Biggest Sale of Clean Energy Finds No Buyer for All of SunEdisonby , , and
SunEdison said to receive no bids for entire company
Top renewable-energy developer filed year’s biggest bankruptcy
For SunEdison Inc., the whole is attracting less interest from buyers than its parts.
Three months after filing for Chapter 11 bankruptcy protection with $16.1 billion in liabilities, the developer has yet to field any bids to take over the entire business, according to two people familiar with the sales process.
Instead, it’s received more than 100 indications of interest for specific assets, Rothschild Inc., which is managing the sales process, said last week. That includes bids for individual projects, for bundles of wind and solar farms, and for its entire commercial and industrial unit. The developer also received at least one inquiry about its controlling stake in TerraForm Power Inc., one of its most valuable holdings. Potential buyers are looking to cherry-pick the company’s best assets, or may be pursuing low-ball bids for the most speculative ones.
“It’s a piecemeal approach,” said Colin Smith, a solar analyst at GTM Research in Boston. “Or you’re buying a dozen eggs knowing a few of them will be broken.”
And there are a lot of eggs -- a smorgasbord of wind and solar farms at just about every stage of development. SunEdison is marketing most of its assets and will entertain offers for all of them, according to one of the people who discussed the sales process and asked not be identified because the details aren’t public.
At least 50 projects on five continents, from the U.S. and the U.K. to India, South Africa and Chile, are available with more than 5 gigawatts of capacity. That would be enough to power Ecuador if they were all completed, and is a significant subset of as much as 8 gigawatts of power projects the company has said it owns.
“This is arguably the unwinding of the largest and most diverse set of assets in the history of the renewable-energy industry,” said Nathan Serota, an analyst at Bloomberg New Energy Finance.
Some assets are operational, selling power to stable utility buyers under long-term contracts, according to an April company presentation. Others are listed zero-percent complete on the presentation, barely more than a patch of dirt and some paperwork. A good chunk was picked up during the two-year, multibillion-dollar buying-binge that made SunEdison the world’s biggest clean-energy developer.
While the sheer size of the portfolio and the compressed schedule for arranging the sale made the process unwieldy at the start, it’s becoming more organized. A spokesman for SunEdison declined to comment on efforts to sell assets.
There’s no formal sales process yet for SunEdison’s stakes in TerraForm Power and sister company TerraForm Global Inc., through Class B shares that give it control over the two publicly traded yieldco units, according to the two people.
Brookfield Asset Management Inc. is now TerraForm Power’s biggest owner of standard Class A shares and also expressed interest in buying the Class B shares that have voting rights, according to a June 29 filing. A spokesman for the two TerraForm companies declined to comment on the sales process.
There’s an “elevated probability” that Brookfield’s clean-energy generation unit Brookfield Renewable Partners will become “the ultimate owner of TerraForm Power,” Greg Jones, an analyst at CreditSights Inc., said in a research note Monday. “The key question is will SunEdison creditors let Brookfield purchase the TerraForm Power Class B shares at such a deep discount to peers or will creditors attempt to restart the company.”
Renewable-energy assets are typically marketed through online document-management systems, known as data rooms, that offer secure access to evaluate technical details about projects. The SunEdison site, portions of which were shown to Bloomberg, lets potential buyers evaluate projects by various criteria, including funding status and location; there’s even an “Add to Favorites” button.
SunEdison’s data room lacked some key fact sheets for some projects when it went live. And in late June, data for at least one U.S. wind farm conflicted with details on another spreadsheet that had information on multiple assets. This has frustrated potential buyers.
“People are trying to understand what is the value of these projects, what are they worth, how much should I pay for them,” said Greentech Media’s Smith. “It’s still muddled and messy. Each project is different. Some are easier to get through than others.”
The sale is attracting large players with the resources to value assets and assemble bids, including other developers and private equity companies. SunPower Corp., the second-biggest U.S. panel producer, has evaluated SunEdison projects with power-purchase agreements, according to Chief Executive Officer Tom Werner. And the clean-energy developer Pattern Energy Group LP paid $13 million for development rights for a proposed 600-megawatt SunEdison wind farm in Maine.
A buyer “would need to be a big company with the bandwidth and size,” Smith said.
The bankruptcy process makes sales more complicated because some debtors need court permission to sell some assets, and it’s not always clear which ones. When SunEdison sought approval to grant a potential buyer exclusivity rights for two Texas solar projects, a judge in June said he didn’t have authority over deals involving the company’s non-bankrupt units.
Another issue is that some projects face development deadlines with governments or utilities. When SunEdison asked for court approval to sell a California solar farm, it cited the looming expiration of its interconnection rights.
“We’ve seen many bankruptcies in the renewable-energy industry, but most have involved manufacturers, not developers like SunEdison,” said Angelo Zino, an analyst at S&P Global Market Intelligence. “We’ve never seen anything like SunEdison.”