Sunedison Inc (SUNE) is facing an internal audit and reportedly headed towards bankruptcy with its future now hanging in the balance
Sunedison Inc (NYSE:SUNE) has been suspended or had its price target revised downwards at a number of sell side firms as the company undergoes internal audit and investigations regarding compliance. The potential to go bankrupt has pitched the company in the limelight and investors will be sitting on the sidelines or withdrawing their positions in the company as they wait for the dust to settle and a clearer picture to emerge.
FBR Capital’s analyst Carter Driscoll, in a research note, suspended the Outperform rating and $7 price target of the company amid its current financial crisis. SunEdison has failed to release any financial statements since its 10Q for the third quarter of fiscal year 2015, the quarter ending on September 30. The energy technology company has been under an internal audit and has also noted concerns regarding internal controls and how it reports its finances. This is a dangerous situation and in the vacuum caused by the absence of information or a more concrete reasoning behind why the audit is truly in place, the company’s business and viability have been placed in doubt. Questions have also been raised regarding SunEdison’s legal disputes such as the one with Vivint and their status.
Deutsche Bank also cast some light on the matter when commenting on TerraForm which has delayed its 10-K reportedly due to a risk they see of SunEdison declaring bankruptcy. Yesterday, SunEdison stock fell 55% after the U.S Securities and Exchange Commission commented on the risk of such an eventuality. It has only been 2 weeks since SunEdison delayed its annual report but in hindsight the collapse of the Vivint deal due to SunEdison’s inability to amass the necessary funds gives credence to its insolvency. SunEdison’s business has long been criticized for its cash buwith poor cash flow and high debt remaining a consistent problem for the company. The Street will be watching the developments at SunEdison with bated breath as bankruptcy becomes a real possibility for SunEdison.