Robert Dydo

Long-term horizon, research analyst
Robert Dydo
Long-term horizon, research analyst
Contributor since: 2012
Company: Solar PV Investor
Meat this is one great post, you should write an article on it as 29741 suggests.
Does anyone have a doubt any more what Vivint offers to SUNE? You have to be truly blind to consider dumpster Vivint as takeover target. Tepper sees it and he want to save the waste of money. Watch SCTY, VSLR has already lower guidance on pretty much anything....
There is another option, SUNE keeps Vivint assets and sells utility scale and commercial size assets to TERP in swap transaction instead.
They should make an offer to sell their Dominion solar plants' interests to TERP for the same amount of money, but offer market pricing this time, as per transaction in the partnership.
I know what has been sold to partnership is already option to TERP, but what SUNE owns could be moved to TERP. Vivint is SUNE's TERP gets utility projects bought at JPM rates. Tepper could be offered a seat recommendation on TERP board he has enough shares, more than Einhorn in SUNE. Clean deal with removal take/pay agreement and placing right of first refusal instead.
I have written review of Appaloosa buys on our investment forum,
The summary of those buys is here
"In my opinion Tepper bought more shares of TERP, knowing that board quit and officers of the company got fired as they wanted to change the transaction and not to buy Vivint assets. This was their agreed right. Chatilla broke the agreement and fired them. After Tepper learns about it he adds 3.8M with the lowest buy on Monday. doubling his holdings, fully understanding that two directors could not support shareholders as per their resignation letter. This is done in full disclosure not non-disclosure. "
Prior to November 20th, Tepper owns 699K of TERP (buying initiated on 11th). On November 23rd, public learns Zornoza and Hernandez are fired. They also learn
that 4 members of the BoD resigned. Events took place on Nov 20th. 20th is Friday.
Between 23rd and 24th, Tepper knowing above buys 588K shares.
Sends the letter on 25th,
Between 25th and 27th, he buys 1.230M shares.
On 27th, TERP releases resignation letters, showing that BoD resigned unable to protect shareholders.
27th is Friday,
Stock hits the lowest level on 30th, Tepper buys 3.880M, the largest buy of his holdings. He buys 950K on December 1st.
4.8M are bought after Nov 27th, after resignation letters are known, the only thing he needed to know why they could not protect shareholders. Someone asks maybe over the weekend, 65% of holdings are bought after this.
Not sure if he already planned to sue, but certainly he sees Chatila letting people go for trying to use clause written in July agreement to walk away from the Vivint assets.
Gets nowhere with the letter one and two. We know now in details of his lawsuit how those events happened, I am sure he had interviewed the BoD. I am pretty sure neither Hernadez not Zorgoza signed non-disclosure when they got removed and then he goes with lawsuit.
If he learned that board of directors was fired, because announcement made public on Nov 23, he could easily pursue information to a reason why they got fired. The matter was in a public domain.
His Nov 25 letter states nothing of amendment, I doubt he would be knowing anything about that, but he could ask a question why BOD quit unable to protect shareholders. Unless there was a signed disclosure not to reveal this. I speculate all the way here, but lawsuit will show what happened in the presentation.
He is looking to enjoin the transaction or compensation if proceeds. He believes his investment is hurt and will be hurt more. His lawsuit is about the amendment.
His strategy is to sell assets and breakup the company. He stated this. It beats insolvency. The question is can he take SUNE out of Vivint merger. Perhaps he thinks he can, this is why he is not giving up.
Meat18, I appreciate your comments. Your posts clears the nonsensical statements from the SUNE diehards about Tepper being the shareholder of TERP after Vivint deal was agreed on.
Tepper lawsuit is about amendment not July agreement. All should read it again to get this clarity.
The deal was amended on Dec 9th, with nothing being changed for TERP. Tepper wrote first letter on Nov 25th, asking for minutes of the meeting as I bet those who got fired contacted him and perhaps already been in contact to refuse the deal. They got canned on 23rd, for using the clause to walk on amendment condition.
Chatila fires those who refuse to sign it, and others quit in protest, all while Tepper is owning the shares. Tepper is impacted as shareholder, end of that debacle.
