Vivint Solar pulls the plug on the $1.82B SunEdison merger deal
- Major rooftop solar developer Vivint Solar terminated its $1.82 billion merger deal with utility-scale renewables developer SunEdison today, citing a "willful breach" of the agreement.
- The financially embattled utility-scale solar developer failed to meet its obligations laid out in the merger agreement, Vivint Solar said in a statement, adding that they will "seek all legal remedies" to reduce financial penalities otherwise incurred because they ended the deal.
- The deal was originally valued at $2.2 billion when the deal was announced, but was later renegotiated in late 2015 to about $1.82 billion.
The termination of the Vivint deal caps a difficult period for SunEdison, the world's largest clean energy developer.
And in 2015, the developer had to cut 15% of its workforce in its bid to streamline its business after aggressive project devlopment and acquisitions. In addition to pushing purchases of Vivint and wind developer First Wind, the company has also been adding 1 GW of renewables generation to its portfolio quarterly.
Company executives said the Vivint acquisition would help make SunEdison “the first renewable energy supermajor,” but investors recoiled, beginning the downward slide in its stock.
Now the latest twist in SunEdison's financial woes could actually be a boon for the company, Greentech Media reports, though analysts at Oppenheimer Equity Research told Greentech Media the move "suggests SUNE liquidity/bankruptcy risks could be serious."
Even so, the termination of the deal could provide some financial relief for SunEdison's yieldco, TerraForm Power.
Under the Vivint deal, SunEdison to would have had to use $789 million from TerraForm Power, the developer’s yieldco, to partially fund the acquisition. TerraForm was established by SunEdison to monetize the utility-scale generation it builds and owns.
"It is likely in our view that [TerraForm] will see substantial relief from these obligations," wrote Oppenheimer analysts to Greentech Media.
Beforehand, SunEdison struggled to find banks willing to finance the acquisition, especially after two recent SunEdison acquisitions may have compromised its financial leverage, leaving investors with the impression it had over-reached.
As for Vivint Solar, the high demand for rooftop solar in the U.S. will likely cushion any impacts from ending the deal and allow the company to continue growing, an analyst from Deutsche Bank told Greentech Media, especially since the federal investment tax credit for solar was extended an additional five years.
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