SunEdison Legal Woes Mount With Suits Over First Wind, Indiaby and
TerraForm Power, SunEdison sued over debts in First Wind Deal
TerraForm Global sues SunEdison over India project funds
The legal woes are mounting for SunEdison Inc.
Two creditors filed a lawsuit Sunday against the struggling company’s TerraForm Power Inc. holding company seeking $231 million related to an acquisition last year. Also Sunday, SunEdison’s TerraForm Global Inc. yieldco filed a separate suit over renewable-energy projects in India.
D.E. Shaw & Co. LP and Madison Dearborn Capital Partners IV LP say the funds in the TerraForm Power matter are owed as deferred payment for SunEdison’s $1.9 billion purchase of First Wind Holdings LLC in January 2015, and will be due “immediately” if SunEdison files for bankruptcy or restructures its debt, according to the suit filed in the Supreme Court of the State of New York.
First Wind was one of SunEdison’s biggest purchases, and made it the world’s biggest renewable-energy company. It was part of a massive buying spree that racked up $11.7 billion in debt by the end of September and helped drive the company to the edge of failure.
“By all reports, SunEdison is on the verge of bankruptcy,” D.E. Shaw and Madison Dearborn said in the suit. “That bankruptcy will trigger substantial contractual payment obligations.”
Under the First Wind deal, SunEdison and TerraForm Power bought 500 megawatts of operating wind farms, 21 megawatts of operating solar farms and 1.6 gigawatts of development-stage projects. They deferred about $510 million in earn-out project payments, and about $231 million of that amount remains unpaid. That’s the amount D.E. Shaw and Madison Dearborn Capital are seeking from TerraForm Power, which also was one of the buyers and shares responsibility for the debt, according to the suit.
“During the fall of 2015, SunEdison failed to make timely earn-out project payments and indicated that it would not comply with its obligations,” according to the suit. D.E. Shaw and Madison Dearborn Capital notified SunEdison and TerraForm Power Nov. 18 that this would lead to an “acceleration event” that would make TerraForm Power responsible for the entire amount.
Ben Harborne, a SunEdison spokesman, declined to comment on pending litigation, as did spokesmen for TerraForm Power and TerraForm Global.
Separately, TerraForm Global sued parent SunEdison in a dispute over $231 million in funds transferred in connection with renewable-energy projects in India.
SunEdison officials said in November that they sought the transfer of funds from TerraForm Global to complete the Indian projects, according to TerraForm Global’s suit filed in Delaware Chancery Court late Friday. Once completed, the Indian projects would be owned by TerraForm Global, the filing said.
“In fact, the projects were underfunded and behind schedule and SunEdison instead diverted the funds to prop up its flagging liquidity position,” TerraForm Global officials said in the suit.
TerraForm Global is asking a judge to have its interests in the Indian projects protected through a trust and seeks an undetermined amount of monetary damages from SunEdison.
SunEdison is seeking to sell as much as 1 gigawatt of unfinished projects in India, say people familiar with the matter.
The case involving the First Wind deal is D.E. Shaw Composite Holdings LLC v. TerraForm Power LLC, 651752/2016, New York State Supreme Court, New York County. The other case is TerraForm Global Inc. v. SunEdison Inc., No. 12159, Delaware Chancery Court (Wilmington).