The Fall of SunEdison-A Solar Eclipse?
Case Code: FINC125
Case Length: 12 Pages
Period: 2015-2016
Pub Date: 2017
Teaching Note: Available
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Price: Rs.500
Organization: SunEdison
Industry: Solar Energy
Countries: U.S,World
Themes: - |
Abstract
Case Intro 1
Case Intro 2
Excerpts
Introduction
On April 21, 2016, SunEdison Inc. (SunEdison), a global renewable energy company, filed for Chapter 11 bankruptcy protection. "Our decision to initiate a court-supervised restructuring was a difficult but important step to address our immediate liquidity issues," said Chief Executive of SunEdison, Ahmad Chatila (Ahmad). "The court process will allow us to right-size our balance sheet and reduce our debt."
On the same day, the NYSE (New York Stock Exchange) announced suspension of trading in SunEdison shares. SunEdison, which had had a valuation of $10 billion in June 2015, saw its market cap eroding by 100 times in a matter of nine months, making it a penny stock unavailable for trade on the NYSE. Over the years, SunEdison went on accumulating debt. By 2016, the company had debt to the tune of $16 billion which included debt from its subsidiaries, TerraForm Power Inc and TerraForm Global Inc. Its listed assets amounted to $20.7 billion dollars as of September 30, 2015. The sudden fall of SunEdison as a renewable energy major came as a shock to investors as well as analysts who until then had perceived it as an organization poised to become the world’s largest renewable energy company. In June 2015, at a Senior Managers meet in Paris, Ahmad had been enthusiastic about SunEdison's growth. "By 2020," he said, “the renewable-energy startup would be worth more than $350 billion. Some day it would be as big as Apple or Google." Ahmad, who was born in Lebanon, had a degree in Electrical Engineering and was a veteran in the semiconductor industry. In 2009, he was hired as a CEO by Monsanto Electronic Materials Company (MEMC), a provider of silicon parts to the semiconductor and solar industries. In November 2009, Ahmad's first move as CEO was to acquire SunEdison for $340 million.
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