The hedge fund hopes to prevent SunEdison's TerraForm Power (TERP) yieldco from purchasing some of Vivint Solar (VSLR)'s assets following SunEdison's acquisition of the company, Reuters reports.
SunEdison is acquiring Vivint Solar for $2.2 billion, and TerraForm Power will then purchase Vivint's residential solar rooftop portfolio for $799 million.
Appaloosa wants "immediate injunctive relief," as the Vivint acquisition could close "at any time," the hedge fund said in a filing in a Delaware court yesterday, Reuters notes.
This deal is not in the interest of TerraForm Power shareholders, Appaloosa contends. In December, the hedge fund disclosed a 9.25% stake in the company.
This has been a "sub-optimal situation for SunEdison for some time now," TheStreet's Jim Cramer said on CNBC's Squawk on the Street this morning.
Cramer noted that he believes that David Tepper is right, and that SunEdison went too far with the Vivint Solar deal.
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate SUNEDISON INC as a Sell with a ratings score of D. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is very high at 8.33 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, SUNE maintains a poor quick ratio of 0.76, which illustrates the inability to avoid short-term cash problems.
- Looking at the price performance of SUNE's shares over the past 12 months, there is not much good news to report: the stock is down 82.14%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- SUNEDISON INC's earnings per share declined by 19.5% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SUNEDISON INC reported poor results of -$4.12 versus -$2.39 in the prior year. This year, the market expects an improvement in earnings (-$3.77 versus -$4.12).
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, SUNEDISON INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry average. The net income has remained constant at -$284.00 million when compared to the same quarter one year ago.
- You can view the full analysis from the report here: SUNE