SunEdison Has Loan Deal, Gives Creditors Funds for Probe

  • Creditors, lenders and yieldcos all support new financing
  • Company drops examiner bid in favor of creditor committe probe

SunEdison Inc. reached a new agreement on a loan to fund its operations in bankruptcy, overcoming objections from creditors -- who will also be allowed to investigate the renewable-energy giant’s pre-bankruptcy conduct to seek possible recoveries.

“The devil’s in the details, there’s lots to discuss. We’re hopeful this is the first step to building a consensual plan here,” the company’s lead lawyer, Jay Goffman, told U.S. Bankruptcy Judge Stuart Bernstein in a Manhattan court Friday. 

After spending the past four days in negotiations, lawyers reached an understanding of what the loan will look like. They’ll return to court June 7 to seek Bernstein’s approval of the package, once the necessary documents are completed and filed.

SunEdison also agreed to drop its request for an examiner to look into its pre-bankruptcy actions and will instead allow creditors to investigate any claims.

The company was forced to suspend a hearing Thursday on the original $1.34 billion loan package in the face of objections from the official creditors’ committee and the company’s two yieldcos -- TerraForm Global Inc. and TerraForm Power Inc. -- public, non-bankrupt companies created to buy the wind and solar projects SunEdison develops.

Creditors had disputed how much new money the loan would actually bring the company, as opposed to just repackaging existing debt. They also bridled at the amount of control SunEdison was ceding to the DIP lenders, saying it would give them exclusive rights to decide whether to liquidate the renewable energy developer as early as next week.

Assurances

The yieldcos had sought assurance that the fees they pay SunEdison for asset management, operations and maintenance would be used exclusively to support those services.

“The DIP lenders have agreed to that on the record of the court,” Andrew Dietderich, a lawyer for the TerraForms, said in an interview after Friday’s hearing. “On that basis, the yieldcos are comfortable making payments because we’re confident we’ll continue to receive those services.”

The new, consensual loan agreement announced Friday will create a $10 million litigation trust to investigate potential claims against the company’s directors and officers, but not pre-petition lenders, lawyers told Bernstein. The creditors’ committee will also have a $175,000 “challenge budget” to pursue claims.

“The focus of the committee really was: We understand that these are going to be difficult cases. Unsecured creditors should have some opportunity for some value here if value is maximized for all constituents,” said Matthew Barr, a lawyer for the creditors.

The case is In re SunEdison Inc., 16-10992, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

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