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$2.6-bln buying binge puts SunEdison on brink of collapse

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(Credit: Robert Nickelsberg/Getty Images) WESTHAMPTON, NJ - JULY 15: Employees of SunEdison install photovoltaic solar panels on the roof of a Kohl's Department Store on July 15, 2008 in Westhampton, New Jersey. Company engineers estimate Kohl's will be able to reduce their electricity usage on average by 25% once power begins flowing from the 1536 rooftop panels. Kohl's signed a contract with SunEdison, based in Beltsville, Maryland, to receive electricity for 20 years at a reduced price from public utility rates. New Jersey is the nation's second largest producer of solar energy behind California. State and federal tax incentives help individuals and commercial enterprises cover the costs of solar panel installations. SunEdison is North America's largest solar energy service provider. SunEdison Installs Solar Panels On Kohl's Rooftops
March 31
3:51 AM 2016

The continuous buying binge of SunEdison Inc is heading to bankruptcy protection as its total debt amounts to $12 billion. The US-based clean-energy company has consumed every dollar to finance its buying spree of wind and solar firms. The buying spree involving a $2.6 billion spending is affecting the financial performance of the renewable energy company.

SunEdison had taken up a massive buying plan to become the world's largest renewable energy company. Recently Wall Street's favorite clean-energy company has turned out to be on the verge of collapse. The stock price fell below $1 largely on its own doing.

Bloomberg reports that the technical default threat of $1.4 billion in loans and credit facilities is looming over SunEdison. The current situation may force SunEdison to seek bankruptcy protection. SunEdison has to repay or seek waivers from lenders and file its delayed 2015 annual report.

SunEdison was aggressive in buying solar and wind firms. In June and July alone, SunEdison closed four acquisitions. 

Established in 2003, the company was aiming to become the world's largest renewable energy company. The continuous buying binge sent its share price soaring to over $31.66 on 20 July 2015 benefiting investors. Banks also pocketed fees with each acquisition. Investors too, enjoyed dividends in stretch of low interest rates. Even some hedge funds bought SunEdison share as well. 

Its aggressive acquisition strategy has resulted in a huge debt burden of $12 billion for SunEdison, leading it to the substantial risk of bankruptcy. According to bankruptcydata.com, it would be the largest bankruptcy among non-financial companies in 10 years. TerraForm Globl Inc is one of the two SunEdison yield cos. TerraForm Global in a filing said there was a substantial risk that SunEdison would soon seek bankruptcy protection. TerraForm Global will join its parent and fellow yieldco TerraForm Power Inc in delaying annual report for the year ending December 31, as reported by Reuters.

Gordon Johnson, an analyst at Axiom Capital Management Inc, said "It's not just management's fault, it's not just their hubris. They just began to drink their own Kool-Aid." Renewable energy companies have been facing turbulent situation since mid 2015 in the wake of slump in commodities markets. 

Meanwhile, the CEOs of TerraForm Global Inc and TerrForm Power Inc have been changed. It's learnt that both the CEOs stepped down from their positions. CEO Brian Wuebbels exited from his position, but it's not clear whether he remained employed at SunEdison. Both the responsibilities have been shifted to a newly formed Office of the Chairman. Securities and Exchnge Commission (SEC) was investigating whether SunEdison has overstated the funds availability, according to The Wall Street Journal

The possible technical default of $1.4 billion in loans and other credit facilities has hammered down the share price to below $1 now from over $31 in mid-2015 level. The chances of bankruptcy protection cover have shadowed SunEdison for most of this year. An official spokesperson at SunEdison has declined to provide more details. TerraForm Global's annual report was due for release on 30 March 2016.

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