Deutsche Bank maintained a Buy rating on SunEdison (NYSE: SUNE) with a modified price target of $9.00 (from $16.00). In a research note, analyst Vishal Shah outlined bull and bear scenarios. In the bear case, the company takes no action, and in the second scenario, management restructures the Vivint Solar (NYSE: VSLR) transaction, sells operating assets, refinances margin loan and enters into strategic third party sales.

Overall, while walking away from the Vivint Solar transaction does not appear to be an option, Shaw thinks the current problem can be solved if the company acts decisively and urgently to sell backlog, operating assets as well as Vivint Solar assets. He also thinks TerraForm Power (NASDAQ: TERP) should consider selling some operating assets and cut opex more aggressively.

Shah explained, "SUNE had to post additional $91m cash collateral against margin loan, may consume over $100m cash for working capital (from project companies), has $105m of cash obligations for Renova in March '16, $40m restructuring charge in Q4/Q1, $119m+ payment for wind turbines in Q1 and $250m First Wind earn out payments to make during Q4. Moreover, the company would need ~$345m+ cash to support core opex in Q4/Q1, $76m for core interest payments and $55m for GLBL/TERP opex/interest support. SUNE would also see ~$13m cash outflow to support SMP credit facility (which is non-recourse) until the Cashflow from that facility is substantial to meet interest obligations. For TERP, the near term cash outflow includes $309m cash for Invenergy acquisition, $712m for VSLR acquisition and $388m for equity in the Invenergy warehouse. Additionally, the company would need ~$100m cash for dividend payments (at 35 cents over 2 quarters on 140m shares), $81m for interest payments and $44m for core opex. Net/net - we see $732m and $665m cash outflow at SUNE level in Q4/Q1 and $796m/$813m cash outflow at TERP level."

Shah added, "We believe refinancing the margin loan and closing the VSLR acquisition (in a restructured manner) appear to be the top priorities for SUNE mgmt. Besides this, SUNE can monetize VSLR operating assets, sell projects to third parties and move a number of POC projects to the finish line. Moreover, we believe the company can renegotiate the Renova deal and avoid the $105m cash obligation. For TERP, the Invenergy acquisition likely closes by year end for which the company needs to either arrange project financing in the warehouse or use cash earmarked for VSLR operating assets to buy the projects that were to be dropped into the warehouse. In the second scenario, TERP needs clarity from SUNE that the VSLR operating assets have a buyer by year end or the Invenergy deal claims would require creation of a separate warehouse."

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Shares of SunEdison closed at $2.82 yesterday.