Self-dealing and wrongful dismissal for executing fiduciary duty, can this get any worse than that for Chatila?
If Tepper is negotiating, it is from position of power.
Great job Meat, I recognize you for your objectivity
I see you pushing SUNE everywhere these days number 29741, including pushing it on me.
No thanks, those are desperate times for SUNE, buying companies in desperate times can turn very desperate for people who own them.
I like strategy, which would not need lawyers to solve problems of abusive relations, but sometime you need to bring them to make a point. That is also a strategy in corporate world.
If SUNE is willing to lose $100M dollars to third parties numbers like you will pay with further dilution.
If they are willing to give it away to TERP, SUNE and investors like me will get better yields on their dividends and numbers like you will lose in dilution.
See, the same strategy, TERP is just being better off.
Sine you own SUNE, you appear to believe in many things which make no sense, why would I be surprise at this belief?
I think both, Pension and Appaloosa suits, are being heard at the same time. To contrary both are exactly consequential and clearly pertinacious.
In order to avoid the hurdle one needs to negotiate a compromise. SUNE cannot walk, who or what made very clear this is not happening. Instead of selling at the loss, sell the whole caravan to TERP but add a plant or two SUNE is building to make the price to be 1.50 per watt., If SUNE does sell to third parties it is a loss, if they put this in the plan, they can get the money back from TERP dividends.
one of the Tepper reasons is fairness. Read this as "price". If they sell at the market or just under it, his argument is a fume, gone. SUNE can renegotiate by giving away those MWs from their development so they can pick up the pieces in dividend. Money talks and you know what walks
It is clear to me. Blackstone does not give rat's you know what about VSLR. They want that thing be gone from their books at the price of $250M in commitment. When they bought original Vivint, they bought three divisions. They are selling one of them now for almost $2B, that $250M is peanuts to what the other two are worth. I despise Gordon Clown Johnson, but he is right on the nail saying that Blackstone has SUNE by the bottom parts before that deal is off. It simply no walking away here.
Well the only thing SUNE needs to do add some 68 to 70MW solar farm and handed over to TERP. At 1.50 per MW, this would be the simplest to do. I suppose the thin line of unfair ends when TERP would be making money, coincidentally for SUNE, in a form of dividends.
SUNE has 3GW under construction. Throw one of those things into a mix and Tepper would have nothing to argue about.
I think it is somewhat late to sell to 3rdps.
Thank you Morningsidepark,
Greta work on details of costs. I really appreciate the effort. Looking forward to more analysis as per your promise.
It is a Blackstone's run company. I think this is really clear.
I think I wrote that. TERP will be very volatile but it will be a big opportunity to buy more,. SUNE may never see $5 after Vivint deal and Einhorn will chop shop it probably in 12 months.
We can revisit in time......
Ever since Chatilla made the reach for Vivint, what happened to SUNE?
There are many forces in the market.
Yes, ever since Tepper established the lawsuit many people found another level of insecurity with this action and TERP traded down and has hard time to go up. However when the same Tepper announced his position in the stock, on that day, TERP went up 30% and I believe his very involvement allowed for TERP to go up well over $12.
I sympathize with Tepper's cause, but I do not bet on his win. I bet on the TERP being a winning stock in either of possible outcomes. I think if Tepper won we would have a swifter and more capable business, a lot more independent to choose what is better for its shareholders not a sponsor company. The day SUNE IPO TERP the concept of own backyard should no longer apply, but as usual the self-control is harder than self-dealing.
If you consider that TERP CEO wanted the deal, when he got fired why the deal is on? Is it because committing suicide by merger is the honorable way Chatilla decided to go out, against his own will? Sounds rather naive. Like a puppet board of directors the execs of TerraForm had committed resources of the company to enable SUNE's merger with Vivint. Tepper has taken an opportunity to argue not to teach ethics in the Sunday school, but to earn money. He has spelled out the reasons and sued. It makes sense to preserve the value of TERP in a state it is now. If decision is made under duress you have reason for claims of unfairness and self-dealing.
The point is that SUNE does not have to make the deal, it wants to make the deal. I have found not a single statement from SUNE they do not want it. In fact the want it so bad, they are willing to sell Vivint assets to someone else at the loss, that is how much they want it.
how does Tepper harm TERP? I like to understand this
Are you saying that CEO of a company can damage it and just because he can, nobody should say anything?
