SunEdison is getting butchered

SunEdison, the renewable energy backed by some of the biggest names on Wall Street, crashed 24% on Tuesday.

Investors have been looking at SunEdison’s debt obligations and cash holdings.

The company owns two yieldcos — companies created to own and operate its specific energy projects — and their financing arrangements are complicated.

More importantly, they’re expensive, and the company is holding a lot of debt. Already SunEdison has had to pay $US152 million towards a margin loan for one of its yieldcos, TerraForm.

During the company’s last earnings call it disclosed a number of cash obligations to its yieldcos that frightened investors.

And yesterday, as Bloomberg reported, analysts at CreditSights noted that SunEdison changed the classification of $US700 million worth of debt from “non-recourse” to “recourse.” That means that lenders can seek financial damages if SunEdison defaults on the debt.

The release of the report happened to coincide with the release of government filings in which big money managers disclose their long positions for the previous quarter.

Greenlight Capital, billionaire David Einhorn’s fund, disclosed that it had sold 6.2 million shares in the company, bringing its holding to 18.3 million shares at the end of the quarter.

Omega Advisors, the hedge fund helmed by Leon Cooperman, also sold during the quarter, bringing its share holdings down by 3.1 million to 5.3 million shares.

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