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SunEdison Planning For Bankruptcy Filing, Negotiating With Creditors For Related Financing

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(Credit: SAM PANTHAKY/AFP/Getty Images) An employee walks past solar panels placed over the Narmada Canal near Chandrasan village of Mehsana district, some 60 kms from Ahmedabad, on February 15, 2012. The Gujarat State Electricity Corporation Limited (GSECL), with the expertise of US-based SunEdison, is laying out solar panels in a pilot project along a one-kilometre length of the Narmada canal to produce 1MW of power.An employee walks past solar panels plac
April 2
10:59 PM 2016

SunEdison Inc., the fastest growing renewable energy developer in the US, is planning to file chapter 11 to seek bankruptcy protection in coming weeks. The news appears to be a dramatic one for a company whose market value has been estimated at $10 billion in July last year.

The solar energy company is in negotiations with two creditor groups to fund its operations during the bankruptcy processing. Creditors are rumored to take control of the company and its power projects' portfolio, reports The Wall Street Journal citing people familiar with the matter as the source.

The Saint Louis based company has applied combination of a financial engineering and cheap debt in becoming the largest developer of renewable power plants in the US. However, investors have disfavored a proposed $1.9 billion takeover of residential-rooftop installer Vivint Solar Inc. and finally been terminated last month. Meanwhile historic low crude oil prices have led to a broad selloff for energy stocks and the Wall Street has raised concerns over its ability to continue financial acquisitions.

The Californian renewable energy giant has been witnessing acute cash crunch due to its aggressive acquisition strategy that led it to embrace $12 billion in debt. Furthermore, the company has been facing scrutiny from regulators at the US Department of Justice and the US Securities and Exchange Commission over a failed deal and other issues, according to a report published in Reuters citing a regulatory filing by SunEdison as the source. A SunEdison spokesperson hasn't immediately responded to requests for comments.

Share prices of SunEdison have been witnessed to fall 50% during after hours trading on Friday following information on its possible bankruptcy. The prices have hit 22 cents after closing at 46 cents with a decrease of 14.9%. Prior to that, SunEdison stock has plunged 91% so far this year and more than 98% during the last 52 weeks, reports MarketWatch.

SunEdison has been holding meetings with the creditors for the bankruptcy financing. But competition among the lenders for the deal has caused delay in reaching an agreement. The Wall Street Journal names Deutsche Bank AG and a group of hedge funds, among the negotiators. The hedge funds focus on distressed companies and have raised $725 million through participating in a junior debt offering in January.

SunEdison has been reported to planning for seeking bankruptcy protection and is negotiating with creditors to arrange loan for the processing. Bankruptcy financing is comparatively safer with promise for higher returns and hence reaching a deal is being delayed. The Wall Street Journal names Deutsche Bank AG and a group of hedge funds as the possible financers.

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