The shares of solar energy company SunEdison (SUNE) and its yieldco, TerraForm Power (TERP) - Get Report , are falling after UBS downgraded both stocks to sell, saying that the companies face considerable risk after personnel changes at TerraForm.

WHAT'S NEW: After TerraForm earlier this week announced that the CFO of SunEdison, Brian Wuebbel, had become TerraForm's CEO and implemented changes to its board, UBS analyst Julien Dumoulin-Smith says the moves suggest that SunEdison's liquidity problems may be worse than many believe. According to Dumoulin-Smith, "schisms" between TerraForm and SunEdison may indicate that the disagreements between the companies were more intense than is generally understood. Moreover, SunEdison may be caught in a catch-22, as it needs to maintain its guidance to show that it's solvent, but carrying out all its projects as planned could create liquidity risks, the analyst stated. As for TerraForm, Dumoulin-Smith believes that the changes to its management team signal that SunEdison will "extract meaningful liquidity" from it. The analyst thinks that SunEdison will take a number of "value destroying steps," including a reduction of TerraForm's value by $2.50 per share to finance Invenergy's warehouse and a $4.50 per share reduction in value to finance an additional 500 megawatts of energy production through 2020, the analyst predicted. TerraForm acquired $2B of wind energy projects from Invenergy earlier this year. The analyst downgraded SunEdison and TerraForm to Sell from Neutral while cutting his price target on SunEdison to $2 from $3 and reducing his price target on TerraForm to $6 from $14.

PRICE ACTION: In early trading, SunEdison fell 11.4% to $3.65 and TerraForm tumbled 17% to $7.33. SunEdison controls another yieldco, TerraForm Global (GLBL) , whose shares are down 12.6% to $4.56 this morning.

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