SunEdison Plummets On Imminent Bankruptcy; Axiom Sees "The Beginning Of The End" And 85% More Downside

Tyler Durden's picture

The sun is about to set on SunEdison.

Once upon a time SunEdison was one of the most popular hedge fund hotel stocks, which however, just like Valeant, has led all of the hedge funds who were long the name (and still are) to ruin.

Case in point: yesterday the stock plunged another 25% following a DebtWire report that the company was in DIP loan negotiations with lenders, the final step before filing for bankruptcy, after talks to reach an out of court solution with 2nd lien lenders had failed.

This morning, the stock is down another 15% following ever louder concerns that a bankruptcy is imminent, and following a note from Axiom's Gordon Johnson, arguably the most accurate forecaster in the name, who overnight lowered his 2016 year-end price target adjusts lower to $0.22/shr (85% downside from yesterday’s closing price) vs. $0.39/shr prior.

More importantly, he also notes that "should SUNE be forced to liquidate projects out of its 5.5GW backlog in a Bankruptcy, the impact to US solar market project fundamentals (incl. rooftop) could be detrimental." This means that none other than Elon Musk may be slammed after SUNE has no choice but to file.

Here is Axiom's full note"

The Beginning of the End?


Debtwire (“DW”) Report Suggests SUNE in Debtor-in-Possession (“DIP”) Negotiations with $725mn LIBOR +1,000bps A-1 & A-2 2018 Second Lien Term Loan Holders. Yesterday, DW (link) reported that SUNE, after talks failed to reach an out-of-court solution with second lien holders around resolving liquidity/leverage problems, entered into DIP discussions with creditors. By way of background, in general, we remind our readers that DIP financing is typically “put into play” after out-of-court resolutions fall apart. That is, if a company needs a loan, but a potential lender is unwilling to make it (due, mainly, to concerns around legal challenges), the Bankruptcy Code offers a way in which the lender can circumvent legal challenges from other creditors. This is typically done via a Chapter 11 Bankruptcy, whereby the lender(s) is granted a first priority security interest, a market/premium interest rate, approved budget, and other lender protections. Stated differently, via a Chapter 11 Bankruptcy filing, a distressed company who is unable to obtain a new loan outside of bankruptcy, may use DIP financing to get the liquidity necessary to run a sale process or finance a formal Chapter 11 restructuring. In our view, assuming SUNE is successful in acquiring DIP funding, we believe this likely shifts lower the priority of the majority of their capital structure (with equity holders the least likely to be made whole); it also suggests, as we’ve warned extensively, that SUNE’s current cash position is dire, if not completely compromised. We maintain our SELL rating and adjust our price target lower.


SUNE “Mum” when Asked for Comment, But Impact to US Solar Market Could Prove “Debilitating”. We reached out to SUNE regarding the validity of DW’s report, yet did not hear back. However, should SUNE be forced to liquidate projects out of its 5.5GW backlog in a Bankruptcy, the impact to US solar market project fundamentals (incl. rooftop) could be detrimental. Finally, according to DW, SUNE is seeking $300mn in new post-petition DIP liquidity.


Valuation. Using our sum-of-the-parts, where the key point of differentiation is our view that SUNE will develop just 1.95GW of projects in 2016 (vs. guidance of 3.3-3.7GW), our 2016 year-end price target adjusts lower to $0.22/shr (85% downside from yesterday’s closing price) vs. $0.39/shr prior - due to lower TERP/GLBL shr prices.

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wisefool's picture

Do busted solar panels fit in the broken window keynesian economic model?

DownWithYogaPants's picture

You might be able to get a custom window frame to fit a solar panel.  I think that pretty much makes the cut in the country of Keynesia.

max2205's picture

DIP stay on bonuses are fucking awesome

Vampyroteuthis infernalis's picture

Solar energy sounds like a true, good green energy system. Look underneath the hood though, it is a BIG fraud. The libbie pushers never mention the amount of supposed dirty energy required to make each panel and the amount of pollution associated with production. It takes an enourmous number of panels to make any significant amount of electricity.

LowerSlowerDelaware_LSD's picture
LowerSlowerDelaware_LSD (not verified) Vampyroteuthis infernalis Mar 23, 2016 10:04 AM

Not to mention the fact that the massive power generating stations have to run at less than peak efficiency (more pollution) while alternatives are producing then ramp back up when the sun goes down and/or wind slows.

boattrash's picture

So, alternative energy that was unable to compete with $100-150 BBL Oil, is struggling to compete with $30-40 BBL Oil? Shocked I tell ya.

L_Estasi_dell_Oro's picture

".. the amount of supposed dirty energy required to make each panel "

That's paid back after about 6 months of harvesting solar energy. Then you have at least 25 years of production on the same level as when the panel was produced.