I can see that SUNE shareholders do not care what price assets are sold to TERP, as long as they are. If they do not SUNE is in trouble. However, that does not make those actions right. Let the law rule over this one. SUNE management had done nothing for own shareholders to a point one of them is trying to change the company's direction. Another shareholder wants to prevent the harm from happening to the company. It it just too bad those actions are in conflict, otherwise to me those action look like a same motion. .
jjw, I have mentioned it, this is possible, but I think is too late to make it meaningful. You have the 16th, hearing and then you have on 24th just a formality of Vivint vote. March 18th has also a role to play. In theory either company can walk if circumstances of not their fault prevent the consummation. Since anything happening to TERP and its action does not prevent merger and since not selling to third parties does not change the conditions of agreement , SUNE is too committed and third party sale sounds frantic and late to execute. To your point the price reduction is cost to SUNE, so frantic circumstances means a lot cost to SUNE. Does not make a lot of sense if Tepper was to lose. In fact third party sales inclusion was a surprise, sounded like a admission of guilt of pressuring TERP. It could be also a strategy to show, we tried but nobody wanted them. Who knows.
I am not anticipating any outcome. Therefore, the entire comment of yours makes not a lot of sense to me. Further if I do not anticipate specific outcome, how can I predict Tepper's loss?
Finally , what negative information can there be, if according to you nothing is new? Well nothing is new, but future has not been written yet and this is what makes investing exciting.
My article is about those scenarios, but with underlying opinion on my decision why I chose TERP. Choice I made prior to the debacle and choice I reasoned to continue to have.
PS. I made a comment on GLBL.
Einhorn involvement says few things. One he is not happy with the direction and he wants to influence the direction of his investment. What I read or heard about his involvement, talks about all right things about SUNE. Liquidity is critical for the company and speaks about it via selling assets. He also talks about shareholders as value. Do not sell equity to patch holes in operations and in "assumption" to seal bad deals.
I hope he is negotiating right now about VSLR. He certainly does not have to take path created by Chatilla and give up to the grip of Blackstone. Perhaps it is too late, but I am hopeful.
Bottom line his presence it is a value added to SUNE, I cannot see it any other way, even if he has his own (read shareholder) interest in mind.
I am aware that Tepper is long TERP. If he shorted SUNE, it would represent high level of confidence that assets of Vivint would not be purchased and he would win the injunction. As I suspect SUNE would be sold hard, facing merger by itself.
I can speculate he is short, but I am not sure if he is. I know Blackrock is long. They were long only 1.2M in Q3 and shown on Friday holding to 4.7M. Their interest in TERP may indicate long term view but also hope for a quick catalyst to give them quick return. This may or may not be level of confidence in the hearing. Not sure, but certainly I like it they show this level of ownership now.
I expect dividend go up, first on Invenergy, and of course if there is a legit value, on residential assets. However I expect value of equity to go up, hence the annual yield to drop and settle lower.
I expect TERP to come back to $20 to $25 range, sooner if transaction was enjoined. I also expect TERP enter 2017 at $2 per share yearly dividend.
I do not think that SunEdison has bad assets, but TERP needs to get big plants in Cali and Texas from the sponsor.
Let SUNE securitize residential portfolio and sell it to investors, if it can't get out of the Vivint. Leave TERP do what it can do best.
Agreement has changed for quantity to fewer assets in 2016 and 2017, as Vivint dropped its forecast. I suspect even less now than when it was printed. Original transaction is some $560M and $236M in debt assumption. I do not see them to be worthless, they are difficult to manage, they are prone to instability, but worthless is not the word to describe them. They are certainly considered pricey in this structure.
TERP has 930MW Invenergy deal which will produce really high CAFD. Their portfolio is 2.7GW almost evenly split between wind and solar.
My point was to say it is a long term value, which can get cheaper during hysteria and could be considered as an opportunity. Cannot say the same for SUNE.
