SunEdison filed for Chapter 11 bankruptcy protection on Thursday, the culmination of a long downhill slide after becoming one of the largest US solar providers through a spurt of debt-fuelled acquisitions.
In bankruptcy court documents filed in New York, SunEdison listed $20.7 billion of assets and $16.1 billion of liabilities as of 30 September. The company is awaiting court approval for a $300 million liquidity injection from first and second lien lenders to fund operations during bankruptcy. SunEdison said in a statement it will reduce debt and shed non-core operations to restructure the company.
“Our decision to initiate a court-supervised restructuring was a difficult but important step to address our immediate liquidity issues,” SunEdison chief executive Ahmad Chatila said in a statement.
The solar company did not list its subsidiaries, yieldcos TerraForm Power and TerraForm Global, in the bankruptcy filings. The two yesterday strived to distance themselves from their parent company, saying in a statement that their assets are “not available to satisfy the claims of creditors of SunEdison.” They said they should have “sufficient liquidity” on their own to operate.
There have been signs of trouble facing SunEdison for months. By 5 April, 17 lawsuits had been filed against the solar company this year, mostly for breach of contract or fiduciary responsibilities. SEC filings in late March show that SunEdison was subpoenaed by the US Department of Justice, which is investigating the company’s botched $1.9 billion Vivint Solar deal and intercompany transactions with its yieldcos.
The collapse of the Vivint Solar deal was possibly the biggest sign of SunEdison’s unravelling. The cash, shares and debt agreement was called off on 8 March because of SunEdison’s “failure to meet its obligations under the merger agreement”.
After a period of rapid growth that saw it purchase solar assets and resell them to TerraForm Power and Global, SunEdison agreed last July to purchase Vivint for $2.2 billion, a figure that was later negotiated down to complete the deal. Immediately after the Vivnt deal was announced, SunEdison’s shares began to plummet due to investors’ fear the company had overextended itself.
SunEdison’s share price has fallen over 90 percent since last summer. Shares were halted yesterday when the company announced its bankruptcy, trading last at about 34 cents. According to court documents, OppenheimerFunds still owns an 11.9 percent stake in the company, with BlackRock holding 6.5 percent, Vanguard Group 6.4 percent and Adage Capital Partners 5.4 percent.
Chatila, who has been with SunEdison since 2009, remained optimistic. “As a result of this process, we expect that SunEdison will be in an even better position over the long term to utilise our capabilities in the renewable energy sector in service of our customers, business partners and employees.”