May 4 (Reuters) - Solar power company SunEdison Inc shares have climbed over the past two years on hopes of forming a separate yield company, or “yieldco,” but may be too reliant on renewable energy tax subsidies, according to an article in the May 5 edition of Barron‘s.
Officials at SunEdison were not immediately available for comment.
SunEdison’s shares have climbed from $1.50 in 2012 to over $20, which is over 50 times the most optimistic Wall Street cash flow forecast for next year, the article said.
The yieldco would be a publicly-held subsidiary that would own SunEdison’s finished solar projects and pay out most of the projects’ cash flow, tax-free, thanks to tax breaks available to owners of renewable power plants, Barron’s said.
The article warned that “aggressive tax strategies,” like those likely planned for SunEdison’s yieldco “could draw unwelcome scrutiny when the renewable power industry lobbies Congress to extend the industry’s tax subsidies past 2016.”
Barron’s calculated that more than half of the value created by SunEdison’s yieldco comes from tax benefits.
The company declined to answer Barron’s questions because the yieldco is in its registration “quiet period” with the U.S. Securities and Exchange Commission, according to the article. (Reporting by Scott DiSavino; Editing by Marguerita Choy)