helping lead to 17% growth in the U.S. solar market. Utah jumped from No. 23 state in solar to No. 7, and Georgia moved from 16th to eighth place. Nevada was No. 3 on the installer list for the second year running. In 2013, Nevada was No. 12. California and North Carolina have led in recent years. But analysts say Nevada solar demand is likely to hit a floor in 2016 on the new net-metering rate scheme. SolarCity and Sunrun exited their Nevada operations in December because of that then-pending move. Vivint Solar ( VSLR ), soon to be acquired by SunEdison ( SUNE ), made a similar threat at the time.