Shares of SunEdison (SUNE) plunged 15% and were halted three times on Tuesday morning following a report from Reuters that said the Missouri-based renewable energy company was targetted in a lawsuit by Appaloosa Management.
The purpose of the reported lawsuit is to prevent TerraForm Power (TERP), one of SunEdison's yieldcos, from being forced to acquire assets from Vivint Solar (VSLR). In July, SunEdison announced plans to acquire Vivint Solar. The deal was controversial: first, because analysts questioned SunEdison's financial capacity to make the acquistion, and second, because Vivint's portfolio of residential paneling projects was deemed of lower credit quality than SunEdison's usual portfolio business.
Matters were made worse when it was announced that TerraForm Power would be acquiring at least a portion of Vivint's projects. The move was considered damaging to TerraForm Power's shareholders.
Appaloosa Management, a New Jersey-based hedge fund led by David Tepper, announced a stake in TerraForm Power in December following announcements of several board and management changes in the yieldco, which were perceived to give SunEdison greater control over the yieldco. Since then Tepper, has demanded to see TerraForm Power's records after learning that the company changed its outside counsel to Greenberg Traurig from Cleary Gottlieb Steen & Hamilton. It was not clear if the law firm resigned or was fired.