Published on March 10th, 2016 | by Joshua S Hill5
SunEdison Watches As Things Turn From Bad To Worse Then Jump Off A Cliff
March 10th, 2016 by Joshua S Hill
Once the world’s leading renewable energy developers, SunEdison, is now facing tumbling share prices and the demise of $10 billion in market value.
Fourteen Months Of Pending Doom
It was just over a year ago that SunEdison and its first yieldco, TerraForm Power, announced closure on the $2.4 billion acquisition of energy company First Wind. A month later, SunEdison announced record installations of just over 1 GW in 2014 but a net loss of $242.1 million in the fourth quarter. This was followed a quarter later by the acquisition of seven renewable energy portfolios in emerging countries, and the intention to form a second yieldco dedicated to emerging markets (TerraForm Global, founded during the middle of 2015).
All in all, maybe the writing was on the wall the whole time, because less than a year after the company announced its first quarter results for 2015, things seem to have gone terribly pear-shaped.
It could all be said to have started back in August, when investors began becoming remarkably skittish at the company’s second quarterly earnings report, which revealed record growth and, according to Bloomberg Business, left analysts “scratching their heads” in the wake of what was then the biggest drop in SunEdison’s shares in 14 years. The earnings report came a month after SunEdison announced that it would be acquiring Vivint Solar for $2.2 billion.
In an attempt to appease its shareholders, SunEdison announced the creation of a new $1 billion warehouse investment vehicle.
More recently, however, things have gone from bad to startlingly worse.
Arrival of Doom
At the beginning of March, SunEdison and TerraForm Power announced that they had settled with Latin America Power for $28.5 million over the termination of the planned acquisition of Latin America Power by SunEdison.
This was followed four days later by the announcement that Vivint Solar had terminated its merger agreement due to “SunEdison’s failure to meet its obligations under the merger agreement.” Vivint Solar added that “SunEdison’s failure to consummate the merger when required pursuant to the terms of the merger agreement constitutes a willful breach of the merger agreement, and Vivint Solar intends to seek all legal remedies available to it in respect of such willful breach.”
Vivint Solar wasn’t kidding, as on the same day, the company announced it had commenced “action in the Court of Chancery of the State of Delaware suing SunEdison, Inc. over its willful breach of the merger agreement between Vivint Solar and SunEdison.”
“SunEdison has willfully breached its obligations under the merger agreement and we intend to pursue Vivint Solar’s remedies vigorously,” said Gregory Butterfield, President and CEO of Vivint Solar.
Vivint Solar is seeking damages for the benefits its stockholders expected in connection the transaction, among other legal actions.
A Bleak Future
SunEdison’s shares have barely seen any good news for several months now, and with the company’s fourth quarter and full year 2015 earnings report currently delayed (we are expecting it any day now), things are not looking up.
Bloomberg has suggested that “It is perhaps beginning to dawn on SunEdison’s share holders that, despite having narrowly avoided a car crash, they’re still driving a heap of junk (debt).” And Greentech Media have posited that “We are witnessing the end, or perhaps the remaking, of SunEdison.”
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