SunEdison wants to sell last of its C&I solar business to a Mitsui affiliate

SunEdison Inc. on Jan. 5 asked its bankruptcy court for approval of the sale, without the need for a competitive bid auction, of some remaining solar projects under its C&I Business.

SunEdison proposed a sale hearing for Jan. 24 and a deadline for any objections to this sale of Jan. 19.  

SunEdison Inc. (SUNE) is asking the court to let it and subsidiary Sun Edison LLC execute a Purchase and Sale Agreement with MyPower Corp., dated as of Jan. 5, 2017. The companies have been in Chapter 11 protection since April 2016 at the U.S. Bankruptcy Court for the Southern District of New York.

SUNE and Sun Edison LLC, along with certain of their non-debtor subsidiaries and affiliates, develop distributed generation community solar projects in North America and sell the output of those projects under multiple power purchase agreements to large commercial and industrial organizations, including, among others, municipalities, school districts, and housing authorities (collectively, this is called the “C&I Business”).

The C&I Business also develops on-site behind-the-meter projects such as installations on rooftops, carports, or small ground mounts systems at the host site, where the host then purchases the output directly from the system. SunEdison’s C&I customers are primarily large companies that typically have certain attributes that make them good candidates for SunEdison’s services, such as multiple locations with large rooftops, parking canopies, or unused land, strong credit quality, large electricity consumption requirements, and requisite load usage.

Typically SunEdison, through its C&I Business and other business units, identifies and acquires renewable energy projects in the early stages of development, shepherds and funds an acquired project through the development and construction phases, and then transfers the projects to an identified purchaser (or to the customer).

Throughout the course of these Chapter 11 cases, SunEdison has continued to develop, construct, and transfer projects in various stages of completion to acquirers. Certain of these transfers (or specific transactions and agreements related to such transfers) have been approved by this court, or are the subjects of pending motions seeking such court approval.

Said the Jan. 5 petition to the court: “Following the transfers of a majority of its existing C&I projects, as well as the transfers of a substantial majority of those pipeline projects which had achieved sufficient milestones to be independently transferred, SunEdison has determined, in an exercise of its business judgment and for the benefit of the Debtors’ creditors and all parties in interest, that the C&I Business, including the few remaining pipeline projects, should be transferred to a buyer or otherwise wound down to reduce continued carrying costs.

“Approximately thirty-six (36) of the remaining C&I Business pipeline projects require interconnection or other key contractual payments due from the Company to certain counterparties in December 2016 and January 2017. The Company has been successful in extending or deferring such payments (estimated total amount of $6 million) to January and February 2017 pending a sale of such pipeline projects, but absent payment of such amounts (the majority of which are due by January 31, 2017), the related pipeline projects are at risk of near-total devaluation, to the detriment of the Company and its stakeholders.”

MyPower would pay at least $15 million for these assets. 

Christopher A. Gaudet, the Senior Finance Director of Finance Planning and Analysis at SunEdison, said in a Jan. 5 statement in support of this deal: “I believe it is in the best interests of the Debtors to promptly consummate the Sale Transaction. First, the C&I Business has previously monetized the substantial majority of its project pipeline that has achieved sufficient milestones to stand on its own. Second, the C&I Business platform – largely comprised of the remaining project pipeline, key employees, and intellectual property – would require significant, additional short-term investment in order to preserve the value in the remaining pipeline. This is due, in large part, to certain contractual payment deadlines coming due through the end of January 2017. In addition, I believe that the proposed net sale proceeds represent fair consideration in exchange for the Purchased Assets.”

A buyer contact is: MyPower Corp. c/o Mitsui & Co. Ltd., Infrastructure Projects Development Division 1-3, Marunouchi 1-chome, Chiyoda-ku Tokyo 100-8631, Japan, Attn: Hiromu Kayamori, facsimile: +81 3 3285 9795, H.Kayamori@mitsui.com.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.