SunEdison Inc (OTCMKTS:SUNEQ) has been working hard to ensure its restructuring efforts are successful. It looks like the bankrupt solar firm has hit a snag, and the company-wide restructuring initiative may fail, the former solar giant told a court last week.
SunEdison Inc Has a Restructuring Hiccup
SunEdison wants to find out what exactly is going on with a recent $231 million lawsuit that was filed against it.
SunEdison filed a motion on Thursday in Bankruptcy Court for the Southern District of New York for a Rule 2004 probe that looks into allegations that stem from a lawsuit filed by D.E. Shaw Composite Holdings LLC and Madison Dearborn Capital Partners IV LP.
The filed court order permits SunEdison to investigate into the two firms’ lawsuit. It remains unclear at this time as to what the lawsuit is trying to achieve, but SunEdison claims that the $231 million lawsuit could negatively impact its plans for financing a massive restructuring.
SunEdison filed for Chapter 11 bankruptcy protection a year ago after taking on too much debt, expanding too quickly, and experiencing poor corporate governance. The solar firm has been working diligently to reduce its debt obligations by selling off its assets.
SunEdison Inc Sells Off Yieldcos
Canada’s largest alternative asset manager announced that it is acquiring all of the two yieldcos. These yieldcos were founded to manage SunEdison’s solar and wind farms around the globe. TerraForm Power controls about 3,000 MW of solar and wind in OECD countries. TerraForm Global owns 919 MW of solar and wind assets in several emerging markets, including Brazil, Thailand, South Africa, and China.
The agreement comes with close to four gigawatts of solar and wind power. Brookfield presently maintains roughly 10,700 megawatts of alternative energy plants worldwide, including 217 hydropower sites. A majority of its holdings are in hydro (8,751 MW), and it currently has 1,590 MW of wind and 390 MW of Solar.
Brookfield had already put forward a massive investment in the yieldcos prior to the deal. Brookfield and SunEdison have been in talks about this deal for the last few months. Sachin Shah, CEO of Brookfield Renewable Partners, says it was the right time to purchase the yieldcos, considering that solar is now a cost-effective source of power.
“We knew at some point, the world of wind and solar would turn. For the first time, we saw something that lent itself to investing,” Shah told Bloomberg News. “We didn’t care that it wasn’t very exciting. Hydro provides high cash margins and good returns.”
Brookfield had decided to bide its time for solar power’s costs to come down. The Canadian firm had aggressively invested in wind power because the technology had advanced a lot quicker than solar. This year, solar is now more competitive than other alternatives and some experts contend that it is even more affordable.
With SunEdison looking to shed its assets to pay its creditors, Brookfield viewed this as an opportune time. Traders – keeping SunEdison’s 12-month collapse in mind – are now viewing utilities as a “sexy” play.
“These are truly infrastructure assets,” Shah said. “When have utilities ever been sexy?”