SunEdison Moves Closer to Bankruptcy as Federal Officials Investigate the Struggling Solar Company
SunEdison shares fell below $1 this morning for the first time in the company’s history.
Two pieces of news — a warning about imminent bankruptcy protection and reports of an SEC investigation into executives’ claims about cash levels — contributed to the stock price decline.
The company’s YieldCo, TerraForm Global, warned in an SEC filing today that there is “substantial risk that SunEdison will soon seek bankruptcy protection.”
TerraForm Global’s Chief Financial Officer Rebecca Cranna assured investors that the YieldCo is able to fund current operations. But a SunEdison bankruptcy would certainly cause trouble.
According to Cranna, hundreds of megawatts’ worth of solar projects in India and Uruguay planned for sale to TerraForm Global could be in jeopardy. She also warned that some power-purchase agreements in India and South Africa allow lenders to accelerate loan repayment in the event of a SunEdison bankruptcy filing.
“If SunEdison does not perform under these agreements, it could have a material adverse effect on TerraForm Global,” wrote the company.SunEdison is also facing an investigation from the Securities and Exchange Commission, according to a Monday report from the Wall Street Journal.
In November, the company told investors that it had more than $1 billion in cash. That assurance of liquidity, along with a plan to restructure operations, was designed to stop the company’s precipitous decline in value.
But that number may have been grossly inflated, according to WSJ:
People familiar with the matter said that $1.4 billion figure consisted largely of cash that SunEdison couldn’t access. The company had direct access to only a few hundred million dollars throughout September and October, and by November, the balance had dropped under $100 million, the people said.
The bigger number reported to investors included cash that was trapped inside individual power projects and earmarked for construction or debt service, to which SunEdison didn’t have access, the people said. A footnote to an investor presentation said the figure included some cash committed to project construction.The SEC is now reportedly investigating whether SunEdison intentionally misled investors.SunEdison has twice delayed the release of its annual report because of problems with internal controls related to financial reporting. Its debt load is more than $11 billion.SunEdison’s stock price dropped to $0.72 this morning — a decline of more than 96 percent since July.