SunEdison's Latin America Power Deal Fails
October 06 2015 - 10:40PM
Dow Jones News
SunEdison Inc. won't complete its roughly $700 million planned
acquisition of Latin American Power as the U.S. solar-energy
producer's woes mount.
Private-equity-owned Latin American Power walked away from its
sale to SunEdison, which was to close Sept. 30, according to people
familiar with the matter. SunEdison failed to make a roughly $400
million upfront cash payment, the people said.
A spokesman for SunEdison said Latin American Power's owners
didn't satisfy conditions required for the deal's completion.
"While SunEdison is disappointed by this outcome, we remain
committed to pursuing attractive opportunities in Latin America and
working with partners in the region," he said, declining to comment
further.
A lawyer for Latin American Power, Michael B. Carlinsky of Quinn
Emanuel Urquhart & Sullivan LLP, said: "We reject SunEdison's
claim as baseless," adding, "We are confident that the record will
show that SunEdison breached its contractual obligations."
Whatever the precise cause of the deal's collapse, it adds to a
litany of difficulties for SunEdison, which is one of the world's
biggest operators of solar power projects. The company, which has
been buffeted by rising expenses among other issues, said Tuesday
it would lay off 15% of its workers and take a write-down of
between $30 million and $40 million.
SunEdison shares fell 3.9% on the news to $8.69, giving it a
market value of just under $3 billion. The stock is down 70% in the
past three months, following a second-quarter earnings report that
was worse than analysts had expected.
As part of a recent acquisition spree, SunEdison agreed in May
to acquire Latin American Power, an owner of wind and hydropower
projects in Chile and Peru. The deal's price tag wasn't disclosed,
but one of the people said it valued Latin American Power at more
than $700 million, including future milestone payments.
In all, SunEdison has struck about $6 billion in deals over the
past year, including acquisitions of Vivint Solar Inc. for $1.9
billion and First Wind Holdings Inc. for $2.4 billion. They have
helped boost the company's debt from $7 billion at the end of last
year to $10.7 billion as of June 30, according to regulatory
filings.
SunEdison also has been hurt by the lackluster performance of
TerraForm Global Inc., a portfolio of power projects it took public
in July. TerraForm shares are down 52% since the initial public
offering.
Further details of SunEdison's cost-cutting plan are expected
Wednesday during a conference call with its executives.
Analysts for J.P. Morgan said in a client note Tuesday that they
expected SunEdison to reduce expenses by as much as 30% by the
middle of 2016.
Latin American Power is majority-owned by BTG Pactual SA, the
Brazilian investment bank, and Patria Investimentos, a Brazilian
firm that is backed by U.S. private-equity firm Blackstone Group
LP.
Write to Liz Hoffman at liz.hoffman@wsj.com
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(END) Dow Jones Newswires
October 06, 2015 22:25 ET (02:25 GMT)
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