SunEdison, Inc. announced that it has “commenced a process to restructure its balance sheet and position the company for the future.” Translation is the company has filed for chapter 11 — a move that had been rumored for awhile now. You may recall its Vivint deal falling through in March, but troubling signs had emerged before then, with industry onlookers unsure about the company’s heavy acquisition strategy.
SunEdison’s publicly-traded yieldcos, TerraForm Power (NASDAQ: TERP) and TerraForm Global (NASDAQ: GLBL), are not 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 Ahmad Chatila, SunEdison chief executive officer. “The court process will allow us to right-size our balance sheet and reduce our debt, providing the opportunity to support the business going forward while focusing on our core strengths. It also will facilitate our continued work towards transforming the Company into a more streamlined and efficient operator, shedding non-core assets as well as taking other steps to help us get the most value out of our technological and intellectual property. As a result of this process, we expect that SunEdison will be in an even better position over the long term to utilize our capabilities in the renewable energy sector in service of our customers, business partners, and employees.”
SunEdison has secured commitments for new capital totaling up to $300 million in debtor-in-possession (DIP) financing from a consortium of first and second lien lenders. Subject to Court approval, these financial resources will be made available to the Company to support its continuing business operations, minimize disruption to its worldwide projects and partnerships, and make necessary operational changes.
- The new financing will support day-to-day operations during the reorganization, including:
- Proceeding with work on ongoing projects, both in the U.S. and elsewhere;
- Paying wages and benefits for employees;
- Continuing to provide services to customers;
- Paying vendors and suppliers in the ordinary course for goods and services provided on or after the date of the chapter 11 filing; and
- Complying with all regulatory obligations.
SunEdison has made customary filings, including first day motions, with the Court, which, if granted, will help ensure a smooth transition into chapter 11 without business disruption. The motions are expected to be addressed by the Court promptly following the filing, and include, among other things, a request for approval of the debtor-in-possession financing, as well as requests for authority to make wage and salary payments, continue various benefits for employees, honor certain customer programs, and other relief in order to continue the day-to-day operations of SunEdison.
Solar Industry Reaction
Unfortunately for the solar industry — after a series of positive, momentum-building announcements that spoke to the ascendance of solar power’s PR and value — this headline will likely standout as a black eye. That would be a mistake though, as SunEdison’s approach was an outlier. Don’t take my word for it though:
“This is a highly competitive industry with a massive upside. As with other rapidly growing and successful industries, not every company in the solar market is going to stand the test of time. SunEdison is just one company and today’s development does not reflect a trend of the broader industry. The solar industry is growing at warp speed. It took us 40 years to get to 1 million installations (which we have just done) and it will take us just two more years to hit 2 million and that, I think, illustrates the direction of the solar industry.”
— Dan Whitten, VP of communications for the Solar Energy Industries Association.
“For strongly backed, responsible solar companies who are prepared to understand and address customer needs, the future is brighter than ever. REC Solar will continue to leverage its relationship with Duke Energy as we continue our focus on delivering compelling energy solutions to the commercial customer segment.”
— Alan Russo, SVP Sales & Marketing at REC Solar.
“The travails of one company will not stop the rise of solar power. We stand at a watershed moment where solar technologies are both proven and economical in applications from rooftops to oilfields. This transformation is ushering in an era of energy convergence, where major energy companies will increasingly integrate solar and traditional energy into all that they do.”
–Rod MacGregor, co-founder and CEO of GlassPoint Solar, a leader in solar-for-oil
“SunEdison’s situation is unfortunate, and we hope that it can emerge from bankruptcy successfully. However, a negative outlook of the solar industry as a whole is misguided, as the fundamentals of distributed generation solar have never been better: electricity rates continue to rise and solar continues to get cheaper. Much of the recent turmoil can be attributed to a maturation and disaggregation of the solar value chain as capital and technology are democratized by new financing products and independent software tools. We’re seeing a more level playing field emerge and companies without a focused strategy and clear value proposition will face significant challenges.”
– Conlan O’Leary, Sighten CEO
— Solar Builder magazine
[source: http://solarbuildermag.com/news/sunedison-files-bankruptcy/]
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