This page has been archived and commenting is disabled.

Bad News Piles On For Hedge Fund Hotel SunEdison: First $315MM Margin Call, Now Mass Layoffs

Tyler Durden's picture




 

It has been a long way up and quick ride down for SunEdison but bad news keeps piling up for the hedge fund hotel even as it dead-cat-bounces again. As the stock bounces, just as it bounced in September after Steve Cohen's Point72 exposed their stake and JPM jumped to the rescue, uncertainty remains extreme. Amid a surge in debt and increasingly negative operating cash-flow, the plunge in stock (asset) price may have triggered a cross-collateral margin call of around $315 million. Furthermore, mass layoffs are on the cards as the CEO attempts to "optimize" the business.

 

Another squeeze...

Charts: Bloomberg

Some investors have dumped the stock due to low oil prices and turmoil in commodity markets -- a problem for other public solar companies as well. However, short sellers have targeted SunEdison more than its competitors.

Recent acquisitions have nearly doubled SunEdison's debt load and increased negative operating cash flow. The Vivint acquisition, which wasn't an obvious fit with SunEdison's culture and traditional business of building large solar-power plants, added to investor skepticism.

 

The stock has become a playground for hedge funds.

But uncertainty remains extreme...

SunEdison may have triggered a collateral call on its $410 million margin loan, a report from CreditSights says, citing a decline in the financially-linked TerraForm Power Inc (known as a "yieldco," the spin-off of a related business venture), which fell 36% in September and continued to slide, down 49% year ­to ­date.

 

 

After sifting through four different SEC documents – a 10Q at SunEdison, an equity prospectus at TerraForm, a convertible bond 8K from SunEdison and a margin loan agreement at SunEdison... the report concludes it is possible SunEdison to be dragged down by TerraForm and the added burden of posting cash collateral for the margin loan that was backed by stock.

 

CreditSights says the margin loan is yet another example of lack of disclosure but they reiterate their our conclusion on the collateral call.

As Creditsights concludes...

there are a lot of moving parts to SunEdison and the more we find the more negative we get on the sponsor company of TerraForm Power.

And now, as GreenTechMedia.com's Stephen Lacey reports, SunEdison is now culling its workforce.

According to a company-wide memo from CEO Ahmad Chatila released on September 30, SunEdison will be laying off around 10 percent of its 7,300 employees. Many employees received notices on Friday.

 

"Overall, the proposed changes result in an overall reduction of about 30%, 20% being from non-labor expenses and about 10% from headcount reduction. And this process will take some time to complete. Most of the changes will be announced during the fourth quarter with some final steps expected in the first quarter of 2016," reads the memo.

 

The staff reduction will come through integrating acquired companies and "eliminating redundancy." It will also come from simplifying management structures in different areas of the business, and focusing on a smaller range of geographic regions.

 

The cuts have reached all the way to the VP level, but not the executive level. Sources within the company expressed worry and surprise that the cuts didn't impact the architects of the Vivint acquisition.

 

When asked for comment, SunEdison would not address the cuts specifically.

 

"We are proposing to take several actions around the world to optimize our business, align with current and expected market opportunities and position ourselves for long-term growth. In October we plan to provide investors with a more comprehensive view of our business structure and go-forward strategic growth plan in a conference call," wrote spokesperson Gordon Handelsman in an email.

More details on SunEdison's plans to "align with current and expected market opportunities" will be forthcoming this week.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mon, 10/05/2015 - 15:31 | 6632207 KnuckleDragger-X
KnuckleDragger-X's picture

Well tsk, this, of course, was totally unexpected......

Mon, 10/05/2015 - 16:04 | 6632340 junction
junction's picture

Stick a fork in this turkey, it's done.

Mon, 10/05/2015 - 15:34 | 6632210 Viffer
Viffer's picture

Again ... no worries. Our economy is so strong that we need those 7300 workers to fill other positions.

 

Let's call it "expanding employees opportunies" rather then "layoffs" as in "We are expanding the opportunies of 7,300 employees."

 

Mon, 10/05/2015 - 16:16 | 6632393 willwork4food
willwork4food's picture

"Employee Freedom Initiative".  Just sounds better.

Mon, 10/05/2015 - 16:29 | 6632447 Government need...
Government needs you to pay taxes's picture

About 7300 new 'free shit collection' engineers.  We're #1 at digitized .gov free shit vouchers.  So those 7300 layoffs will result in a nice 'plus' for GDP, as measured by the mountain of .gov free-shit paperwork.  Now that's change you can believe in.

Mon, 10/05/2015 - 20:21 | 6633428 Amraphel
Amraphel's picture

try '10 percent of its 7300 employees'

Mon, 10/05/2015 - 15:33 | 6632213 silverer
silverer's picture

I'm sure the core group of puds who put this daisy game together has already siphoned off everything they'll need for the rest of their lives.  Buy the dip, anyone?

Mon, 10/05/2015 - 15:33 | 6632215 giggler321
giggler321's picture

I love the word optimise even when it's spelt with a Z.  If it was that important to optimiZe; they'd of done it already with the PHD mathematicians and a like.   Nope, simple it means cut and while every other non-boardroom type thinks of fat they think of little people and then where to snip

Mon, 10/05/2015 - 15:35 | 6632226 KnuckleDragger-X
KnuckleDragger-X's picture

Optimize=save the bonus checks....

Mon, 10/05/2015 - 15:34 | 6632224 cosmyccowboy
cosmyccowboy's picture

Welcome to the jungle we got fun and games...

