SunEdison (SUNE) has been a troubling investment for many -- though perhaps none have been as hurt by it as David Einhorn's Greenlight Capital. Now, in an interesting twist, the New York-based hedge fund may be getting a seat on SunEdison's board.
On Sunday night, the Wall Street Journal reported Greenlight Capital is set to appoint a new director to the troubled solar energy company's board, citing people familiar with the matter. The announcement could come in the next week.
Representatives from Greenlight Capital declined to respond to the report when asked by Real Money. Similarly, representatives from SunEdison declined to comment on what it called "rumors and speculation."
Though, sometimes rumors and speculation can be proven true.
As of Sep. 30, Greenlight Capital holds a 5.8% stake in SunEdison. In November, it was revealed via 13-F filings that Einhorn reduced his stake in the company by 25% during the third quarter. While the shares of SunEdison had already fallen steeply following its announcement of its plans to acquire Vivint Solar (VLSR), they dropped over 30% in one day on news of Einhorn paring down his position.
Since then, wild daily swings in the stock price have not been uncommon as the company announced several board and management changes to SunEdison and its yieldcos TerraForm Power (TERP) and TerraForm Global (GLBL), revised terms to its plan to acquire Vivint Solar as well as measures to shore up liquidity. The changes to TerraForm Power's board, coupled with the Vivint deal were enough to make another activist investor, David Tepper of Appaloosa Managment, to file suit against SunEdison for "breach of fiduciary duty." This too has weighed on the stock price of the family of companies.
Einhorn's rumored increased involvement with SunEdison could certainly be interesting as his fund is coming off of a difficult year, which was in no way helped by the solar company.
At October 2014's Robin Hood conference, Einhorn shared his conviction in SunEdison by calling it a "well run, financially savvy company."
At the time, Einhorn spoke favorably of SunEdison's relationship with its yieldcs by saying that before that structure, SunEdison had to absorb all of the risks of their projects, which meant they could only eke out a small return. By tranferring the risks to a "low cost of capital" buyer, SunEdison benefits. (Of course, Tepper sees this as a problem for the yieldcos.)
If the rumors prove true and Greenlight Capital gets a seat on the board, it will be interesting to see how Einhorn responds to SunEdison's new set of challeges.
