SunEdison (SUNE), TerraForm Power (TERP) Ratings Suspended at Deutsche Bank

Deutsche Bank analyst Vishal Shah suspended his ratings on SunEdison (NYSE: SUNE) and TerraForm Power (NASDAQ: TERP) after both companies said they were delaying their 10-K filings.

Commenting on developments, analyst Vishal Shah said, "While we continue to believe there is inherent value in the development business, especially considering the improving backdrop of US solar market post the ITC extension, ongoing accounting investigation, delayed 10-K filing and pending resolution of the Appaloosa lawsuit/VSLR transaction would continue to remain an overhang on shares. In light of the recent accounting investigation, we believe the liquidity situation of the company is difficult to assess and as such we are suspending our rating on both SUNE and TERP."

The analyst added, "SunEdison and Terraform are both delaying their 10-K filings and stated intention to complete and file within 15 days. Terraform is also delaying decision on its dividend until financial statements and other pending matters are resolved. SUNE’s audit committee is completing two inquiries – the first of which was initiated in late 2015, the second initiated recently and is in early stages, though neither have yet found any wrongdoing. The first inquiry is based on allegations made by former executives concerning accuracy of the company’s anticipated financial position disclosed to the Board of Directors. The process is ongoing but SUNE stated they have found no wrongdoing based on the allegations. Separately, the Audit Committee recently initiated a second investigation concerning the company‘s anticipated financial position based on other issues raised by a current and a former employee. The Audit Committee is engaging with independent counsel and financial advisors, but the second investigation is still relatively early stage. The SUNE disclosure warned that if some or all of the allegations prove to have merit, management may be required to reassess company’s liquidity position and disclosures in form 10-K and whether the company may require additional liquidity vs previous expectations and if sources are sufficient to meet requirements."

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