SunEdison's FinancialPosition Unclear to Investors, Employees
Investors aren’t the only ones uncertain of SunEdison Inc.’sfinances. Current and former employees have raised questions about therenewable-energy developer’s liquidity, and the company is now conducting aninquiry into its financial position.
The worst-performing clean-energy company saidMonday that it initiated an internal inquiry late last year “based onallegations made by former executives” related to the accuracy of SunEdison’sfinancial status, according to a regulatory filing. Its internal audit committeeis also looking at the “accuracy of its anticipated financial position,” inresponse to issues raised by a current and a former employee. To date, thecommittee has found no wrongdoing.
The inquiry reflects mounting uncertainty surrounding SunEdison’s books. Thecompany spent billions last year buying wind and solar projects and developersaround the world, amassing a portfolio of partially completed power plants thatstill require significant investment to complete. It’s not clear how the companyplans to pay for that.
‘Precarious Position’
“It’s frustrating because you can’t get a grasp of what’s actually happeninghere,” Patrick Jobin, an analyst at Credit Suisse Group AG, said in aninterview Tuesday. “I have never seen something so strange. The company’s in aprecarious position.”
The disclosure dragged down SunEdison 17 percent to $1.64 at 12:14 p.m. in NewYork. The shares have declined 93 percent in the past year, the most in theWilderHill New Energy Global Innovation Index of 104 companies.
“Since the meltdown in the stock, there’s been a lot of investor questions,”Sven Eenmaa, an analyst at Stifel Nicolaus & Co., said in an interviewTuesday. “It is pretty clear to me that the disclosures to the outside have notbeen sufficient. It does raise questions of internal controls.”
SunEdison said in a Jan. 7 presentation that it expected to have $619 millionof cash on hand at the end of 2015. Of that amount, $563 million was committedto project development and $56 million was available for general corporate use.The company forecast having $1.37 billion in cash at the end of this year.
Ben Harborne, a SunEdison spokesman, declined to comment Tuesday.
SunEdison also said Monday it won’t be able to file its 2015 financial resultson time, citing the internal inquiry, as well as “restructuring decisionspreviously disclosed and the additional turmoil in the energy sector.” TheMaryland Heights, Missouri-based company plans to file its earnings within 15calendar days of the due date.
‘Major Events’
SunEdison has already had a bumpy 2016. In January, David Tepper’s AppaloosaManagement LP sued to block SunEdison’s proposed $1.9 billion acquisition ofrooftop solar company Vivint Solar Inc. A judge in Delaware rejectedAppaloosa’s request for an injunction last week, but said the hedge fund couldrequest an expedited trial, and Appaloosa announced Monday that it would do so.
In February, Hawaiian Electric Co. canceled contracts for 148 megawatts ofsolar projects SunEdison is developing in the state -- projects that thecompany has planned to transfer to creditors, including D.E. Shaw & Co.,upon completion.
“You have all these major events,” Gordon Johnson, an analyst at Axiom CapitalManagement Inc., in an interview Tuesday. “It suggests to me that the writingcould be on the wall.”
Downgrades
Johnson downgraded SunEdison to sell Tuesday, pointing to the company’s“trivial” equity value. The disclosure of the investigation also prompted ColinW. Rusch, an analyst at Oppenheimer & Co., to downgrade SunEdison to theequivalent of hold.
“We don’t know for certain everything, because they don’t disclose everything,”Johnson said. ‘But this is a company that’s in distress.”