UncleChopChop's picture

any data to point to? ive been curious about this for a while, wondering how dirty the tech is to make the panel, but generally came up empty in finding good info on it.

panels themselves are typically warranted for 20-25yrs, so you do need to take that into account for the environmental analysis (forget for the time being the argument about whether co2 is the culprit.. im thinking more in terms of direct mining/e&p raping of the earth.)

gonetogalt's picture

Solar is a joke, if the energy industry (oil, gas, coal) weren't the most important markets of the world we'd have moved to zero point energy long ago.

Here's one example of what our energy source would be if not for...well, you name it.

There are many different designs, Tesla was right, energy is all about.

Squirrel Tooth Alice's picture

India is ahead of me. 

So far, my design consists of a funnel and a stand.  Once I get energy to consolidate and fall out of the bottom of the funnel, I am going to work on the energy collector.

PT's picture

So have you built one yet?
Or bought one?

gonetogalt's picture

Not internet conversation, but thanks.

Scroll down to 'suppressed energy technologies' and read a bit.


PT's picture

Thanks for the link but my questions remain.  If we know that free energy is being "suppressed" ... then I'd still make one for myself, my friends, a few passers-by ...
... and anyone within earshot would know exactly how and why it worked ...

Mediocritas's picture

Lol, I love how diplomatic you are at calling bullshit.

gonetogalt's picture

You guys clearly didn't read the link...

Play smart or be dead...

PT's picture

I had a look.  But it sounds like I may need to take a closer look.  But my questions remain ...

SethDealer's picture

the math for solar power does not work!! It is too expensive even with govenrment subsidies, tired of ur government throwing money away to prop up loser deals. Windmills suck too

PavlovPup's picture

I am seeing plenty of success with solar installs I have done, BC HYDRO buys all the energy you produce here if you have an on grid system. Solar has become exremly cheap and effective.


The Proletariat's picture

..."It is too expensive even with govenrment subsidies"...

Incorrect, it is too expensive as a result of government subsidies

Helix6's picture

Actually, the math of a lot of energy systems does not add up.  Nuclear power has never been brought online anywhere without massive government subsidies, and the oil industry lives and breathes on "oil depletion allowances", tax breaks, and a vast array of other direct and indirect supports.

I should think you would be happy for energy coming from any source.  The bottom line here is that affordable conventional petroleum *will* come into short supply at some point, and unless something big and spectacular comes to pass, we're going to start experiencing the leading edge of that shortage sometime soon.  In the long run, humanity *is* going to live within the limits proscribed by incoming solar energy.  Energy use patterns will probably be quite different than they are today, but I'm pretty sure that solar energy and its derivitives (wind, hydro, wave, wood, synthetic hydrocarbon, etc.) are going to be part of the equation.  And I'm equally sure that conventional petroleum and coal won't be.

August's picture

Tidal power:

All day, every day, like clockwork, as long as the Moon flies.

tarabel's picture



The math for solar works just fine for me.

But what am I buying with my money? That is the question.

Am I buying cheap energy? No.

I'm paying for a higher degree of independence and self-reliance rather than "saving money" with my membership in tyrannical collective organizations.

There are some things that are more worth saving than money.


Edit: No, I am not a grid-tie subsidy-sucking leech or a tax credit whore. All out of my pocket and standalone.

TideFighter's picture

"Electricity will necessarily be more expensive!" 

I can't remember who said that, oh yeah, it was the Cuban Wave Guy sitting next to Raul and laying flowers on CHe's grave.

ebworthen's picture

Solar not helped by utility companies who backed out of agreements to buy generated power from customers - shafting thousands of households.

There is a reason Greed is one of the seven deadly sins; and the U.S. is overflowing with it.

LawsofPhysics's picture

Bingo.  However, people need to stop tinking about these things in terms of fiat currency.

You will either have the consumable calories to actually do and make real stuff, or you will die.  Simple as that.

Calories invested, versus calories returned is the only thing that matters.

NoDebt's picture

Judging by the people you see at WalMart I'd say we have a surplus of calories at the present time,

Stormtrooper's picture

That is very true but the riddle is how to turn those excess calories into productive calories.

NoDebt's picture

Have the productive eat the unproductive.  Oh, no, wait, maybe that's not such a good idea.  Then again....

g'kar's picture

"Solar not helped by utility companies who backed out of agreements to buy generated power from customers - shafting thousands of households."


precisely what warren buffet did when he bought nvpower in las vegas....strange how quiet the greenies like obama are about it all

snr-moment's picture

Absolutely. Including all those people who bought solar thinking they could make money off of it.  And use the grid as their battery bank.  For free.



squid's picture

That is retarded and only a government would force something soooo stupid onto a utility.


Pushing VARS back into the grid is fxxked, the grid is not designed for that, never has been. You use solar to either:

1. get off the grid,

2. take your base load off the grid.


