SunEdison Replaces CEO of Two TerraForm Companies in Shakeup

  • CEO Chatila stays on after shares sink 87 percent in past year
  • TerraForm Power, TerraForm Global under new management

SunEdison Inc., the worst-performing solar company, reorganized the structure of its three interconnected companies, affirming its support for Chief Executive Officer Ahmad Chatila and giving more authority to Chief Financial Officer Brian Wuebbels.

Wuebbels is immediately taking over as CEO of TerraForm Power Inc. and TerraForm Global Inc., replacing Carlos Domenech who held the top position at the two businesses SunEdison formed to own and operate power plants. Wuebbels will continue as CFO at SunEdison, the Maryland Heights, Missouri-based company said in a statement Monday. Domenech is leaving the company.

The changes come after bigger-than-expected losses triggered a slide in shares of SunEdison and the two TerraForms, threatening their ability to raise funds to make new acquisitions. That’s prompted some investors to question Chatila’s strategy, and the company on Monday affirmed its support for the moves that have made it the world’s biggest renewable energy developer.

“The board and management are aligned around SunEdison’s strategy,” Chairman Emmanuel Hernandez said in the statement.

Financing Costs

The moves reflect the company’s focus on driving growth at the TerraForm units mainly through acquiring SunEdison projects “with less reliance on third-party acquisitions,” according to separate statements from the two holding companies.

Both TerraForm companies have slumped, which may make it harder for them to finance acquisitions from SunEdison, analysts at Macquarie Group led by Angie Storozynski, said in a research note Monday. TerraForm Power has dropped 74 percent in the past year, while TerraForm Global has declined 64 percent since its initial public offering in July.

“While we are stunned by the sudden change in management, we recognize the need for a drastic strategic move in light of the sharp sell-off,” Storozynski said. She has the equivalent of buy ratings on all three companies. “Growth originating from SunEdison was definitely emphasized in the releases and our follow-up call with management.”

That may indicates a change from just six weeks ago, when Chatila said SunEdison would seek outside buyers for the power plants his company completes instead of selling them to TerraForm Global and TerraForm Power.

“This seems to be desperation for SunEdison,” Gordon Johnson, an analyst at Axiom Capital Management, said in an interview. “From a SunEdison shareholder perspective it’s good news for now because they’ll have a buyer, but it’s bad for TerraForm.” He has a sell rating on SunEdison.

SunEdison isn’t pursuing sales now to the TerraForm units, often described as yieldcos.

“In the immediate term, SunEdison intends to warehouse assets or sell them to third parties until a time when it is appropriate to sell assets to the yieldcos,” Gordon Handelsman, a SunEdison spokesman, said in an e-mail. “When the yieldcos are trading at a level where it makes sense for them to acquire assets, there will be focus around acquiring projects” from the parent company.

SunEdison shares have fallen 87 percent in the past year, making them the worst performer among the 20 members of the BI Global Large Solar Energy index in the past year.

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