Sun Edison disclosure practice

I have – on the grapevine – been sent a research report from Credit Sights on Sun Edison. “The title: Sun Edison and Terraform: Dual 10Q cut. Recourse?”

It is complete with the usual suggestion that there is debt at Sun Edison that is both (a) recourse to the parent company and (b) does not have sufficient and allocated cash left to settle it.

That is the central question with Sun Edison. Bears suggest that Sun Edison has parent company debt that they do not have the wherewithal to pay. The company has steadfastly denied this. They state all debt is either (a) no recourse or (b) has well determined cash flows that will be used to pay it. Alas certain debts have shifted from the non-recourse to the recourse column.*

I confess I am concerned with the Credit Sights note. I own Sun Edison stock which I purchased in distress (about $9). This was after it lost two thirds of its value.

Proving my ability to pick stocks that halve it halved again.

The line in the Credit Sights report that concerns me most however is not assertions about recourse versus non-recourse. That is the bet I have taken.

My concern is this:

SUNE stopped returning our emails and phone calls over a month ago so we are unable to confirm this new recourse status with the company as the missing one letter footnote could just be a typo.

Sun Edison is a financial institution. It requires the trust of financial markets to do business.

Credit Sights is a highly reputable (if somewhat bearish) debt research shop.

Not returning their calls is simply unacceptable. The management of Sun Edison (as this blog has stated) have to start sounding like and behaving like the management of a mortgage REIT.

They are not doing so. Financial institutions do not ignore the people who analyse their debt.

So Mr Ahmad Chatila (CEO Sun Edison), how about you return Credit Sights’ phone call?

Or, failing that, will the board of Sun Edison please fire the CEO now.

John Hempton
Disclosure: Long Sun Edison (unfortunately)

* One reclassified debt: a margin loan on Terraform stock was once classified as non-recourse and is now classified as recourse.