SunEdison, the US-based solar power giant, is at "a substantial risk" of bankruptcy, according to one of its own publicly listed subsidiaries.
The statement was made by TerraForm Global, one of two SunEdison’s "yieldcos" – that is, listed companies that hold renewable energy assets and have long-term power purchase deals with utilities.
The statement said SunEdison had "not performed as obligated" with respect to financial reporting, and had not been able to contribute to projects in Uruguay and India. It added: "In addition, due to SunEdison’s liquidity difficulties, there is a substantial risk that SunEdison will soon seek bankruptcy protection."
TerraForm Global told shareholders that it will join its parent and fellow yieldco TerraForm Power in delaying its own financial report for 2015; they had been due to be filed today (30 March).
At this point, SunEdison has really kinda run out of options– Angelo Zino, analyst with S&P Global Intelligence
Shares in TerraForm Global fell 23% to a record low of $1.92 after the announcement.
SunEdison’s shares, which were hit by a report in the Wall Street Journal on Monday that it was being investigated for overstating its cash position, fell 60% to 50 cents. The company’s market capitalisation has fallen 95% over the past 12 months to about $400m.
SunEdison, which has a turnover of about $2.5bn and describes itself as "the world’s largest renewable energy development company", is carrying $11.7bn in debt brought by an aggressive acquisition policy. If it were to file for bankruptcy it would be one of the largest non-financial company failures in recent American history.
Angelo Zino, an analyst with S&P Global Intelligence, told the Reuters news agency: "At this point, SunEdison has really kinda run out of options."
Pavel Molchanov, an analyst at financial adviser Raymond James, said TerraForm Power and TerraForm Global were legally separate companies and would not follow SunEdison into bankruptcy.
"However, there is a close historical relationship between the parent company and these yieldcos and therefore some dislocation in the event of parent bankruptcy should be expected," he added.
Last July, SunEdison bought the Mark Group, a UK solar power contractor based in Leicester, and announced that it was launching the SunEdison Energy Saver Plan, "which makes it possible for homeowners to save up to 15% on their energy bills without any upfront costs".
Photograph: SunEdison’s 100MW solar scheme in the Atacama desert in Chile (SunEdison)