Dive Brief:
- SunEdison, the world's largest renewables developer, is preparing to file for Chapter 11 bankruptcy in the coming weeks, according to anonymous sources familiar with the matter who spoke to the Wall Street Journal.
- SunEdison is in talks with two creditor groups to obtain a loan to fund its operations during that process, and the creditors are likely to take over control of the company and its portfolio.
- SunEdison is currently facing an investigation from the Securities and Exchange Commission about the company's disclosures over financial activities related to its acquisition of rooftop solar provider Vivint Solar, which was terminated last month.
Dive Insight:
Vivint Solar's decision to terminate the $1.82 billion takeover from SunEdison was the first domino in a lightning-quick string of troubled financial disclosures, with the latest news being that SunEdison is preparing to file for bankruptcy.
SunEdison now faces inquiries from both the SEC and DOJ about disclosures over how much cash it had on hand as its stock price fell more than 75% since last summer, WSJ reported. SunEdison failed to file its annual 10-K report for 2015 by the March 30 deadline, meaning it faces a potential $1.4 billion technical default on loans and credit facilities.
The renewables company reported a total debt of $11.7 billion by the end of September 2015, more than double the amount it reported last year, as it acquired projects and companies on six continents, prompting questions from investors whether it borrowed too much, too fast.
The company said in a January presentation that it expected to have $619 million in cash on hand by the end of 2015. SunEdison took out a $725 million second-lien credit facility in January with Barclays Plc, Deutsche Bank AG, KeyCorp and Macquarie Bank Ltd. as joint bookrunners, with terms requiring the company to release an audited financial statement for 2015 within 90 days of the end of its fiscal year, March 30.
Earlier this year, Hawaiian Electric Companies (HECO) cancelled three power purchase agreements from SunEdison while major residential solar developer Vivint Solar pulled the plug on its proposed $1.82 billion merger deal.
Vivint Solar's decision to pull out of the merger sent SunEdison stock tumbling earlier this year. Vivint claimed the company failed to meet its obligations laid out in the merger agreement, saying they will "seek all legal remedies" to reduce financial penalities otherwise incurred because they ended the deal.
Before Vivint pulled out, SunEdison struggled to find banks willing to finance the acquisition, especially after two recent SunEdison acquisitions may have compromised its financial leverage, leaving investors with the impression it overreached, according to Greentech Media.
SunEdison didn't respond to a request for comment from Wall Street Journal.