I priced out number 2 here in Singapore WHEN oil was 100 a barrel, would have taken me 23 years to pay down the investment and that was assuming the batteries and panels last that long....and they won't. Panels are warrantied for 20 years, the batteries for 10.


But pushing VARS back into the grid.


Aboslutely rediculous.



Rakshas's picture

I understand what you are saying but any excess generated by small scale residential systems will get used locally to the point of generation and helps to unload the grid during the system production period but more importantly to the residential user you effectively store your excess production on the grid for later which reduces the size of the battery bank you would need. But the cost of your system and your payback time depends of course on the lifestyle you are trying to support, of course conservation costs the least and ultimately saves the most and if you have the ability to use thermal sinks for both heating and cooling systems it all helps........ I catch a lot of flak for my views on renewables but my game is solely based on starving my wallet leeches whenever possible  

NoDebt's picture

"our view that SUNE will develop just 1.95GW of projects in 2016"

Not even enough to send a single DeLorean backwards in time to undo one's mistaken investments in this dumpster fire of a company.

all-priced-in's picture

How many $ of government loans do they have?



Magooo's picture

Replacement of oil by alternative sources


While oil has many other important uses (lubrication, plastics, roadways, roofing) this section considers only its use as an energy source.  The CMO is a powerful means of understanding the difficulty of replacing oil energy by other sources. SRI International chemist Ripudaman Malhotra, working with Crane and colleague Ed Kinderman, used it to describe the looming energy crisis in sobering terms.[13] Malhotra illustrates the problem of producing one CMO energy that we currently derive from oil each year from five different alternative sources. Installing capacity to produce 1 CMO per year requires long and significant development.


Allowing fifty years to develop the requisite capacity, 1 CMO of energy per year could be produced by any one of these developments:


    4 Three Gorges Dams,[14] developed each year for 50 years, or

    52 nuclear power plants,[15] developed each year for 50 years, or

    104 coal-fired power plants,[16] developed each year for 50 years, or

    32,850 wind turbines,[17][18] developed each year for 50 years, or

    91,250,000 rooftop solar photovoltaic panels[19] developed each year for 50 years


A partial list of products made from Petroleum (144 of 6000 items)


One 42-gallon barrel of oil creates 19.4 gallons of gasoline. The rest (over half) is used to make things like:


Renewable energy 'simply won't work': Top Google engineers

Two highly qualified Google engineers who have spent years studying and trying to improve renewable energy technology have stated quite bluntly that whatever the future holds, it is not a renewables-powered civilisation: such a thing is impossible.

Both men are Stanford PhDs, Ross Koningstein having trained in aerospace engineering and David Fork in applied physics. These aren't guys who fiddle about with websites or data analytics or "technology" of that sort: they are real engineers who understand difficult maths and physics, and top-bracket even among that distinguished company.

Even if one were to electrify all of transport, industry, heating and so on, so much renewable generation and balancing/storage equipment would be needed to power it that astronomical new requirements for steel, concrete, copper, glass, carbon fibre, neodymium, shipping and haulage etc etc would appear.

All these things are made using mammoth amounts of energy: far from achieving massive energy savings, which most plans for a renewables future rely on implicitly, we would wind up needing far more energy, which would mean even more vast renewables farms – and even more materials and energy to make and maintain them and so on. The scale of the building would be like nothing ever attempted by the human race.

In reality, well before any such stage was reached, energy would become horrifyingly expensive – which means that everything would become horrifyingly expensive (even the present well-under-one-per-cent renewables level in the UK has pushed up utility bills very considerably).


illyia's picture

Very interesting, Mr. Magooo

Anopheles's picture


That's the part which people don't understand.   How much energy we actually use.   It's a HUGE amount, and not easily replaced.

The green weenies also don't realize the COST and SUBSTANTIAL reduction in lifestyle that accompanies switching to renewable energy.   It's not just energy that will cost MANY times more, but that will also affect everything you buy and do, will also cost many times more.   Incomes won't increase, and will likely decrease. 

withglee's picture

The green weenies also don't realize the COST and SUBSTANTIAL reduction in lifestyle that accompanies switching to renewable energy.

I'm not a "green weenie" but I have subsisted on 95% renewable energy for 11 years now ... out of necessity. My lifestyle has improved. I don't think I could be comfortable in "real" civilization again. My cave is very comfortable.

Incomes won't increase, and will likely decrease.

Incomes for the fewer and fewer "will continue" to dramatically increase. Incomes for more and more will drop abruptly ... to zero ... when they are replaced by automation.

A component of everyone's job description is to become more efficient. At the limit, we "efficient" ourselves out of a job.

We need to find a way to enjoy the fruits of our efficiency generating labors rather than to have them become grave digging exercises ... our own.

