In an announcement
, SunEdison says it has commenced a process to restructure its balance sheet and position the company for the future. To facilitate this restructuring, SunEdison and certain of its domestic and international subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the Bankruptcy Court for the Southern District of New York.
Notably, SunEdison’s publicly traded yieldcos, TerraForm Power and TerraForm Global, are not part of the filing.
“Our decision to initiate a court-supervised restructuring was a difficult but important step to address our immediate liquidity issues,” says Ahmad Chatila, SunEdison CEO. “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 toward 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,” continues Chatila. “As a result of this process, we expect that SunEdison will be in an even better position over the long term to utilize our capabilities in the renewable energy sector in service of our customers, business partners and employees.”
SunEdison says it has secured commitments for new capital totaling up to $300 million in debtor-in-possession financing from a consortium of first and second lien lenders. Subject to court approval, these financial resources will be made available to the company to support its continuing business operations, minimize disruption to its worldwide projects and partnerships, and make necessary operational changes.
According to the company, the new financing will support day-to-day operations during the reorganization, including the following:
– Proceeding with work on ongoing projects, both in the U.S. and elsewhere;
– Paying wages and benefits for employees;
– Continuing to provide services to customers;
– Paying vendors and suppliers in the ordinary course for goods and services provided on or after the date of the Chapter 11 filing; and
– Complying with all regulatory obligations.
SunEdison has hired Rothschild Inc. and McKinsey Recovery & Transformation Services U.S. LLC as advisors in connection with the company’s restructuring. Skadden, Arps, Slate, Meagher & Flom LLP is acting as its legal advisor.
The bankruptcy filing comes after SunEdison racked up large amounts of debt following an acquisition spree, its stock prices plummeted over the past year or so, and the company was hit with several lawsuits, including one from its TerraForm Global yeildco. A recently released internal investigation
also pointed to an “overly optimistic culture” at SunEdison.
Jenny Chase, Bloomberg New Energy Finance’s head of solar insight, says
SunEdison’s two-year, $3.1 billion acquisition binge “drove its debt to unmanageable levels and sent investors running for the exits.”
“SunEdison’s bankruptcy says more about the company’s strategic decisions than about the solar industry as a whole,” notes Chase, adding, “Comparable companies SunPower and First Solar have managed a develop-and-sell business profitably over the past three years.”
Dan Whitten, vice president of communications for the Solar Energy Industries Association, has echoed that sentiment.
“This is a highly competitive industry with a massive upside,” he says in a statement. “As with other rapidly growing and successful industries, not every company in the solar market is going to stand the test of time. SunEdison is just one company, and today’s development does not reflect a trend of the broader industry.”
Chase adds, “What has distinguished SunEdison has been the relentless and unfocused pursuit of growth, in which it has invested vast amounts of borrowed money. Not all of its ventures succeeded, which is inevitable in the project development business, but SunEdison’s win-to-loss ratio was evidently insufficient.”