SunEdison Inc (NYSE:SUNE) is being probed by the Securities and Exchange Commission. As per a report from the Wall Street journal, the SEC is examining SunEdison’s disclosures to find out whether the solar company overstated its liquidity in 2015, when it claimed it had over $1 billion in cash.
SEC personnel are investigating how much cash the organization had in August, when the latter declared it would establish a $1 billion ‘warehouse investment fund’ along with investments handled by Goldman Sachs Group Inc (NYSE:GS).
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The company’s shares crashed by 95% over the past year and is engaging with advisers on a possible bankruptcy filing. As per WSJ, the $1.4 billion in cash that SunEdison had declared in its third quarter comprised primarily cash it lacked access to. By November, the balance had decreased to below $100 million.
SunEdison is laboring under a big debt and had ceased paying certain suppliers and contractors by the end of last year and was struggling internally for means to obtain cash. The SEC refused to comment while SunEdison did not answer queries on the matter.
On Tuesday one of SunEdison’s publicily listed units issued a warning that the parent company is at significant risk of bankruptcy. SunEdison’s aggressive acquisition strategy in the past led it to accumulate over $11 billion of debt. One of two SunEdison yieldcos TerraForm Global Inc (NASDAQ:GLBL) said it would follow its parent as well as field yieldco TerraForm Power Inc (NASDAQ:TERP) in postponing its annual report for 2015. Yieldcos are publicily traded subsidiaries that possess renewable energy assets including assets purchased from their parent companies.
The company said it did not depend much on SunEdison for funding and that it would have enough liquidity to fund its operations even if its parent organization looked for bankruptcy protection. The annual report of TerraForm Global was supposed to be released by March 30th. SunEdison postponed filing its annual report two times and has said it had pinpointed material weaknesses within its financial reporting controls. It remains to be seen if SunEdison recovers financially as well as passes the SEC investigation.