Mon, 10/05/2015 - 15:35 | 6632229 Lumberjack
Lumberjack's picture

I want to see the fuckers go down even harder than their parent company Enron

Mon, 10/05/2015 - 16:31 | 6632457 Lumberjack
Lumberjack's picture

A couple of First Wind executives (now SUNE) were heavily involved in the Trans Caspian pipeline. I am certain they are involved in the current ME fiasco.

Mon, 10/05/2015 - 15:39 | 6632247 SethDealer
SethDealer's picture

you mean solar doesnt make money?? nobody couldve seen this coming!

Mon, 10/05/2015 - 16:05 | 6632345 negative rates
negative rates's picture

Did you bother to put a meter on it? Or just pedal to the metal and let it ride??

Mon, 10/05/2015 - 15:40 | 6632254 RopeADope
RopeADope's picture

The Oxford Dictionaries Word of the Year 2015 is...

may

Mon, 10/05/2015 - 15:43 | 6632262 ThroxxOfVron
ThroxxOfVron's picture

We optimized some folks.

Mon, 10/05/2015 - 15:50 | 6632277 CarpetShag
CarpetShag's picture

Debt doesn't matter.

Mon, 10/05/2015 - 15:51 | 6632283 Catullus
Catullus's picture

I'm a shareholder. What in the ever living mother fuck is going on here? You pledged shares as collateral for a loan in partial spin off? Am I missing something? But the fucking bondholder can just short the shit out of the shares and force a margin call on you!

Mon, 10/05/2015 - 16:36 | 6632474 Jethro
Jethro's picture

I pray that my company is never publicly traded...

Mon, 10/05/2015 - 20:38 | 6633416 Ban KKiller
Ban KKiller's picture

Next up, Fortress Investment Group. Also a "benefactor" of some other shady "hedge" fiend. 

They would jump ship but it is in dry dock. 

Tue, 10/06/2015 - 17:38 | 6637129 Lumberjack
Lumberjack's picture
Tylers, here is a major update... Former PUC head Kurt Adams taking helm of Summit Utilities

 

http://www.pressherald.com/2015/10/05/former-puc-head-kurt-adams-to-take...

 

Kurt Adams, a former head of the Maine Public Utilities Commission, is leaving his job as chief development officer at wind developer SunEdison to become chief executive of Summit Utilities, Summit has announced.

The move comes as the CEO and board chairman of Colorado-based Summit, Michael Earnest, is retiring.

Earnest co-founded Colorado Natural Gas Inc., which became part of Summit Utilities Inc. in 1997.

Summit Utilities is the parent company of Summit Natural Gas of Maine, which has been expanding in the state.

Adams, who is currently a member of the Summit board, also will assume responsibility for the day-to-day leadership of Summit Natural Gas of Maine. Mike Tanchuk, who served as executive vice president of Summit Utilities and President of Summit Natural Gas of Maine, recently departed the company.

Adams who chaired the PUC from 2005 to 2008, was previously chief development officer at First Wind, which was acquired last year by a SunEdison subsidiary. First Wind/SunEdison are the largest wind developers in Maine.

 

=========

Background:

 

First Wind - The Kurt Adams Story

http://www.windtaskforce.org/profiles/blog/show?id=4401701%3ABlogPost%3A...

 

Kurt Adams, chief counsel for expedited wind law pusher Gov John Baldacci becomes Baldacci's chair of the Maine Public Utilities Commission (MPUC). During his term there, the MPUC, overruling its own staff approves the Maine Power Reliability Project (aka the CMP upgrade) which mandates that ratepayers fund the $1.4 Billion transmission expansion in Maine. Baldacci administration proponents cite the reason to be a need for reliability due to "aging lines", completely downplaying the sole reason -- providing Adams' and Baldacci's friends in the wind industry with a free shipping system for their product - electrons, and the subsidies and renewable energy credits that go with them. They even alluded to population growth as a reason for more transmission, yet Maine's population was overall stagnant and predicted to be stagnant for 20 years to come, with all the while, appliances becoming more electricity-efficient. And then, after taking over $1 million in stock options from First Wind, Adams jumps from his PUC Chairman post to become Director of Transmission for First Wind.

 

Most of this is at the links below. This terribly important story was never carried in the Portland Press Herald or Maine Sunday Telegram, so most Mainers are still in the dark about this.

 

Maine Center for Public Interest Reporting - Select Articles in Chronological Order

PUC chairman took equity stake in wind company By: NAOMI SCHALIT, ©MAINE CENTER FOR PUBLIC INTEREST REPORTING | May 6, 2010 Group asks AG to probe official of First Wind By:  | July 18, 2010 First Wind SEC filing change questioned By:  | July 18, 2010 Adams Investigation Finds No Conflict By:  | July 18, 2010

 

This also extends to former Maine Governor Angus S King (Now Senator who's son just so happens to be a VP of acquisitions at Fisrt Wind (Now Sun Edison)... 

 

http://www.themainewire.com/2012/03/developing-king-wind-project-cited-c...

Tue, 10/06/2015 - 18:31 | 6637423 Lumberjack
Lumberjack's picture

http://www3.pictures.zimbio.com/gi/Susan+Collins+Angus+King+Maine+Sen+Co...

 

look at pix on wall.

 

"Enron was JUST (emphasis mine) a business deal". Susan Collins days before Enron went down.

Do NOT follow this link or you will be banned from the site!