Dive Brief:
- One of the world's largest clean energy developers, SunEdison, filed for Chapter 11 bankruptcy protection on Thursday after an aquisition spree sent the company into severe debt, Bloomberg reports.
- The company filed for bankruptcy a month after Vivint Solar pulled the plug on its proposed $1.82 billion merger deal, citing a "willfull breach" on contract.
- At the time of the announcement today, SunEdison shares were trading at $0.34 per share. The company's publicly traded yieldcos TerraForm Power and TerraForm Global are not part of the filing.
- CEO Ahmad Chatila said the decision to initiate a "court-supervised" restructuring is an attempt to downsize and streamline the company and its operations.
Dive Insight:
SunEdison's bankruptcy announcement today came after a lightning-quick series of unfortunate events as deals fell through and utilities withdrew from projects. The company also 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.
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.
An SEC filing by the company on April 14 said an independent audit found that there was no "substantial evidence to support a finding of fraud or willful misconduct," but identified several issues with the company's cash forecasting and liquidity management practices.
SunEdison failed to file its annual 10-K report for 2015 by the March 30 deadline, meaning it faced a potential $1.4 billion technical default on loans and credit facilities. As of last week, it still hasn't filed that report, Greentech Media reports.
In its announcement today, SunEdison said it has secured up to $300 million in new capital for debtor-in-possession financing from a group of first and second lien lenders to support its continuing business operations and minimize impacts on global partnerships and projects.
"Our decision to initiate a court-supervised restructuring was a difficult but important step to address our immediate liquidity issues," said Ahmad Chatila, SunEdison chief executive officer in a statement. "The court process will allow us to right-size our balance sheet and reduce our debt, providing the opportunity to support the business going forward while focusing on our core strengths. It also will facilitate our continued work towards transforming the Company into a more streamlined and efficient operator, shedding non-core assets as well as taking other steps to help us get the most value out of our technological and intellectual property."
However, the bankruptcy filing may be too little too late for some projects as bankruptcy could scuttle a storage deal with Imergy in India, and Hawaiian Electric Companies (HECO) already cancelled three power purchase agreements earlier this year.
