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 In its bankruptcy filing, the company said it had assets of $20.7
billion and liabilities of $16.1 billion as of Sept. 30.
SunEdison's two publicly traded subsidiaries, TerraForm Power Inc
and TerraForm Global Inc, are not part of the bankruptcy. In a
statement, the companies, known as yieldcos, said they had
sufficient liquidity to operate and that their assets are not
available to satisfy the claims of SunEdison creditors.
The bankruptcy "will present challenges," however, including with
financing agreements for certain projects, the yieldcos said.
The Chapter 11 filing caps SunEdison Chief Executive Officer Ahmad
Chatila's seven-year quest to transform a struggling maker of
silicon wafers into a renewable energy giant able to capitalize on
burgeoning demand for solar and wind energy amid growing concerns
about climate change.
Chatila was named CEO of what was then called MEMC Electronic
Materials in 2009 and almost immediately bought fledgling solar
project developer SunEdison. The company changed its name four years
later and embarked on a rapid expansion that included entering new
businesses like wind and energy storage and taking on projects
worldwide. That growth racked up billions of dollars of debt.
Solar industry watchers said the bankruptcy was not a reflection of
the sector, which is growing rapidly.
"SunEdison had a balance sheet that is way out of line with any
other solar company," said Shayle Kann, senior vice president and
renewable energy research firm GTM Research. "The projects
themselves are good. They just bought too much to quickly."
The company said it secured up to $300 million in new financing from
its first-lien and second-lien lenders, which is subject to court
approval. The money will be used to support SunEdison's operations
during its bankruptcy.
"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.
He said the company planned to use Chapter 11 to reduce debt, shed
non-core operations and take steps to get the most value out of its
technology and intellectual property.
SunEdison asked the bankruptcy court to appoint an independent
examiner to review recent transactions. While it said it is not
aware of any particular wrongdoing, it cited a subpoena from the
U.S. Department of Justice related to financing activity, an
investigation by the U.S. Securities and Exchange Commission and a
lawsuit filed by TerraForm Global in its petition.
It asked that the investigation begin immediately and conclude
within 60 days, a short timeframe compared to independent
examinations in bankruptcies such as the operating unit of Caesars
Entertainment Corp, which lasted 12 months with costs topping $40
million.
SunEdison said the budget for the examiner should not exceed $1
million.
Shares of SunEdison were halted, and last traded at about 34 cents
on the New York Stock Exchange. The company's stock traded as high
as $33.44 in July 2015. Shares of First Solar Inc closed up slightly
and shares of SolarCity Corp were up 3.7 percent in late
trading. An index of solar shares gained 0.7 percent.
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Major SunEdison shareholders include OppenheimerFunds Inc with a
11.9 percent stake, BlackRock Inc with a 6.5 percent stake, The
Vanguard Group with a 6.4 percent stake and Adage Capital Partners
GP LLC with a 5.4 percent stake, according to court documents.
Hedge fund Greenlight Capital, led by David Einhorn, earlier this
week reported that it had sharply cut its stake in SunEdison.
Greenlight, which won a board seat at the company earlier this year,
declined to comment on the bankruptcy.
Investors began to lose confidence in SunEdison's supercharged
expansion last summer, when the company announced a $2.2 billion
deal to acquire rooftop solar installer Vivint Solar Inc. At the
time, renewable energy stocks were under pressure, in part because
falling oil prices sparked concerns about demand for alternative
energy sources.
The Vivint deal touched off litigation involving SunEdison's
yieldcos, the listed subsidiaries that own and operate renewable
energy assets, many of which were acquired from SunEdison.
Billionaire David Tepper's Appaloosa Management sued to prevent
TerraForm Power from buying some Vivint assets. Appaloosa is also
seeking to overhaul TerraForm Power's Conflicts Committee, claiming
the company's controlling shareholder, SunEdison, breached its
fiduciary duties.
Tepper was not immediately available for comment.
In March, Vivint terminated the cash-and-stock deal after SunEdison
failed to close on the planned acquisition. Vivint shares were up
4.9 percent on Thursday.
SunEdison is also being investigated by the U.S. Department of
Justice and the U.S. Securities and Exchange Commission over the
failed Vivint Solar deal and other issues.
SunEdison is also being sued by TerraForm Global, its other yieldco,
for breach of contract, alleging SunEdison misappropriated $231
million of TerraForm's cash.
The company has delayed filing its annual report twice after
identifying material weaknesses in its financial reporting controls.
The case is in U.S. Bankruptcy Court, Southern District of New York,
Case No: 16-10992
(Additional reporting by Arathy S Nair in Bengaluru and Tracy
Rucinski in Chicago)
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