SunEdison Sped Up $1 Billion Goldman Deal to Reassure Investors

When SunEdison Inc. lost a quarter of its market value in a single day this month, Chief Financial Officer Brian Wuebbels knew he had to do something.

The world’s biggest developer of wind and solar farms is down more than 50 percent in the past month, including a 25 percent plunge Aug. 6 after releasing its second-quarter results.

One of the big concerns for investors is liquidity. With potential plans for more than 50 gigawatts of power plants around the world, SunEdison needs lots of money. To demonstrate that the Maryland Heights, Missouri-based company can pay for all those wind turbines and solar panels it plans to install, Wuebbels fast-tracked several deals, including a $1 billion fund with Goldman Sachs Group Inc.

“Market sentiment shifted very quickly,” Wuebbels said in an interview Wednesday at Bloomberg’s headquarters in New York. “We wanted to reassure investors that we’ll be O.K.”

On Monday, SunEdison announced details of the investment vehicle with a Goldman Sachs-managed fund, which will build and buy clean power plants. Wuebbels said the capital will help the company meet its future growth targets, and under certain conditions it may expand by another $1 billion.

SunEdison also announced plans Tuesday to raise $650 million by selling preferred shares. Last week, it sold half of a 420-megawatt solar project in Utah to Dominion Resources Inc. for $500 million.

‘Rapid Shift’

Those transactions had been in the works for months, and in response to the “very rapid shift” in the market, “we accelerated those activities,” Wuebbels said Wednesday.

The moves haven’t had much effect on the stock. The shares slipped to $13.35 on Aug. 11, a 19-month low, and were trading at $13.75 at 11:08 a.m. in New York.

“They did shore up their balance sheet, for now, but future financing needs may be more difficult,” Ben Kallo, an analyst at Robert W. Baird & Co. in San Francisco, said in an interview. He reduced his 12-month price target Wednesday to $20 from $35.

SunEdison has grown rapidly, through acquisitions and by creating two publicly listed companies that own and operate the power plants it builds, TerraForm Power Inc. and TerraForm Global Inc. That business structure may also be intimidating investors, Kallo said.

Vivint Deal

The company agreed in July to buy Vivint Solar Inc., the second-largest provider of U.S. residential solar systems. In March, it bought Solar Grid Storage LLC to add battery system technology, and in January it paid $1.9 billion for First Wind Holdings Inc.

With the acquisitions, SunEdison expects to double installations next year to 4,200 megawatts to 4,500 megawatts, from 2,100 megawatts to 2,200 megawatts this year.

“We think their pipeline of opportunities is very impressive,” Edward Pallesen, head of Goldman Sachs’s infrastructure investment group for the Americas, said in an interview. He cited SunEdison’s track record for completing plants on time and on budget, as well as its diverse portfolio, in terms of size, technology and location.

The company’s goals may be too ambitious. “Their target for next year is very aggressive by any standard,” Kallo said. “It would be favorable for them to ratchet that down.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE