SunEdison Inc (OTCMKTS:SUNEQ) describes its situation as “hopeless insolvency.” With this, the bankrupt solar firm is urging shareholders to end their fight. In other words, SunEdison investors shouldn’t have a committee representing them during the Chapter 11 process.
SunEdison Inc is in a ‘Hopeless Insolvency’ State
When SunEdison filed for Chapter 11 bankruptcy in April, shareholders have been desperately trying to recover anything. Over the last several weeks, investors have been looking to launch an equity committee during the bankruptcy process. The efforts may have been in vain.
Earlier this month, SunEdison attorneys urged a judge to deny shareholders’ attempts to have a committee represent them. Court papers found that the solar firm revealed that there was “no basis” for a recovery, or even a “meaningful one.”
“There is nothing the Debtors desire more than to be able to pay all creditors and return value to equity holders,” SunEdison wrote in documents. “Unfortunately, the facts of this situation lead to the inevitable conclusion that this is entirely unlikely.”
Last week, SunEdison revealed in legal documents that it faces about $4.2 billion in prepetition claims. However, the firm was honest in stating that its situation amounts to “hopeless insolvency.” It added that the shareholders should not have an official committee representing them in the case.
It remains unclear as to what the judge in charge of the case will decide in the end.
This comes as SunEdison has received a bulk of new financing to maintain operations.
SunEdison Inc Gets New Funding
A bankruptcy court has approved new funding for the solar firm. SunEdison and its creditors have modified the terms of its debt-in-possession agreement. The new terms will allow SunEdison to have an extra $300 million in financing, new documents from financial regulators state.
The new loan changes the initial DIP agreement in various aspects. The loan will have a new interest rate of 3.75 percent from eight percent for Eurocurrency rate loans. The interest rate for base rate loans will also be reduced from seven percent to 2.75 percent.
SunEdison states that the new funding will help it maintain operations, minimize disruptions to its many projects and continue to implement various changes to its operations.
Modifications made to the loan comes as the firm may be offloading several assets. Reports say that SunEdison has selected eight projects to sell in India. These eight projects have a total capacity of 1,318 MW. Big and small businesses have been approached about the deal.
It has been said that Adani Green Energy Ltd, which has stakes in oil, gas and coal, is interested in buying all of SunEdison’s Indian assets. Adani CEO Jayant Parimal confirmed in Mumbai that investment bankers and Rothschild spoke to him about the projects in India. It is unknown as to how much the projects are worth if the Indian giant will buy the renewable energy projects.
With about $20 billion in assets, SunEdison has been looking to sell many of its global projects. The solar firm presently has interests in the U.S., India and Europe.