Morning Commentary: Energy rise pauses; SunEdison flat to higher after Vivint deal scrapped

By Rebecca Melvin

New York, March 8 – The ride higher for energy convertibles took a break early Tuesday, and a couple of issues were trading down as oil prices and equities turned lower.

Chesapeake Energy Corp.’s 2.5% convertibles due 2037 retraced about 3 points, changing hands at 56 early on Tuesday. Chesapeake shares also peeled back some and were lower by 17% after a string of double-digit gains.

Meanwhile, SunEdison Inc. was in the news again, and those convertibles were trading flat to higher after news that Vivint Solar Inc. pulled out of the controversial deal to be bought by the Maryland Heights, Mo.-based solar technology company. SunEdison shares were up 20% in the early going.

Vivint said it pulled out of the deal because SunEdison failed to meet obligations that would have completed the transaction.

The deal plan was first announced last July. Hedge fund manager David Tepper had objected to the deal as not in the best interest of SunEdison’s TerraForm Power subsidiary, in which Tepper is an investor. But there were other hindrances to the deal getting done, namely SunEdison’s already heavy debt burden after a string of acquisitions.

SunEdison’s 2.375% convertibles traded at 13, which was up 0.5 point but where they had been trading a week ago before news that the company was delaying filing its annual report with regulators.

SunEdison’s 3.375% convertibles also traded at 13, and the SunEdison 2% convertibles due 2018 traded up a point to 22. SunEdison shares were at $2.23 last, which was up 33 cents on the day.

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