Solar-energy company SunEdison Inc. on Thursday said it filed for chapter 11 bankruptcy protection, a dramatic move for a company whose market value stood at nearly $10 billion in July.
SunEdison said its publicly traded so-called yieldcos, TerraForm Power Inc. and TerraForm Global Inc., aren't part of the filing.
"Our decision to initiate a court-supervised restructuring was a difficult but important step to address our immediate liquidity issues," said Chief Executive Ahmad Chatila. "The court process will allow us to right-size our balance sheet and reduce our debt."
He said the process will also help the company transform "into a more streamlined and efficient operator, shedding noncore assets as well as taking other steps to help us get the most value out of our technological and intellectual property."
The company said it has secured commitments for new capital of up to $300 million in debtor-in-possession financing from a consortium of first- and second-lien lenders. Court papers say the chapter 11 financing may include a "roll-up" of up to $350 million of the existing second-lien loans and second-lien convertible notes. In a "roll-up" deal, pre-bankruptcy loans are elevated to the prime status of bankruptcy financing, which makes them easier to collect, as a condition of extending new money to a troubled company.
Bankruptcy has been a near-certainty for SunEdison for some time. The company borrowed heavily to buy up wind and solar developers, accumulating a pile of debt that worried investors. Disappointing earnings didn't ease their fears about the pace of SunEdison's growth, and an accounting move last year that reclassified more than $700 million worth of debt heightened anxieties.
As its woes mounted, SunEdison couldn't close deals, including the $2.2 billion takeover of Vivint Solar Inc., and the $700 million buyout of Latin America Power.
Adding to the concern was upset in the capital markets, which cast a shadow on the financial engineering that spurred SunEdison's growth. The yieldcos, or associated businesses that bought completed projects from SunEdison, were supposed to keep the money flowing to the company.
But SunEdison's yieldcos have been distancing themselves from it, and one of them, TerraForm Global, recently accused SunEdison of diverting cash from it, and sued.
Chapter 11 may be the first clear view investors get into the company's exact financial shape. SunEdison postponed filing its annual reports twice, then missed the deadline, triggering big trouble with lenders. SunEdison's debts top $10 billion.
In bankruptcy papers, however, the company rolled the assets and debts of its yieldcos into its tally, even though TerraForm Global and TerraForm Power are not included in the bankruptcy filing. On a consolidated basis, SunEdison listed assets of $20.7 billion, and debts of $16.1 billion.
SunEdison, whose stock has plunged in recent months, would rank among the largest financial collapses in recent years. The company, based about 20 miles outside St. Louis, used a combination of financial engineering and cheap debt to grow to be one of the country's biggest developers of renewable-power plants.
Last month, SunEdison again delayed the filing of its annual report, citing the discovery of "material weaknesses in its internal controls over financial reporting." The company, whose deadline to file its 10-K had been extended to March 15, didn't give a new target date.
The company's shares have lost 99% of their value in the past 12 months and were halted on Thursday morning because of the news.
Dow Jones Newswires
