SunEdison engages in DIP talks with second lien holders

by Madalina Iacob , and Alexander Gladstone

SunEdison isin negotiations with holders of its second lien loans to fund a DIP facility, two sources familiar with the matter told Debtwire.

The second lien investor group, which has organized with legal counsel Akin Gump, includes holders of the aggregated USD 725m Libor +1000bps second lien term loans A-1 and A-2, both of which come due in 2018, the sources continued. DIP talks this week have focused on providing the company with upwards of USD 300m in new post-petition liquidity.

There are also discussions about rolling up portions of the second liens as well as the company’s first lien letter of credit facility, added one of the sources. The USD 750m LC facility had USD 716m in outstanding LCs as of 3Q15. The company had just USD 56m of unrestricted cash at the end of 4Q15.

The onset of DIP loan talks with management and the lenders follows up on attempts by second lien holders to ink an out-of-court solution to the solar company’s liquidity and leverage problems, said the sources. “Those discussions fell apart so now they are also looking for a DIP loan,” said the second source.

Both the second lien TL A-1 and second lien TL A-2 were thinly quoted today at 45.5/49, according to Markit

For its part, SunEdison earlier this month brought in outside help to advise management on how to restructure the unsustainable debt stack. The company recently disclosed that it will have to delay the filing of its annual 10-K yet again due to additional time needed to address deficient information technology controls. Initially the company asked the Securities and Exchange Commission for an extension to 15 March to file its annual earnings report due to ongoing investigations into the accuracy of the statements, after former executives and current employees raised concerns about the company’s financial position.

The company is also facing a litigation over its failed merger with Vivint Solar which filed a lawsuit against SunEdison in the Delaware Chancery Court for willful breaches.

“With a SunEdison Chapter 11 likely on the horizon, Vivint’s suit would likely get them no more than a general unsecured claim in the waterfall,” wrote Debtwire analyst team in a recent report.

The company already appeared in the Chancery Court in mid-February in connection with a lawsuit brought by Appaloosa Management, the shareholder of its subsidiary TerraForm Power (TERP), to stop the Vivint merger. At that time, Chancellor Andre G. Bouchard of the Delaware Court of Chancery denied Appaloosa’s injunction request.

SunEdison’s USD 316m 2.375% convertible notes due 2022 traded at 8.75 on 21 March down from 11.25 on 15 March. SunEdison’s stock is down a tad today to USD 2 for a market capitalization of USD 598m. The stock is down 60.61% year-to-date.

Calls to SunEdison, Akin, Rothschild were not returned.

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