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What: Shares of renewable energy developer SunEdison Inc. dropped as much as 14% in early trading Thursday after announcing the suspension of its preferred stock dividend.
So what: SunEdison announced after the market closed yesterday that it was suspending its dividend on 6.75% Series A Perpetual Convertible Preferred Stock. The dividend owed to these shareholders will continue to accumulate, but the company doesn't have the money to pay it now. This amplifies investors' fears that SunEdison will soon run out of cash, especially if it acquires Vivint Solar .
Speaking of Vivint Solar, The Wall Street Journal is reporting today that banks that have agreed to provide capital for the acquisition are starting to back out. Borrowing costs have been rising for SunEdison, and if banks don't agree to fund the Vivint Solar acquisition, it would show just how far confidence in the company has fallen.
Now what: Almost everyday, SunEdison stock is moving over 10% higher or lower, depending on the news of the day. But the overarching theme is that SunEdison's cash position is becoming more tenuous and banks are starting to either demand higher rates or backing out from lending to the company at all. The future continues to dim for the company, and if it can't even get banks to lend it money, I don't know how it's going to survive.
The article Why SunEdison Inc.'s Shares Dropped 14% Today originally appeared on Fool.com.
Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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