Dive Brief:
- SunEdison, the world’s largest renewables developer, will lay off about 15% of its 7,300 employees and incur restructuring charges of between $30 and $40 million in Q4 2015 and Q1 2016, PV Magazine reports.
- The cuts come in response to plunging financial indicators after a string of acquisitions and growth. SunEdison’s stock has dropped from a 52-week high of $33.45 to $8.14. The stock price of TerraForm Power, its YieldCo, recently fell to $21.61 from $42.15. And SunEdison’s July market cap of over $9 billion is presently around $2.6 billion.
- Investor confidence has been shaky for months, Greentech Media reports, as some have questioned SunEdison’s aggressive acquisition activity. In July, it bought Vivint Solar, the second-biggest U.S. residential solar installer, for $2.2 billion. Last year, it acquired First Wind, one of North America’s top wind developers.
Dive Insight:
CEO Ahmad Chatila wrote in a memo that on top of the job cuts, the company would also slash 20% of its non-labor expenses in Q4 2015 and Q1 2016, Greentech Media reported Monday.
The cuts stem from redundancies in SunEdison's businesses after a series of acquisitions and aggressive capacity growth, PV Magazine points out. In addition to the Vivint and First Wind purchases, the company has also been adding 1 GW of renewables generation to its portfolio quarterly.
Company executives said the Vivint acquisition would help make SunEdison “the first renewable energy supermajor,” but investors recoiled, beginning downward slide in its stock.
As with other solar companies, investors have also been turning away because of low oil prices and commodity market fluctuations, according to Greentech, and SunEdison has reportedly been particularly targeted by short sellers, especially at hedge funds.
TerraForm Power helped fund growth by purchasing completed projects, keeping capital available to the developer, and remonetizing the projects through bond offerings. That activity has been compromised by the YieldCo's loss in value. SunEdison teams are reportedly liquidating still-valuable renewables projects to relieve the cash flow bottleneck created by the acquisitions and stock drops.
Executives of Solar Grid Storage, another recent acquisition, have been let go, although analysts’ are bullish on the grid-scale battery energy storage market in which the acquired company works.
SunEdison will hold an investor call Wednesday, October 7, to further explain its latest moves.
