SunEdison, the solar power company that has seen its stock fall 83% in the last six months, is crashing yet again on some disappointing news.
The news is that Appaloosa Management, the hedge fund helmed by billionaire David Tepper, will accept a Delaware court’s offer to expedite its lawsuit against the company.
“Anybody who read the judge’s opinion, who read the transcripts of the trial, knew we were going to go for an expedited trial,” Tepper said in a phone call with Business Insider.
“We don’t start things just to start things.”
The stock is down more than 11% on the news.
Appaloosa’s lawsuit has to do with the deal that started dragging SunEdison’s stock down in the first place last July — SunEdison’s attempt to acquire residential solar firm, Vivint. The deal revealed to Wall Street that SunEdison’s cash position might not be as strong as investors thought.
For Appaloosa’s part, it is suing SunEdison specifically because it owns a stake in one of SunEdison’s subsidiaries, a yieldco called TerraForm Power. Yieldcos are companies formed to manage solar projects after they’re complete, and they operate like other power utilities. In the Vivint deal, TerraForm Power would have been forced to enter into take-or-pay agreements, which would make it necessary for the company to buy projects from SunEdison/Vivint, or pay a fee.
Appaloosa doesn’t think the take-or-pay agreements are a fair deal. It tried to block the Vivint acquisition entirely, but a Delaware Court said the acquisition could go through last week. SunEdison’s stock rallied on the news.
That ruling didn’t actually mean that Appaloosa lost. The take-or-pay agreements and their fairness to TerraForm Power shareholders are still under consideration. In fact, the Court said that no one should “underestimate[e] this Court’s power to grant relief in the future if it is warranted.”
It also called SunEdison’s process in doing the deal “inherently suspect,” and that “troubling” circumstances surrounding one of the Conflicts Committee’s advisors “raise serious questions that go to the fairness of the process.”
This is not over people.