Sunedison Inc (NYSE:SUNE) recently provided an update on how it hopes to operate and perform over the next one year. The business update to some extent takes away some liquidity concerns that investors have had about the company. However, there still remain issues for the company to clarify, according to the assessment of Janney analysts.
Sunedison’s business update covers the period between 3Q2015 and 4Q2016, shedding light in areas that investors want clarification, but also introducing new twists in some areas.
Sunedison Inc (NYSE:SUNE) expects to earn $340 million through its interest in the First Wind. Janney on its part expects the company to earn $500 million from First Wind, but it does say that Sunedison’s soft guidance pride upside potential to its cash projections.
Sunedison also renegotiated deal terms with Vivint Solar Inc (NYSE:VSLR), whereby the company will pay $2 less per share than previously agreed. Blackstone Group LP has also committed to extent a $250 million line of credit to Sunedison to fund the acquisition of Vivint.
Liquidity concern addressed
Sunedison Inc (NYSE:SUNE) expects to reach adjusted EBITDA of $1.186 billion by 4Q2016, which Janney says is well above its estimate and consensus target of $675 million and $703 million, respectively. Additionally, Sunedison projects to end 2016 with cash balance of $1.1 billion, which is double the target of Janney at $515 million.
Sunedison’s strong financial projections indicate the management’s confidence in sidestepping a scorching cash crunch situation.
As if to further show that Sunedison Inc (NYSE:SUNE) is getting out of the financial woods, the company is discussion a fresh line of credit to the tune of $650 million. The fresh funding should help Sunedison to bring financial flexibility to its balance sheet. However, the fact that the addition credit facility involves equity raises questions that Janney notes the company will have to clarify, less it alienate investors further.
Based on Sunedison Inc (NYSE:SUNE)’s business update, and save for the equity issue in the fresh credit facility, Janney predicts that strength with return to the stock. Shares of Sunedison have declined more than 81% since July 2015. The firm has a Buy rating on Sunedison.
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