Struggling SunEdison looks to sell projects in India

Mumbai: SunEdison Inc., the world’s largest renewable energy company which is battling a liquidity crisis and facing potential bankruptcy in the US, has put all its India assets on the block, two people familiar with the matter said.

The company is looking to either completely sell off these assets or find equity investors for them. In the latter case, the investor would fund these projects while SunEdison would construct them on EPC (engineering, procurement and construction) basis, the two persons quoted earlier said, requesting not to be identified.

A 500 MW solar power project SunEdison won in Andhra Pradesh in November by quoting record low tariffs in a reverse e-auction is among the projects put up for sale, one of the two persons said.

SunEdison has won a total of about 1,000 MW of solar and wind projects in India in recent months. In the November auction, the company’s aggressive bid for the tender of 500 MW capacity, under the Jawaharlal Nehru National Solar Mission (NSM), saw India’s solar power tariff touch a record low of Rs.4.63 per kWh (kilowatt-hour). Tariffs fell further toRs.4.34/kWh at a January reverse e-auction conducted by the state-run NTPC Ltd due to aggressive bidding by several domestic companies.

In a reverse auction, the roles of the buyer and seller are reversed and a business bid is won by quoting prices downwards.

“We are working with various potential equity partners for our projects because of the overall liquidity crunch,” said Pashupathy Gopalan, president Asia Pacific at SunEdison, replying to a Mint query. He did not name the partners.

Nearly 500 MW of projects in India are funded and are under construction, Gopalan said. “We continue to pursue equity partnerships in our projects to the extent allowed by the PPA (power purchase agreement)… Our business model will be to sell assets depending on PPA restrictions,” he said.

While the company has arranged for debt funding for its projects, it is struggling with equity investments, said the first of the two people cited above.

SunEdison’s publicly-traded unit TerraForm Global Inc. said in a US Securities and Exchange Commission (SEC) filing on 29 March that SunEdison faced “substantial risk” of seeking bankruptcy protection given its liquidity constraints.

Last week, SunEdison also confirmed that it is being investigated by the SEC over any financial irregularity or exaggeration of its liquidity last year, when it had disclosed $1 billion in cash.

SunEdison is preparing a Chapter 11 filing and is in talks with two creditor groups to obtain a loan to fund its operations during the process, The Wall Street Journalreported on 1 April citing people familiar with the matter. Creditors are likely to take control of the company and its portfolio of power projects, WSJ said in the report.

The company has been hurt by a slump in its share price and a cash crunch after a series of aggressive acquisitions. In recent months, SunEdison has announced job cuts and backed off on a deal to acquire Singapore-based Continuum Wind Energy Ltd. In March, US-based solar firm Vivint Solar cancelled its planned $2.2 billion sale to SunEdison.

In the last one year, SunEdison’s shares have fallen 98.3% to 43 cents up to Friday’s close on the New York Stock Exchange. The company, which has a debt of $11.67 billion as on 30 September, has postponed the release of its 2015 annual report twice.

The company has projects of 1.5 GW capacity of which some are operational projects, ready to construct projects and projects under development, Gopalan said.

In November, it sold 425 MW of projects in India to its yield company Terraform Global for $231 million. It had a target of setting up 15 gigawatt (GW) of combined capacity between solar and wind in India by 2022. These plans could now be hurt.

Gopalan did not say how a bankruptcy at SunEdison would impact these expansion plans in India. “We are focusing on a few critical markets. For example, we sold our business in Japan but India remains one of the most important geographies for us and will continue to operate and develop and build our pipeline,” Gopalan said.

India has a target of installing 100 GW of solar power capacity and 60 GW of wind energy capacity by 2022 as part of the Narendra Modi-led National Democratic Alliance (NDA) government’s efforts to lower dependence on coal-fuelled electricity.