SunEdison Won’t Complete $700 Million Buyout of Latin America Power

SunEdison Won’t Complete $700 Million Buyout of Latin America Power

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.

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