[explo 648]

Averaged down here too this morning. Good action lately.

[dk1 6]

Explo, just please note that there is large amount of fx risk that is hedged through parent...now that might pose quite some challenge for ABY given large number of projects in emerging markets.

[explo 648]

5 minutes ago, dk1 said:

Explo, just please note that there is large amount of fx risk that is hedged through parent...now that might pose quite some challenge for ABY given large number of projects in emerging markets.

Thanks that's good info. How does that hedge work? Will they just no longer be hedged or will they risk losing money on their hedge positions when parent becomes insolvent?

 

[dk1 6]

I dont know the details...but I always wondered why ABY did not take a writedown on LATAM and Southafrican projects inspite of such a decline in currencies...IMO some of this was because they had hedged large share of these project revenue through Abengoa..that is what they always mentioned in their presentations...

Overall I do think ABY is trading at good levels, it does not have IDR issue and less linked to parent (I think now not even majority owned)..so it could survive the bankruptcy of parent without much damage, but personally I will wait for a while before taking a position.

[explo 648]

Thanks

[explo 648]

ABY declares its independence: 

https://finance.yahoo.com/news/abengoa-yield-announces-appointment-santiago-150741374.html

 

[explo 648]

More: http://www.bloomberg.com/news/articles/2015-11-27/abengoa-yield-said-to-work-with-jpmorgan-on-stake-sale-plans?cmpid=yhoo.headline

Abengoa Yield wants to find a long-term investor to guarantee its sustainability as an independent business after its parent company filed for preliminary protection from creditors. It has mandated a top-tier investment bank to lead the search for a new sponsor, according to a statement Friday. It’s also working on new branding and hiring a new chief financial officer from outside the company.

A representative for Abengoa Yield and Abengoa declined to comment. A representative for JPMorgan couldn’t immediately comment.

[odyd 1,340]

It would be anything hardly different in cases of TERP and GLBL. Those appointments could be lifesavers send to execs of SUNE just in case the main ship goes down.

To contrary to popular opinion I suspect that yieldcos as fix asset collectors will be nourished to strength at the sacrifice of SUNE. It makes complete sense to rescue viable business  format and inject with enough resources from a dying failure, when all fails.

Anyone who ran multiple businesses will not claw to failing one at the price of the good one. MEMCs transition was a illustration of it. Set apart polysilicon business being a complete disaster SUNE could be saved and was result of action to save the business years back.

We are going to witness actions going into the future and see how really three organizations are going to be played. I have no doubt empty headed market sees yieldocs as SUNE spawn infected with the same issues and this is a potent opportunity with realization of risks of fluctuation in price and nerve-wrecking journalism sentencing every one of those companies to various faiths almost daily. 

My view on the last paragraph will be taken on TERP board.

 

 

[explo 648]

I have the same view odyd. I'll be more wolf than sheep here and pick up all yieldcos offered at bargain prices to asset values. I have a patient attitude towards it where I'm ok to wait with share appreciation and just collect dividend at great yield while waiting years if necessary until valuation normalize. I'll be feeding on the fear mongering reporting.

 

[odyd 1,340]

Explo,

This article is certainly putting a light on potential corporate behavior around yield and sponsor relationship. I think it is wrong, but reading it I would be cautious to get into the name now, I hope you can have a chance to read it.

http://finance.yahoo.com/news/abengoa-yields-dividend-spotlight-115732125.html