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SunEdison, world’s largest renewable energy firm, files for bankruptcy

Lucas Mearian | April 22, 2016
Its financial meltdown will have little effect on the renewable energy industry.

Those moves -- relentless and unfocused pursuit of growth through which it invested vast amounts of borrowed money -- distinguished SunEdison from other renewable energy companies.

"Not all of its ventures succeeded, which is inevitable in the project development business, but SunEdison's win-to-loss ratio was evidently insufficient. It borrowed a lot of money and lost it -- or at least tied it up in projects at various degrees of completion," she said.

For example, SunEdison's deal to acquire Vivint Solar for $2.2 billion fell apart earlier this month when Vivint terminated the agreement, citing failure by SunEdison to meet its financial obligations.

SunEdison began in 1959 as a major supplier of silicon wafers, which are not only the basis for semiconductor chips but also solar cells used in photovoltaic panels. While SunEdison sold off its semiconductor subsidiary in the last year to focus on being a renewable-energy corporation, it continued to use its expertise to manufacture solar modules.

Along with purchasing existing hydroelectric and solar power contracts overseas, SunEdison sought to either acquire or create new manufacturing operations in Latin America and China. The company produces fluidized bed reactors for making polysilicon wafers and crystalline silicon ingots, both crucial to the production of solar panels.

"Ultimately, they transitioned into becoming a developer because it offered greater returns," said Tyler Ogden, an analyst with Lux Research. "It guaranteed them a revenu stream from products while still leveraging their experience as a [silicon] wafer producer."

There is plenty of value left to cash in on in SunEdison's project pipeline, which ultimately comprises cash-generating assets not linked to the continued existence of SunEdison, according to Chase. However, the company's investors will need time to do the due diligence in placing a value on those projects correctly before handing over cash for them, she added.

"Some projects, like the portfolio in Andhra Pradesh, India...may be difficult to build at a profit due to the extremely competitive prices they were bid at," Chase said.

SunEdison said it has secured commitments for new capital totaling up to $300 million in debtor-in-possession financing from a consortium of first and second lien lenders.

Chatila said the financial reorganization of his company will result 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."

 

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