We have discussed GLBL a lot on our forum, a lot of people are interested in the yield as it is massive now. I personally prefer NA locations and majority earnings in the US dollar, important to me to avoid fluctuating currency issues. I also prefer policies with less FiT but market agreements for source of revenue. I view them as stable in case of TERP.
It is a personal opinion of preference, and I prefer TERP.
SUNE buying Vivint gains very little to nothing. Revenues, operations and financial abilities of Vivint, are nothing of value to SunEdison. They are weak in short and the purchase is overpriced even after the amendment. The cost to carry this purchase is a disaster. Blackstone is willing to put $250M to see Vivint go.
TERP is better off if deal gets consummated, even if appears as a victim of it at first. TERP’s commitment is less engaging and is buying the only “real” value Vivint has, not the fluff SUNE is buying. I hope they will not, but if they will, as I said CAFD which is the most important to a investor profile.
I do not short stocks but I predicted SUNE to go to $5 from $30. Do not write teenage novels. Thank you for your comments
Aurelien, TERP agreed to terms of the deal as a result of breach in fiduciary duties by the principles of the company. If you believe in any due diligence there, I guess anything is possible at this point.
SUNE has evoke take/pay agreement on TERP so they can get $300M term facility from three banks to consummate the merger. There is no compensation of any kind to TERP for it.
What due diligence was done to protect TERP interests in a merger? Nothing, TERP is accessory to it, nothing else.
The day SUNE IPO TERP its arm's length dealing became a shareholders' concern and a matter of a public company. Running it as its own backyard is gross misconduct in those conditions.
Going back to the subject, the reality is that SUNE has put itself in a position that they need to pursue the merger, even if TERP does not buy those assets. This is why everyone who owns SUNE is willing to put aside any concerns around fairness as long as SUNE gets the money from TERP.
I cannot argue that desire, but I cannot agree this is right.
I own TERP for its dividend and the asset portfolio. I would like to see rescission, but I am not in a mortal fear if the lawsuit gets rejected. TERP has a strength to absorb this chunk for 2016, it could be a problem in subsequent years, who knows.
I hold belief that SUNE will only gets more complicated on the onset of the merger and its path to liquidity will get muddier. Hey, perhaps they will sell more equity, they have no problem to dilute own shareholders or perhaps they will sell TERP B shares as they did in $336M transaction.
Time will tell,
All the best
Aurelien, I have written a note on our forum, which I hope you could review. It is to amended agreement of a merger from December 9th, and the new role TerraForm was going to play based on it. Additionally SunEdison issued a letter agreement dated same where TERP is put into an new agreement to buy Vivint assets or interests, which has not been disclosed to this day in any detail, which shows predatory, punitive outcome to TERP if in any way it managed to avoid purchasing assets of Vivint.
In my opinion this amendment and the new agreement only further confirms self dealing by SUNE in order to consummate the merger. I suspect not the July but December transaction was the straw which broke the back of Tepper's campaign to "resolve" any concerns via exchange of information.
I am not an author of this article and when you author articles you do disclose your positions. However, I have no reason not to. If you are curious I am long TERP as I have disclosed on this site on Nov 25 and traded it since till now.
If your interest brings you to our forum, you can see a lot more.
best to all
bh, this is in condition when debt facility is not obtained. I actually think that upon injunction SUNE will use it to walk. This is business, Why SUNE must play a life line to Vivint? Moral obligation, this is not ailing relative, but a company, which gone to the business and needs to maneuver markets and conditions, not count on mergers for survival. SUNE without Vivint makes SUNE and TERP better, but makes Vivint very weak, collapsible. Talking on Vivint alone is a suicide. Taking on Vivint with TERP is lead poisoning. It will take time and will be a lot more visible in SUNE than TERP. See the pattern? Toxicity is called Vivint, and Blackstone put $250M to get better themselves.
To someone stating that nobody would deal with SUNE after broken deal as they would be unethical or perhaps immoral? Why because they were able to manage themselves out of bankruptcy and did what they needed to do to stay on? Perfect business sense. This is what they have done now, at the price of new equity, closing all the loops. If SUNE made the last final step and walked using TERP as cause, they would serve own shareholders and not needs of other business and worse Blackstone.
Best to all
Very well, the title does however reflect better what your wrote.
Thank you for explanation.