Anopheles's picture

How do you heat your house?  How do you heat hot water?  How do you cook? 

If those things aren't electric, then you haven't reduced your energy consumption by 95%. 

Helix6's picture

Long on engineering, short on imagination.  These worthy fellows are trying to imagine a society having the same patterns of energy consumption as we have now.  Unless some spectacular breakthroughs involving heretofore unknown energy sources are in our near- to medium-term future, that's not going to happen.

Instead, what is going to happen is that modern societies are going to go Amish.  Not religiously, but technologically.  In temperate climates, anyone who builds a house that does not take advantage of passive solar heating is going to be looked upon as an idiot.  Muscle power is going to replace gasoline power in many areas.  Considering the girth of the average Ameircan, this might actually be a good thing.  And the GMO guys are going to shift their focus to tweaking the DNA of trees to grow (much) faster and thus provide firewood in greater abundance, as well as tweaking the DNA of oil-producing plants to do the same for oil production.  And the photovoltaic guys might be thinking in terms of self-replicatiing silicon systems -- the equivalent of silicon forests.  Oh, yes, and solar electric systems are going to supply electricity for a much more limited range of essential electric devices.

I agree with the statement that everything is going to become horrifyingly expensive.  The upshot of that is that people are going to have gardens and wood stoves again.  Food -- as well as a lot of other things -- is going to become a lot more local.  Material possessions are going to fall more into the need-to-have rather than the like-to-have category.  People will once again learn to play musical instruments -- well.

Of course, it's possible that fusion power could someday become a reality.  Or that the "free energy" schemes described in some other posts here could pan out.  Those are big "ifs".  Controlled fusion has eluded us for over a half-century now, and thinking that, should such systems come online, they would not have serious environmental consequences is delusional.  And despite the claims, there are no "free-energy" systems operating on a commercial scale anywhere even though speculation that such systems might work date from the time of Tesla.  Big "ifs".

Far more likely -- we're going Amish with a modern but modest technological component.

Canadian Renegade's picture

We've already started shifting to living this way and honestly it isn't that hard and there are very few inconveniences. What most people don't realise with the shift to renewables is that electronics and lighting have already become much more efficient and will continue to do so even more.

If the house is designed right from the start it is easy. Also most of the Crap people have is stuff they wanted at some point but don't even really use it just sits in their over sized house collecting dust.

withglee's picture

All your writing assumes a diminishing oil supply. This is only expected if you believe in the oil-from-dinosaurs myth. When you realize the source of oil is abiotic, everything looks different ... and more evidence that this is true comes up every day. They're fighting this reality just as they fought Copernicus' reality. Religion has oh so much inertia.

Helix6's picture

I do assume a diminishing oil supply, but not for the reasons you put forth.  I am very well aware of the abiotic theory of oil formation and for all I know, it may be correct.  One just has to smell the earth dug up during any construction project to realize that there's some hydrocarbons in there.  And under certain circumstances, I can imagine that time, heat, and pressure could transform these hydrocarbons into crude oil.


I'm pretty sure that whatever the formation process is, it operates at a glacial pace compared to the rate that humans have been extracting crude.  We've had a binge on abundant oil because we've tapped sources that have been accumulating over eons of time.  At some point, these sources are going to dry up in the sense that they will yield oil only at the rate of formation, whatever that is.  I'm willing to bet hard cash that this will prove to be far less than the rate at which we are extracting it now.

marathonman's picture

It's been awhile since I read this (Beyond Oil and Gas - the Methanol Economy) but I remember it being a doable approach to scarce petroleum.

It's better to have lots of aerable land and a long growing season because we'll need a lot of land to feed that gasification machine.

Either that or that energy from thorium LFTR technology is going to have to come a LONG way.

JuliaS's picture

Internet and automation will address consumption by eliminating many parasitic services. Sure, everyone's up in arms about yesterday's article on Domino's pizza delivery robots, but think of how much energy is otherwise expended delivering a freaking piece of bread covered in anchovies. When a human driver is piloting a 3000 pound hunk of metal and burning precious gasoline to deliver 1.5 pounds worth of consumable product, that's as close to pure waste as one can get.

youngman's picture

Sooooo how much is the US taxpayer on the hook for....I suspect billions

Dre4dwolf's picture

Instead of wasting billions on ponzi scheme solar companies, spend billions developing cheaper ways to produce panels...... if you can run a home off 2000$ worth of panels...... most people would setup a system in their house...... but when it costs 25,000$ worth of equipment to run your home.... most people will opt for paying the electric company.


Solar Industry will not succeed until the cost per kw/h for making panels drops 90-200% this way they can price cheaper and have access to a bigger market.

venturen's picture

or you pay for efficiency and reduce your needed power requirements by 90%. Of course Goldman, Buffet, Elon get no tax credit for that isn't going to happen.