SunEdison to File Chapter 11, Probed By SEC
In the coming weeks, the solar energy company SunEdison Inc. is considering to file for Chapter 11. It is an ironic move for the company that once had a market value of almost $10 billion in July.
The company is about to file for bankruptcy and is already in discussion with two groups of creditors where it could acquire loans for financing during the process. Its stocks had declined in the past months and were included among the biggest financial meltdown. Its headquarters is situated about 20 miles outside St. Louis and used both financial engineering and inexpensive debt to accelerate as one of the country's renewable-power biggest developers, according to The Wall Street Journal.
SunEdison engaged on a debt-fueled obtainment spree which seemed to be manufacturing money excluding renewable energy. The solar energy company enticed some of the largest names in investing and hedge fund manager David Einhorn laid out his case for possessing the company at the Robin Hood Investment Conference where top hedge managers promote their best ideas behind closed doors.
SunEdison is being probed this week by the Securities and Exchange Commission believing that the company may have overstated its cash by almost $1.3 billion, when it had under $100 million. The company's CFO and the CEO as well of SunEdison's spinoff companies, brokers TerraForm Power and TerraForm Global exited downright under pressure from another big hedge fund investor from Appaloosa Management, David Tepper. The two sister companies claimed in a regulatory filing that SunEdison was at "substantial risk of bankruptcy", Fortune reports.
The possible bankruptcy filing of SunEdison have loomed darkness in India. Industry analysts and representatives are worried that the trickle-down effect on its Indian arm may haul down the growth pace in the solar energy sector.
Aside from having a large pipeline of solar projects in the country, the U.S. solar company is also bound to huge investments. The company's aggressiveness on solar projects bidding is seen as the main reason for solar tariffs dropping below Rs.5 per kWh, as reported by The Hindu.
A TerraForm renewable energy consultant said, "Their pipeline was very big. They thought that the projects they were developing or buying from outside could be sold. As long as you keep rotating the money, it is fine. If something stops, all the problems shoot up. With the fall of its arm, SunEdison is in trouble, and it will definitely have an impact on Indian business."
Even if SunEdison's aggressive bidding made the government and others glad because of the falling solar tariff, the example stayed an important issue across the sector since many serious players believe it is not a lasting exemplar.