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 Then company's shares, down about 98 percent over the past 12
months, fell a further 45 percent in heavy extended trading to 23
cents each.
Once the nation’s fastest growing renewable energy developer,
SunEdison is preparing to seek Chapter 11 protection and is in talks
with two creditor groups for a loan to fund its operations during
the process, the newspaper reported.
A spokesperson for Belmont, California-based SunEdison did not
immediately respond to requests for comment.
The company faces a cash crunch after an aggressive acquisition
strategy saddled it with $12 billion debt, and it has said in
filings it faces scrutiny from regulators at the U.S. Department of
Justice and the U.S. Securities and Exchange Commission over a
failed deal and other issues.
The company's creditors are likely to take control of the company
and its portfolio of power projects, The Wall Street Journal
reported, citing the sources.
The newspaper reported that SunEdison has been meeting with
creditors to negotiate a loan to see it through bankruptcy, but
competition for the deal among lenders has delayed an agreement.
Senior bank lenders led by Deutsche Bank AG form one camp of lenders
while the other comprises a group of creditors, most of which are
hedge funds focused on distressed companies, that participated in a
junior debt offering in January that raised about $725 million, the
newspaper said.
A bankruptcy at SunEdison, whose investors include prominent hedge
fund investor David Einhorn of Greenlight Capital, would rank among
the largest involving a non-financial company in the past 10 years,
according to bankruptcydata.com.
Greenlight, which holds a seat on SunEdison’s board of directors,
declined to comment.
SunEdison warned in March it had been unable to file its annual
financial results due to allegations made by former executives of
incorrect disclosure about the company’s liquidity.
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SunEdison said on Thursday it had received a subpoena from the U.S.
Department of Justice seeking details related to its failed deal to
buy Vivint Solar Inc <VSLR.N> and transactions involving TerraForm
Power Inc <TERP.O> and TerraForm Global Inc <GLBL.O>.
The latter two companies are publicly traded “yieldcos” that were
spun off from SunEdison and hold solar and wind power assets.
The TerraForm assets have long-term power purchase contracts with
utilities that allow them to pay shareholders rich and stable
dividends.
ALLEGATIONS OF BREACH OF FIDUCIARY DUTY
Large investors in TerraForm Power include billionaire David Tepper,
who runs hedge fund Appaloosa Management. Appaloosa owns more than
10 percent of TerraForm and is agitating for governance changes
there.
Appaloosa has sued SunEdison, alleging the company breached its
fiduciary duty by installing a “sham committee” to monitor conflicts
of interest at TerraForm. The company, which has delayed filing its
annual report twice, said this month it had identified material
weaknesses in its financial reporting controls.
In addition, SunEdison is being investigated by the U.S. Securities
and Exchange Commission to see if it had exaggerated its liquidity
position, the Journal reported on Monday.
(Reporting by Ramkumar Iyer in Bengaluru, and Jessica DiNapoli in
New York; Editing by Peter Henderson and Cynthia Osterman)
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