So much for the "January Effect." Shares of SunEdison (SUNE) were down more than 40% as of late-day trading on Thursday, after the company announced a series of transactions to restructure its debt.
The transactions, which are expected to close on Jan. 11, 2016, will reduce the Missouri-based renewable energy company's debt by $738 million, the company said in a press release. The market took a less optimistic view on the news and shares were halted in late afternoon trading.
SunEdison will be issuing $725 million in second-lien secured-term loans that will mature in July 2018 and have an interest rate of LIBOR plus 10%. (LIBOR is the benchmark rate financial institutions charge for making short term loans to each other.) Existing creditors agreed to exchange $335.8 million in existing convertible notes coming due between 2018 and 2025 for $225 million of the newly issued notes. The proceeds of these issues will be used to pay existing debts, interest, transaction costs and "general corporate purposes," the company said.
SunEdison will also be issuing 39.8 million shares of common stock, of which 11.8 million of the shares are in exchange for $158.3 million of the company's preferred stock. The remaining 28 million shares are in exchange for $243.8 million worth of existing notes coming due 2018 to 2025.
Thursday's announcement comes a week after SunEdison announced that it extinguished $336 million of its debt coming due in 2020 by offering creditors shares of its yieldco, TerraForm Power (TERP).
Shares of the company have been in free-fall since July 2015, when the stock was trading just above $30. At the time, the market reacted negatively to news of SunEdison's announcement of its plans to acquire Vivint Solar (VSLR), a Utah-based company that specializes in solar paneling for homes. Investors felt that SunEdison was biting off more than it could chew in the acquisition and that Vivint's portfolio of residential projects was less than creditworthy.
Meanwhile, shares have had difficulty trading above $5 since November when it was revealed that Greenlight Capital shed much of its position in the company. As shares of SunEdison have fallen, the company and its yieldcos TerraForm Power and TerraForm Global (GLBL) have also attracted negative attention from David Tepper's Appaloosa Management. In a series of letters and filings with the Securities and Exchange Commission, Tepper expressed concern about SunEdison exerting undue influence over TerraForm Power at the risk to the yieldco's shareholders.
With SunEdison's latest announcement, it appears that the company's money and management problems will not be going away quickly.