Why SunEdison, Inc. Shares Soared Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of SunEdison, (NYSE: SUNE  ) jumped more than 10% early Thursday, then settled to close up around 5% after it announced the proposed initial public offering of its yieldco subsidary, TerraForm Power.

So what: TerraForm Power is currently an indirect subsidiary of SunEdison, and will own and operate contracted clean power generation assets acquired from SunEdison and other third parties. As a yieldco, TerraForm will generate revenue from long-term power purchase agreements with utility companies. 

Now what: SunEdison, for its part, still hasn't determined the number of shares to be offered, or the respective price range for the offering. But I think investors are right to applaud the move, which provides an avenue for SunEdison to monetize its assets. At the same time, this allows SunEdison to hone the focus of its core business, while maintaining a buyer for its solar installations.

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  • Report this Comment On May 29, 2014, at 8:39 PM, Ojoajoman wrote:

    Thanks, Steve good article and great timing. My son bought a little posn in SUNE two weeks ago so your info was very helpful. How would common owners get some of the spinoff?

    Ojoajoman

  • Report this Comment On May 29, 2014, at 11:28 PM, TMFSymington wrote:

    My pleasure, Ojoajoman. Still some details to be worked out, but feel free to check out SUNE's press release here for more info: http://phx.corporate-ir.net/phoenix.zhtml?c=106680&p=iro...

    Of course, once the IPO is complete, you can always buy shares on the open market if you so choose.

    Thanks for reading and Fool on.

    -

    Steve (TMFSymington)

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