SunEdison Inc (NYSE:SUNE) stock collapsed more
than 50% in a dramatic fashion on Tuesday, as a potential bankruptcy filing is closing in on the renewable energy developer.
The US Securities and Exchange Commission (SEC) is looking into its liquidity disclosures, The Wall Street Journal reported
on Monday, before TerraForm Global – one of SunEdison’s yieldcos – said there is “substantial risk”
the parent company could file for bankruptcy.
SunEdison Green Power Bankruptcy Inevitability
For all those sun baked brains that see salvation
in renewable nirvana, the imminent demise of SunEdison is the latest case that creative green economics is the path to insolvency.
After studying the tangled web of cross collateralization and rehypothecation of debt, the WSJ announcement is inevitable,
SunEdison Said to Be Preparing to File for Bankruptcy. “Solar-energy company SunEdison Inc. plans to file for bankruptcy protection in coming weeks, a dramatic about-face for a company whose market value stood
at nearly $10 billion in July.”
the tour of the SunEdison: A Timeline of the Biggest Corporate Implosion in US Solar History, and understand that the solar and wind industry is founded on a Ponzi scheme of investor hype and government subsidies.
Forbes investigates the convoluted and intertwined relationship in Reconsidering The SunEdison YieldCos, TerraForm Power And TerraForm Global.
company has been highly levered for some years now and management states that the recent increase in indebtedness will go
towards funding of the company’s project pipeline.
Management expects the company to continue to lose money. However, it expects
the cash generated by the two yieldcos under long-term contracts will begin to flow as early as the end of this year or beginning
At this point you must
be asking just what is a ”yieldco”? Sun Edison Buying First Wind Scam provides a breakdown and crash course on how SunEdison used their corporate shell game to acquire a long failed and immensely
indebted industrial wind scheme, lately known as First Wind.
“The lack of disclosure of ALL the debt for projects that cannot even satisfy
minimum interest payments must less retiring the actual obligations, is indicative of an industry that is based upon fraud
and uncompetitive costs.”
to Law 360 the Nov. 2014: SunEdison and TerraForm acquire wind developer First Wind for $2.4 billion, does not tell the entire story.
“TerraForm picks up First Wind’s operating portfolio, which includes 521 megawatts of wind
power assets, for an enterprise value of $862 million. That amount includes the equity purchase price, the assumption
of debt for First Wind’s operating portfolio, certain swap and debt breakage fees and the purchase of a partner’s
ownership stake in certain assets held by First Wind through a joint venture, according to regulatory filings.”
Now you need to enter into the looking glass and
examine the rejected filing of First Wind with the SEC for their IPO. The links on Cohocton Wind Watch documents the actual degree of debt that this candidate for receivership held back in 2010. Why is this important?
The latest law suit from the investment banksters who
financed First Wind gives the answer in SunEdison Legal Woes Mount With Suits Over First Wind.
Shaw & Co. LP and Madison Dearborn Capital Partners IV LP say the funds in the TerraForm Power matter are owed as deferred
payment for SunEdison’s $1.9 billion purchase of First Wind Holdings LLC in January 2015, and will be due “immediately”
if SunEdison files for bankruptcy or restructures its debt, according to the suit filed in the Supreme Court of the State
of New York.
Wind was one of SunEdison’s biggest purchases, and made it the world’s biggest renewable-energy company. It was
part of a massive buying spree that racked up $11.7 billion in debt by the end of September and helped drive the company to
the edge of failure.”
Well, the immediate implosion of the SunEdison house
of cards follows the same pattern of the crooked First Wind operation that cooked the books for years. Start with the notice
that SunEdison In More Hot Water As SEC Investigation Begins & Bankruptcy Looms, “US Securities and Exchange Commission (SEC) has begun its own investigation into the company’s disclosures
to investors about its liquidity” and add in the Bloomberg reports that SunEdison Receives U.S. Subpoena on Vivint Deal Gone Wrong.
Justice Department’s subpoena comes about three weeks after the deal with Vivint, a takeover that drew the ire of billionaire
investor David Tepper, was canceled. Vivint sued SunEdison shortly after, saying its officials had failed to meet financial
obligations and work toward consummating the merger. SunEdison auditors had meanwhile started investigations into allegations
made by former executives and a current employee about the accuracy of the company’s “anticipated financial position.”
The circular accounting circles never seem to reconcile.
Just maybe the basic economics used to finance these dubious energy companies need a thoroughgoing over examination by the
regulatory agencies and financial community.
closely the delusional flimflam From a SunEdison Press Release:
Power's acquisition of the Invenergy wind plants leverages the power of SunEdison's platform which was enhanced with our acquisition
of First Wind in January of 2015," said Ahmad Chatila, SunEdison chief executive officer and TerraForm Power chairman.
"The Invenergy transaction creates significant value for our shareholders through the accretion in our TerraForm Power
ownership and the acceleration of our Incentive Distribution Rights (IDRs). Together with TerraForm Power, SunEdison's development
platform will change how energy is generated, distributed and owned around the world."
No wonder that the SEC is investigating “the company’s disclosures
to investors”. The public needs to wake up to the facts that the solar and wind industry promises much and delivers
little. Anyone remember Solyndra and Evergreen Solar?
Who else but the Motley Fool to sum
up the lesson of another failed “Green” utopian environmental illusion, What Happens to SunEdison Inc If It Goes Under?
the biggest question in a potential SunEdison bankruptcy: What is the renewable energy development business worth?
In theory, developing
renewable energy projects should drive everything from the O&M business to yieldcos. But developing projects requires
a lot of money, including debt, which SunEdison has found out the hard way. If that funding dries up, so does the business.”
Learn well and remember long. Generating electricity
based on government subsidies is a fool’s game. Allowing quick buck artists to become developers and pitch their convoluted
and Byzantine yieldco “re-use” collateral pledges is pure fraud. The public is continually being duped
by opportunists, who are more skilled at ripping off the investor than producing any usable electricity. The forthcoming bankruptcy
of SunEdison is another sign that energy policy under the cult of renewable production is not economically feasible.
For additional evidence that SunEdison’s Subsidy-Fueled Collapse, Robert Bryce nails the problem with a failed governmental energy policy.
“The biggest federal handouts — two of them totaling $200 million
— were made in 2010 and 2011 to a subsidiary of SunEdison, First Wind, for the Milford Wind project in Utah. In addition
to the federal subsidies, SunEdison got $30 million in subsidies from various state authorities, including $21 million from
governmental entities in New York. On top of that, SunEdison also received $846 million in federal loans, loan guarantees,
tax-exempt federal bonds, and federal insurance. The total government support for SunEdison comes out to $1.5 billion.”
The effort to shut down coal generation, decommission
nuclear plants, limit hydro facilities and restrict natural gas turbines all lead to higher electric costs and ultimate brown
outs. The true cost of continuing down this road of electric burn out by underwriting uneconomical “feel good”
projects is punitive and ridiculous.
SunEdison bankruptcy reshuffling is not about cancelling debt, but needs to be the liquidation of assets and accountability
for fiduciary malfeasance. What does it take to admit that the renewal experiment is a bust? Cut the “Green” loses
and get on with the business of generating reliable energy.
James Hall – April 6, 2016
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SunEdison has “defiantly declared”
that it plans to hide its assets with undisclosed parties and affiliates in order to shield them from creditors as it sits
on the brink of bankruptcy, the investors said in a petition filed in state court in Manhattan. SunEdison’s financial
condition “is so dire and rapidly worsening” that analysts expect it to be insolvent by the time the arbitration
might be decided, the shareholders said.