DING DONG THE WITCH IS DEAD
John's latest update on graft, corruption and waste in the energy sector.
SunEdison SUNE, +0.83% said Thursday that it filed for bankruptcy protection, a move that has been expected by investors for weeks. The renewable energy company's stock was halted for news. The company said it has secured $300 million in debtor-in-possession financing to minimize business disruptions while it restructures. "Our decision to initiate a court-supervised restructuring was a difficult but important step to address our immediate liquidity issues," said Chief Executive Ahmad Chatila. SunEdison said its yieldcos, TerraForm Power TERP, +8.11% and TerraForm Global GLBL, +9.62% were not part of the filing. TerraForm Power's stock surged 4.1% in morning trade and TerraForm Global shares climbed 3%.
Potential legal damages stemming from deals SunEdison failed to close while its finances were deteriorating could total hundreds of millions of dollars, according to court filings and people familiar with the deals. Litigation over the failed deals could add to the company’s already lengthy list of creditors and possibly extend to its publicly traded subsidiaries.
SunEdison’s swift rise and fall was fueled by its appetite for takeovers and the availability of cheap money from Wall Street to finance them. When that financing dried up during a volatile period in the markets and a slide in oil prices, SunEdison backed out of several transactions.
Of 11 deals reached since last May, SunEdison has failed to close five with a combined value of about $3.8 billion, according to FactSet. It is in active litigation or arbitration on two of them, and other counterparties are reviewing litigation options, according to people familiar with the matter.
This is a frightening clip from February last year. SunEdison CEO tells CNBC that his company is at least 25% undervalued.
SunEdison CEO: We are 25-30% Undervalued
While SunEdison's fate is all but sealed, the fates of its yieldcos TerraForm Power and TerraForm Global are less certain. But they could be in trouble as well if SunEdison does go under.
In late March, TerraForm Global warned investors that some of its debt repayments could be accelerated if SunEdison files for bankruptcy and some power purchase agreements on projects could be reduced. One of the core problems was $231 million it paid to SunEdison for 425 MW of uncompleted projects in India. By all accounts, those projects either won't be completed on time or at all, which led TerraForm Global to sue SunEdison earlier this month.
What makes TerraForm Global so risky for investors is the fact that a SunEdison default could lead to a cascade of financial impacts that could lead to a default for the yieldco. And without updated financial statements since the end of September, it's hard to assess what SunEdison's finances really look like.
TerraForm Power, a "yieldco" of SunEdison, has a recently-confirmed, but undisclosed SEC probe. In a letter to us dated March 14, 2016, the SEC confirmed enforcement proceedings were ongoing at TerraForm Power.
At the end of Mar-2016, SunEdison disclosed both a DOJ and SEC investigation. This followed the company's delayed 10-K filing announced at the end of Feb-2016. Yet information recently received from the SEC shows TerraForm Power, a "yieldco" of SunEdison, was already under investigation by the SEC prior to either of these two events occurring at SunEdison. To this day, the SEC investigation of TerraForm Power, which was confirmed as on-going as of 14-Mar-2016, remains undisclosed.
Through the troubles, Electrek has learned that Tesla hired a key member of SunEdison’s energy storage team. Mohammad C. Bozchalui is an expert in grid solutions. He holds a MSc in Electrical Engineering from the University of Tehran and a Ph.D. in Power and Energy Systems from the University of Waterloo, according to his LinkedIn profile.
In a 13D filing on SUNEDISON, Inc. David Einhorn's hedge fund Greenlight Capital disclosed a 2.8%, or 11,331,833 share, stake in the company. This is down 58.26% from the 27,151,576 shares held at the end of the latest quarter ending March 31, 2016.
Paul Pelosi Invested in SunEdison Weeks Before First Wind Purchase
WASHINGTON-- House Democratic Leader Nancy Pelosi’s husband bought up to a quarter million dollars of stock in SunEdison, a now financially troubled green energy company just weeks before it announced a major 2014 acquisition that sent its stock price soaring. SunE's 2014 purchase of wind energy company First Wind “further bolstered the reputation of the company,” wrote one market-watcher at the time. “Perhaps unsurprisingly, SunEdison’s stock soared 29% on news of this acquisition alone.”
Pelosi’s husband, Paul Pelosi, had invested just in time. He bought between $100,000 and $250,000 in SunEdison stock on Oct. 24, 2014, according to congressional financial disclosures. The company announced its First Wind acquisition on Nov. 17.
Pelosi has previously been accused of trading stock based on information gleaned through her official duties. A law passed in the wake of that controversy prohibits members of Congress from using nonpublic information for personal gain. Language in that measure was informally dubbed the 'Pelosi Provision.'
Additionally, Federal Election Commission records made available by the Center for Responsive Politics show that SolarReserve board member James McDermott has contributed $61,500 to various Democratic campaigns since 2008, including $30,800 to Obama’s presidential election campaign.
McDermott’s U.S. Renewable Energy Group has a significant financial stake in SolarReserve, and has drawn scrutiny for its ties with Senate Majority Leader Harry Reid — and for reportedly driving green jobs to China.
And Lee Bailey, a fellow SolarReserve board member and U.S. Renewables Group investor, has donated $21,850 since 2008 to Democratic candidates including President Obama, Senate Majority Leader Harry Reid, California Sen. Barbara Boxer and then-presidential candidate Hillary Clinton.
SolarReserve’s board of directors also includes Jasandra Nyker of Pacific Corporate Group Asset Management, where former Speaker of the House Nancy Pelosi’s brother-in-law, Ronald Pelosi, holds a leadership position.
NEW YORK – The collapse of a Spanish-based multinational renewable energies company could cause election-year embarrassment not only to President Obama, Hillary Clinton, the Clinton Foundation and the Democratic Party, but also to Republican presidential candidate Ted Cruz and his wife Heidi, through their ties to Goldman Sachs.
This blockbuster saga entails the law-breaking Spanish conglomerate that carries direct ties to a slew of powerful U.S. Democrats, which bagged over $3 billion of American taxpayer money, with the vast majority coming from President Obama's trillion-dollar stimulus package, coupled with high-praises from the president, is now imploding.
Democrat billionaire Tom Steyer has donated more than $20 million to candidates and outside groups to influence this year’s election, making him the top individual contributor in 2014. And that’s just a fraction of the $50 million Steyer has said he’s willing to spend.
Pelosi, the former House speaker who currently serves as Democratic leader, has used her Washington perch to boost some of Steyer’s projects with government aid. In total, Steyer has benefited from more than $1 billion in taxpayer money. According to her own press releases, Pelosi is responsible for a share of that total.
OIL AND GAS BANKRUPTCY
Four more Texas energy companies filed for bankruptcy last week, bringing the total to 21 North American producers that have filed since the start of the year, according to data from Haynes & Boone. Since the beginning of 2015, there have been 63 North American producers that have filed for bankruptcy. Of those companies, the largest concentration is Texas-based, with 31 of the companies stemming from the Lone Star State. Here are the latest companies to join the Texas energy bankruptcy club.
Haynes and Boone has tracked 63 North American oil and gas producers that have filed for bankruptcy since the beginning of 2015. These bankruptcies, including Chapter 7, Chapter 11, Chapter 15, and Canadian cases, involve approximately $22.5 billion in cumulative secured and unsecured debt. As of April 15, 2016, 21 producers have filed bankruptcy so far this year. All indications suggest many more producer bankruptcy filings will occur during 2016.