SunEdison emerges from Chapter 11

March 2018 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

March 2018 Issue

Almost two years after an $11bn debt forced it to file for bankruptcy protection, former renewable energy giant SunEdison Inc. has emerged from Chapter 11 as a newly-reorganised, privately-held company.

However, as a result of the Chapter 11 proceedings, SunEdison emerges with a significantly smaller footprint and will now “focus on monetising its remaining assets”, according to a company statement. Serving as chairman and chief executive of the reorganised firm is Richard Katz.

A process full of twists and turns, SunEdison’s bankruptcy was steeped in dozens of lawsuits, with shareholders scrambling to recuperate their investments, which were once valued at $10bn.

SunEdison’s plan of reorganisation, confirmed by the Bankruptcy Court for the Southern District of New York in July 2017, saw $2.3bn of gross asset sales. These included the sale to Brookfield Asset Management of SunEdison’s most valuable asset – its interests in non-debtor affiliates TerraForm Power, Inc. and TerraForm Global, Inc. (Yieldcos).

Canadian-based asset manager Brookfield finalised a deal to purchase 51 percent of TerraForm Power in October 2017, with the full acquisition of TerraForm Global completed in December. TerraForm Global has also been delisted from Nasdaq and shareholders were compensated at $5.10 per share. Additional SunEdison asset sales included 1.5 GW of solar and wind developments to NRG Energy and proprietary residential solar lead-generation platform, customer lead databases, marketing materials and human capital to Crius Energy.

In approving SunEdison’s bankruptcy plan, Judge Stuart Bernstein overruled objections from shareholders and two investors. Under the court approved deal, unsecured SunEdison creditors will receive $32m in proceeds of directors and officers’ insurance settlements and $18m as a result of negotiations with the Yieldcos. Secured creditors will be repaid in full with cash. The plan also stipulated that SunEdison existing common stock is to be cancelled. Common stockholders will receive no distribution and will not retain any property.

Furthermore, as part of the plan negotiation process, SunEdison facilitated key settlements with its diverse constituent groups. “We sincerely appreciate the support and cooperation of our financial stakeholders, advisers, creditors and other parties involved in the company’s Chapter 11 process,” said John S. Dubel, SunEdison’s former chief executive, who led the restructuring. “This includes SunEdison’s first and second lien lenders, the official committee of unsecured creditors and the Yieldcos.” Mr Dubel’s predecessor, Ahmed Chatila, resigned in June 2016, just two months after SunEdison’s domestic and international subsidiaries filed voluntary petitions under Chapter 11.

Once considered a major player in clean energy development, SunEdison made a series of acquisitions in recent years, including the $2.4bn purchase of wind-energy company First Wind in 2014. At the time, the deal made SunEdison one of the world’s largest, if not the largest, renewable energy developers.

However, the firm ran into trouble with its attempt to acquire the residential-rooftop solar company Vivint Solar in 2015. Its acquisition spree having racked up a debt of $11bn – more than double its debt load the year before – SunEdison was forced to declare bankruptcy in 2016.

Providing interim management services for SunEdison during the Chapter 11 process was Ankura Consulting, while Skadden, Arps, Slate, Meagher & Flom LLP served as counsel. Togut Segal & Segal LLP served as co-counsel and Rothschild Inc. served as financial adviser and investment banker. Additionally, PricewaterhouseCoopers LLP served as financial adviser and McKinsey Recovery & Transformation Services US, LLC served as restructuring adviser.

Mr Dubel concluded: “We want to thank SunEdison’s outgoing board of directors for their invaluable contributions and guidance relating to the company’s restructuring.”

Fraser Tennant