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8point3 Energy Partners LP (CAFD)

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Thank you again for the great update. I appreciate details about the accelerated depreciation as well other points made. I had CAFD at one point around $15 and sold it around $16. I look at their balance sheet, and I do not see a lot of strength there versus the size of projects to be dropped. I understand they can delay those (sponsors), but I think they will be looking for more equity soon. PEGI has a higher yield and I would like to see 6% on it. At this point it appears a good value to me.

I am trying to preserve as much money as possible to be ready to get more Jinko and perhaps CSIQ by the end of Q2.

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I cannot think of anything negative in particular, but I do not follow CAFD closely. Does it relate to solar markets and sponsors?

I think for most parts they should be separated. I think it may be considered an opportunity but again I do not have a lot of research on this. 

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report seemed okay to me, market must not like no new acquisitions in H1 2017. 

Also available cash seemed pretty low.  (maybe that is why they are dialing back acquisitions for a bit?) investors must assume a share issue is in the works. 

That is the only reason I can see for the drop.  I'm surprised how volatile these dividend stocks are...

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44 minutes ago, disdaniel said:

report seemed okay to me, market must not like no new acquisitions in H1 2017. 

FSLR & SPWR certainly don't like it today.  If they won't be dropping to CAFD in 1H 2017.  Was this a surprise?  I didn't see anything in the Q3 FSLR transcript about 2017 purchases by CAFD.

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There is not a lot of money available for drop downs. $14M in cash and about $62M in the revolver. it would have been interesting to know their cost of capital, but perhaps this s the issue at hand.

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1 hour ago, odyd said:

There is not a lot of money available for drop downs.

Also in the news today, FSLR changed the terms of their credit agreement with Chase bank:

http://investor.firstsolar.com/secfiling.cfm?filingID=1274494-17-2&CIK=1274494

On January 20, 2017, First Solar, Inc. (the “Company”) entered into a Sixth Amendment (the “Amendment”) to the Amended and Restated Credit Agreement dated as of October 15, 2010, as amended by the First Amendment dated as of May 6, 2011, the Second Amendment dated as of June 30, 2011, the Third Amendment dated as of October 23, 2012, the Fourth Amendment dated as of July 15, 2013, and the Fifth Amendment dated as of June 3, 2015, by and among the Company, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent (as amended by the Amendment, the “Amended Credit Agreement”). The Amendment modified certain financial condition covenants to remove the requirement to maintain a minimum Consolidated EBITDA, as defined in the Amended Credit Agreement, and to increase the Liquidity Availability, as defined in the Amended Credit Agreement, required to be maintained from $400,000,000 to $800,000,000.

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Maybe SPWR is too troubled to add sponsor value to CAFD? Would it help CAFD to achieve lower yield if FSLR buy out SPWR?

 

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58 minutes ago, explo said:

Maybe SPWR is too troubled to add sponsor value to CAFD? Would it help CAFD to achieve lower yield if FSLR buy out SPWR?

 

Interesting conclusion. I am not sure if FSLR is interested in CAFD that much as an investment, but what we know, both are interested in selling to it.

I have a concern about the pricing mechanisms for future projects. 

If both companies are looking for cash flows, granted, SPWR is looking like it needs it more, CAFD could appear vulnerable.  The shuffling of the projects was simply an announcement, in my view showing that CAFD is the instrument only to be played as needed.

I am not saying that intentions are to abuse CAFD by sponsors, it is more of perception, showing the company is not controlling the future. Perceptions are the alternative facts of the stock market. 

I think that growth and acquisitions are the likely statements to support yieldcos on the market. The combination of those with dividend growth should influence the sentiment. Despite dividend growth, NEP was disliked in last hour. My doubts here are the financial vehicle appearance of NEP among business of NEE' companies. Change in IDR is positive but it simply happens.It is "on-paper" company, good one, but still.

