01-08-2016, 06:19 AM
While we're not about to buy these shares, this is nevertheless a remarkable development (SUNE is down 40% for the day at $3.25, at the moment):
Analysts are weighing in on renewable energy company Sunedison Inc (NYSE:SUNE) and US biotech company Tetralogic Pharmaceuticals Corp (NASDAQ:TLOG), as shares of both companies fell sharply today. The analysts reflect on Sunedison’s new debt exchange and Tetralogic’s negative clinical trial results. Sunedison Inc Sunedison shares plunged nearly 37% today after the company announced issuance of $725 million second lien secured term loan and a series of exchange transactions. RBC Capital analyst Mahesh Sanganeria believes that all the transactions demonstrate progress in improving the company’s liquidity position and deleveraging balance sheet. Sanganeria noted, “We like the transaction as it effectively provides SunEdison $550M additional liquidity. While the LIBOR+10% interest appears high for the new loan, it is lower than the effective interest rate of the current $170M second lien term loan.” Furthermore, “While the effective interest rate is increasing, the net debt outstanding is reduced by ~$110M (or 33%) after the transaction. It serves the purpose of balance sheet deleverage.” Finally, “Shares are issued at significant premium to SUNE’s current stock price. The common stock issuance effectively deleverages SUNE balance sheet and reduces interest payment.” The analyst reiterated an Outperform rating on shares of SunEdison, with a price target of $20, which implies an upside of 411.5% from current levels.
Hmm, $20 price target whilst the shares are selling at $3.25...