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UPDATED:
SunEdison
Filesfor
Bankruptcy
BY ELECTRICCHOICE.COM APRIL 17, 2016

UPDATED 4/21: SunEdison, the

worlds leading renewable energy
development company, has filed for

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Energy (1776 to Present Day)
5 JUL, 2016

SunedisonInc.(SUNE)vs.S&P500Percent
ChangeOverTime1Year|
FindTheCompany

Consumer Protection: Telemarketing and

the Energy Industry
27 JUN, 2016

Multiple media outlets are reporting

that SunEdison might be filing for
bankruptcy as soon as Sunday
night.
Founded in 1959 as the Monsanto
Electronic Materials Company

Alien Invasion Movies and the Energy it

(MEMC), SunEdison established itself

Takes to Power their Weapons

as a pioneer of silicon wafer, or

20 JUN, 2016

semiconductor-chip manufacturing.
In 2006 the company bought into

the solar market, selling solar wafers

to solar-energy companies in Asia
and shortly after, contracts with
worldwide solar power plants
followed.
Today, SunEdison is a company that
develops, operates and installs
distributed solar power systems. It
also manufactures different solar
technologies to help providecost
effective energy and other services
to its customers. Over the years,
SunEdison achieved and maintained
its status as one of the leading
solar-power companies in the world.
They also created and own many
subsidiaries including, TerraForm
Power and TerraForm Global. With
the selling of their subsidiary
SunEdison Semiconductor in 2015,
SunEdison successfully transformed
from a semiconductor wafer
manufacturer into a wellknownrenewable energy company.

SunEdison Prepares
for Bankruptcy
By mid-March of 2016, it seemed
that SunEdison had fallen short of its
goal of becoming the worlds leading
renewable energy company. On April
15, the New York Times announced
that SunEdison is preparing for
bankruptcy, hot on the heels of
another renewable energy company,

Abengoa. As of today, SunEdisons

stocks have since fallen about 99%
since July of 2015.
So, what went wrong for this
promising company?
While the news came as a bit of a
shock for some, many are left
shaking their heads at business
practices that should have given
SunEdison clear warning signs that
they were headed for troubled
waters.

What Happened?
There are several problems that led
SunEdison to its current financial
state. Most agree that the products,
projects and services the company
provided did not contribute to the
companys problems. The consensus
is fairly universal regarding the
companys business practices,
strategies and spending habits being
the primary contributing factors to
SunEdisons plummeting stocks.

FinancialMismanagement
SunEdison delayed filing its 2015
report twice, which prevented the
company from performing an
internal investigation of alleged
financial mismanagement. This
action generated all kinds of rumors
and questions from the public and
investors about the financial state

and transparencyof the company.

Recently, SunEdison completed their
internal investigation. Their
conclusion, according to
Forbes.comisthat, there were no
identified material misstatements in
the Companys historical financial
statements as well as no substantial
evidence to support a finding of
fraud or willful misconduct
ofmanagement, other than with
respect to the conduct of one former
non-executive employee.
While the results were positive, they
didnt do anything to help
improveSunEdisons other
significant problems.

RapidGrowth
Many analysts feel that the major
problem lies with the fact that
SunEdison tried to grow too quickly.
In order to expand its financing
options, the company created two
new subsidiaries. They also bought
many other companies, picking up
energy projects in many different
renewable energy areas one after
the other. These areas included,
energy, wind and residential solar. In
addition to these purchases,
SunEdison also attempted to expand
its operations in locations like India,
Brazil and China, to name a few.
All of these ventures required

significant sums of money to

organize and run. By the end of
SunEdisons third quarter of 2015,
they had already
reachedapproximately $11 billion in
debt.

FailedAcquisition
Last summer, SunEdison also
decided to acquireVivint Solar, a
residential rooftop solar company.
Investors moved to block the deal
but the court ruled against them. The
problem was, the ruling basically
allowed SunEdison to force one of its
subsidiaries to purchase $799
million in loans to assist the
acquisition. Any investors who were
against SunEdisons purchase of
Vivint Solar, but were also investors
with the subsidiary, were then also
forced to provide the funds by
association.
Due to this ruling, SunEdison has
recently acknowledged that the
Securities and Exchange Commission
and the Justice Department are
investigating their financial activities
connected to their subsidiaries, the
attempted Vivint acquisition as well
as a Uruguay project.
Many parties including Vivint, several
investors, a subsidiary and creditors
are also suing SunEdison due to the
court ruling. In particular, David

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Teppers hedge fund Appaloosa

Management is seeking an expiated
trial. Appaloosa Management holds a
9.5% stake in the subsidiary
company and did not want to be
involved in the investment.

UnsustainableBusiness
Model
The strategy many renewable
energy companies have taken is to
own the resources they build instead
of coming up with or selling projects.
The issue with this model is that it
takes an incredible amount of
financing to run successfully. Why?
Well, these companies borrow
money from shareholders. When
those funds are used up, if there are
any hiccups in the shareholders
market, the company faces
significant funding issues.
For example, On January 5th,
SunEdison announced that it had
$619 million in cash and was running
2.9 GW worth of projects. They need
a significant amount of money to
complete these projects and it was
estimated that they likely spent
most of their current balance in the
early part of 2016.
The bottom line is, renewable energy
companies who follow this model
cant dig themselves out of the
problem they created. They literally

Leave a message

cannot afford to build and maintain

the systems they build in the longterm.

What Will Happen

Now?
In order to make it just to the middle
of 2016 the company will require
$310 million, which could resolve
itself in one of three different ways.
Experts state that ifthe banks are
given control, they could sell off
SunEdison assets quickly and at
discount prices in order to make up
the debt faster. If other investors like
hedge funds are given control, they
might consider some of the assets
to be undervalued and hold onto
them for future benefits. The last
option that might be given to
SunEdison is to sell shares from their
subsidiaries. This would give them
the funds they need to continue to
run their day to day business.
One significant factor to consider
during this process is SunEdisons
current projects, or their global
pipeline. They are developing 3.7 GW
of projects globally that require
about $272 million in investments.
This in turn would generate $897
million in revenue.
As it currently stands, it is not clear
what theend result will look like for

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the SunEdisonand its subsidiaries.

However, it is clear that this
companyis going to have to face
some serious changes. In fact, it is
quite likely that we will see these
changes sooner rather than laterif
bankruptcy proceedings begin as is
being reported in multiple media
outlets.
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