SunEdison to file for bankruptcy as early as Sunday night: Source

The company, which had debt of about $12 billion as of September 30, said on Friday that it was in talks for potential DIP financing

Solar energy company SunEdison is preparing to file for bankruptcy as early as April 17, a person familiar with the matter said on Friday, nine months after its market value had reached $10 billion.

A SunEdison spokesman declined to comment.

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Such a move would represent a fall from grace for the former darling of Wall Street and the renewable energy sector, whose rapid, debt-fuelled expansion with solar and wind energy plants around the world proved unsustainable. The company’s market value as of Friday was $117 million.

The source cautioned that the timing of the bankruptcy filing had not been finalised and asked not to be identified because the plans were not public. SunEdison, which had debt of about $12 billion as of September 30, said in a filing on Friday that it was in talks for potential debtor-in-possession financing with some of its first and second-lien lenders.

The company said it needed about $310 million to stay in business, estimating a cash shortfall of $260 million by mid-June. SunEdison said it expected to secure the financing by pledging assets.

In the filing, the company said challenges to its business started developing in the middle of last year, when it pursued acquiring Vivint Solar and it worked on an initial public offering for TerraForm Global, a so-called “yieldco” company it created to hold renewable energy assets.

TerraForm Global and SunEdison’s other yieldco, TerraForm Power, hired financial and legal advisors to help them prepare and develop contingency plans in case SunEdison files for bankruptcy, a spokesman for the yieldcos said on Friday.

The companies rely on SunEdison to make interest payments for them and for back office functions. They have no employees of their own.

Typically, companies enter into debtor-in-possession financing after they file for bankruptcy protection to maintain liquidity while they reorganise. Analysts said that while the decision to seek this option did not necessarily mean the company would file for bankruptcy, it was likely that this would happen soon.

“It is definitely a sign that they are thinking about it because they are trying to get the arrangement in place before they file,” said Ian Feng, an analyst at credit research firm Covenant Review.

In the filing, SunEdison laid out three scenarios to continue operating. Two included bankruptcy expenses of more than $70 million. The company said it entered into confidentiality agreements with lenders on March 17.