SunEdison Inc (OTCMKTS:SUNEQ), the once dominant solar firm, has filed for bankruptcy. The company is now undergoing a series of restructuring efforts. One of the first things it has done is bring in a turnaround expert. Can the failed solar firm be saved in the long run?
SunEdison Inc Brings in Turnaround Pro
SunEdison named John S. Dubel as the chief restructuring officer on Monday. The appointment is in response to the April 21 chapter 11 bankruptcy protection the insolvent firm made.
As many on Wall Street will likely know, Dubel is a turnaround expert. He is the CEO of Dubel & Associates, LLC, and has been offering turnaround and restructuring services for roughly three decades.
Moving forward, Dubel will work directly with the independent directors of the bankrupt firm’s board. For the foreseeable future Dubel will lead SunEdison’s restructuring efforts as well as its two yieldcos: TerraForm Power Inc (NASDAQ:TERP) and TerraForm Global Inc (NASDAQ:GLBL)
Dubel will certainly have a lot of work ahead of him. One of the first steps is to determine how to tackle the more than $320 million that is owed to upstream suppliers. Its foreign operations will also be a big task to look after.
After months of speculation, SunEdison filed for chapter 11 last month. The struggling firm took on too much debt, expanded too quickly and faced various legal and financial woes. The stock crumbled 99 percent in the last 12 months. Things became so bad that SunEdison was referred to as “Wall Street’s nightmare stock.”
Does SunEdison Inc Debacle Hurt the Solar Industry?
SunEdison will serve as a tremendous case study for an array of business colleges for years to come.
At one point, the solar firm had shares trading at around $30, but today its $9.2 billion valuation has been wiped away. Not only is it an important business story, but it also presents an interesting cautionary tale for the entire solar industry.
There is no doubt that renewable energy will rule the day in the coming decades. In the short-term, however, SunEdison’s collapse may very well hurt solar promoters. The optimists say that in order for SunEdison to succeed once again it has to go back to basics: promote solar as a long-term solution to a long-term problem.
One of the key issues of SunEdison is that it suffered the same fate as Icarus. The firm flew too close to the sun in too short of a time; it shot for the stars too fast; its arms were too short to box with God. And this may give solar critics the fodder they need: solar firms aren’t putting forward a long-lasting solution. Instead, they just want to make a quick buck, or they get ahead of themselves.
For now, SunEdison is concentrating on a turnaround and recovery. There is no need to talk about the chances of the solar firm soaring to $30 a share again. With that being said, there are many financial experts who are confident that SunEdison can return to success.
Until then, the solar industry needs to think of SunEdison as just a hiccup and nothing more.
Francesco Venturini, chief executive officer of Enel Green Power SpA, speaking in an interview with Bloomberg News, may be right:
“It doesn’t change anything. Everybody knew they were going down the wrong path. It was a great team underneath but badly managed up top.”
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