SunEdison Inc. filed for bankruptcy protection Thursday after a two-year, $3.1 billion acquisition binge that drove its debt to unmanageable levels and sent investors running for the exits.
The clean-power giant listed $16.1 billion of debt in Chapter 11 filings in Manhattan federal court, making it the biggest U.S. bankruptcy of the year.
While the buying spree ultimately did SunEdison in, the bankruptcy comes as energy companies of all sorts are succumbing to a slump in prices. This month, , reporting $10.1 billion in liabilities.
“Our decision to initiate a court-supervised restructuring was a difficult but important step to address our immediate liquidity issues,” SunEdison chief executive Ahmad Chatila said Thursday. The company will use the bankruptcy process to cut debt and shed assets, he said.
In Colorado, SunEdison
Pueblo’s economic development chief said the bankruptcy filing was not a cause for concern for the future of Comanche Solar.
“The project is essentially financed in a way that it is self-collateralized; it is a very secure financial agreement,” said Chris Markuson, Pueblo County’s director of economic development and geographic information systems. “Regardless of what happens with SunEdison’s plans, it won’t have any bearing on the Pueblo project.”
The project is close to completion, with some substation work ongoing, Markuson said. The solar farm should come online this summer, he said.
SunEdison has said the project will generate enough power to supply more than 30,000 homes.
Additionally, SunEdison inked a 25-year purchase agreement with the Xcel Energy-owned Public Service Company of Colorado for energy generated from the solar farm.
“Xcel Energy still considers SunEdison as the owner, and construction is proceeding on schedule,” officials for Xcel said in an e-mail. “Xcel Energy will purchase the output from the solar plant under a long-term contract, but has no ownership involvement in the facility.”
SunEdison and Renewable Energy Systems America, the Broomfield-based firm serving as the project’s contractor, could not be reached for comment.
SunEdison has commitments for $300 million in financing to support day-to-day operations during the reorganization. The money is being supplied by a group of first- and second-lien lenders, the company said in the statement. The financing deal requires court approval.
Starting in 2014, Maryland Heights, Mo.-based SunEdison began buying up wind and solar projects on every continent except Antarctica. The purpose was to meet growth targets needed for dividends, and at first the market responded positively, driving the shares to a peak of $32.
But after the company announced plans to purchase Vivint Solar Inc. in July at a 52 percent premium, investors started questioning the business model. At $2.2 billion, it would have been SunEdison’s biggest deal to date. Furthermore, Vivint installs rooftop solar systems, a very different market from SunEdison’s other acquisitions, mainly big, utility-scale power plants.
The transaction was delayed, renegotiated down to $1.9 billion and finally canceled in March.
When SunEdison lost the financing to back the deal because of its initial failure to file an annual earnings report, the company couldn’t close the sale, leaving analysts . The shares have plunged to less than 40 cents.
The company’s troubles have been manifold. It recently disclosed that it received a subpoena from the Justice Department and a similar inquiry from the Securities and Exchange Commission. The government is seeking information about the scrapped Vivint deal and the conduct of a former employee alleged to have committed wrongdoing “in connection with the Vivint termination negotiations,” SunEdison said in a regulatory filing.
Denver Post staff writer Alicia Wallace contributed to this report.