CAFD confirmed solar industry is struggling, and we already know that both its sponsors are going to struggle the most. Without the financial strength to expand, questions being raised about the value of international pipelines, repetitive highlighting of the US projects over any other ones, it put pressure on the trio.

Rightfully so yieldcos are measured by the strength of own sponsors, CAFD is experiencing what the other two feel or the market made that clear.

 

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I read the cc now, the borrowing structure for CAFD has non-amortizing debt which is all due in mid of 2020, some $732M. Not having interest rate locked, mind you 45% of it is hedged, can be seen also as a weakness in a current environment. Getting to a corporate debt, perhaps as a small snug as the company does not have investment grade rating. This could, as it had affected PEGI, cost them.

Finally not paying down principle now, and doing so in the future, could be seen as the impact on distributions.  When you think of principle payment on $732M in 20 years that is more than they are paying in dividend now, I guess CAFD looks a lot less attractive to me than before.

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7 hours ago, odyd said:

I read the cc now, the borrowing structure for CAFD has non-amortizing debt which is all due in mid of 2020, some $732M. Not having interest rate locked, mind you 45% of it is hedged, can be seen also as a weakness in a current environment. Getting to a corporate debt, perhaps as a small snug as the company does not have investment grade rating. This could, as it had affected PEGI, cost them.

Finally not paying down principle now, and doing so in the future, could be seen as the impact on distributions.  When you think of principle payment on $732M in 20 years that is more than they are paying in dividend now, I guess CAFD looks a lot less attractive to me than before.

What do they do with the CAFD? The Class A dividend  is only a small portion of the total. Do they give the rest to the Parent or do they keep it for running the business?

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4 hours ago, SCSolar said:

What do they do with the CAFD? The Class A dividend  is only a small portion of the total. Do they give the rest to the Parent or do they keep it for running the business?

CAFD is the non-GAAP representation of potential payout. It is calculated differently by each yieldco, or almost differently unfortunately to us mortals. CAFD is not a pool of money in an account. it is a statement of different results pooled to show availability of liquidity. All accounts and statements are of yieldco. Nothing is given to parents unless it is in a form of payments or IDRs.

CAFD calls it "Reconciliation of Net Income (Loss) to Adjusted EBITDA and Cash Available for Distribution (CAFD)"

PEGI does it as "non-GAAP net cash provided by operating activities to cash available for distribution and net loss to adjusted EBITDA".

Payment of a dividend is considered a financing activity. One made to A shareholders was $20M, Sponsors got $12M, CAFD was about $73M, os 32/73=43% payout. not bad. But as mention, no principle payments are made. 

PEGI pays 88% of CAFD, but if I put their principle payments back,, hey are about 62%. 

 

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8 hours ago, odyd said:

 

CAFD calls it "Reconciliation of Net Income (Loss) to Adjusted EBITDA and Cash Available for Distribution (CAFD)"

Payment of a dividend is considered a financing activity. One made to A shareholders was $20M, Sponsors got $12M, CAFD was about $73M, os 32/73=43% payout. not bad. But as mention, no principle payments are made. 

 

 

I am trying to wrap my hands around CAFD.

Do you know what percentage of the CAFD is distributed to the tax equity partners(TEP) of the projects?  The TEP get monthly and quarterly distributions that is distributed by the Sponsors operating the OpCo.

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2 hours ago, SCSolar said:

I am trying to wrap my hands around CAFD.

Do you know what percentage of the CAFD is distributed to the tax equity partners(TEP) of the projects?  The TEP get monthly and quarterly distributions that is distributed by the Sponsors operating the OpCo.

There is a line for tax equity on financing activity netting about $3M

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Looks like CAFD filed to sell $125M of shares ,

Sent from my HTC One_M8 using Tapatalk

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On 1/27/2017 at 11:00 AM, disdaniel said:

investors must assume a share issue is in the works. 

Hope no one is surprised...

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52 minutes ago, disdaniel said:

Hope no one is surprised...

Good call Daniel

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