TerraForm Power Inc (NASDAQ:TERP) Downgraded After Management Overhaul


Sunedison Inc (NYSE:SUNE)’s subsidiary, SunEdison Holdings Corporation recently announced that its two crucial executives, namely, Jack F. Jenkins-Stark and Peter Blackmore will now serve the board of TerraForm Power Inc (NASDAQ:TERP). The latest developments revealed that Brian Wuebbles, the Chief Financial Officer (CFO) and Executive Vice-President of Sunedison Inc will now serve TerraForm Power Inc (NASDAQ:TERP) in the capabilities of a Chief Executive Officer.

Addition of executives to TerraForm Power Inc’s board led to its downgraded position

With the new appointments in its board, TerraForm faced a backlash from some of the rating companies that immediately downgraded its position in a sudden reaction. The management changes did not make positive effects, as per the analysts.

Change on the board: A Part of Management Overhaul

While the parent company of TerraForm is reeling under the burden of debt and liquidity; the analysts are under the impression that such changes will only worsen the situation. The market believes that a management overhaul alone is not the solution to two aforementioned problems faced by the company. A concrete decision and a revolutionary action can take the company out of the bondage of cash crunch.

The investors’ concerns

At present, the primary concern of investors is the total debt of company that stands at $2.55 billion at the end of 3Q2015. In 2Q2015, the total debt was $2.23 billion. The cash as well as cash equivalents of the company in 3Q2015 was merely $635.8 million in contrast with $390.6 million in 2Q2015. The operating cash of the company for first three quarters of this fiscal was just $105.3 million.

Meanwhile, TerraForm’s quick decision to make changes to its management is justified as; company’s strategy. The management believes that such changes are meant to drive efficiency and improve the overall company hierarchy.

A conclusion and analysis

Even though the instant reaction of the market analysts was to downgrade TerraForm Power Inc (NASDAQ:TERP), but it would still be interesting to see how the new CEO can bring a considerable transition. There has to be a concrete transition within TerraForm to bring it out from its bearish state of business.