According to a Wall Street Journal report, financial affairs at the US solar energy major, Sunedison Inc (NYSE:SUNE) is murkier than an expensive $12 billion debt. Other financial irregularities of the Californian company include diversion of funds from two of its profitable “yieldco’s” – TerraForm Global (NASDAQ:GLBL) and TerraForm Power (NASDAQ:TERP), and a “questionable” cash filing before SEC in 2015. The news report states that the company is now being probed by the SEC for intentionally misleading investors about the cash position.
Separately, SUNE has said that it would not file its 10-K reports on March 30 due to “identification of material weaknesses,” in reporting financial information. This has led to further speculation about other financial mismanagement and probably filing of Chapter 11 for bankruptcy.
Bankruptcy Filing on the cards?
Sunedison Inc (NYSE:SUNE), is likely to seek Bankruptcy filing as way out of its financial mess, according to analyst speculation. It was also widely reported that contractors and suppliers were not paid in the last quarter of 2015 and SUNE was struggling to raise funds for internal operations as well.
Earlier in August, during the launch of a warehouse investment vehicle, it had reported $1 billion in cash, apart from funds that invest firm, Goldman Sachs operated. In fact the $1.4 billion cash position in the third quarter was notably about cash the company could not “access.” Additionally, the balance dropped to $100 million by the month of November. However, the cash declaration is now subject to regulatory probe, damaging any chance of recovery of Sunedison Inc’s (NYSE:SUNE) financial mess.
Cannot delay financial reports
Before, filing for insolvency, SUNE has to yet overcome some covenant requirements. The company has to file an annual report within 90 days, after a financial year ends. As Ian Feng, an analyst at Covenant Review states, “delivery of annual financials” is mandatory for both “first and second lien credit facility.” Sunedison Inc (NYSE:SUNE) has $1.4 billion in first and second lien debt, according to SEC filings. Meanwhile, both of yield co.’s of SUNE claim they are financially independent and will operate individually, even if SUNE filings for insolvency.