SunEdison, TerraForm Again Delay Annual Reports
March 16 2016 - 9:00AM
Dow Jones News
SunEdison Inc. on Wednesday said it is again delaying the filing
of its annual report, citing in part the discovery of "material
weaknesses in its internal controls over financial reporting."
Shares in the solar-energy company, which have lost 67% over the
past three months and 91% over the past year, slid another 16% to
$1.73 in premarket trading. The delay comes a week after Vivint
Solar Inc. terminated its merger agreement with SunEdison.
The company, whose deadline to file its 10-K was previously
extended to March 15, didn't give a new target date.
SunEdison said the material weaknesses primarily result from
"deficient information technology controls in connection with newly
implemented systems." The company said additional procedures are
necessary to complete the annual financial statements.
SunEdison had said in a regulatory filing earlier this month it
would delay its 2015 earnings report while its board investigates
claims from a former and a current employee challenging the
accuracy of the company's financial disclosures.
On Wednesday, SunEdison said its audit committee investigation
of the accuracy of the company's anticipated financial position
previously disclosed to the board isn't finished.
The company said to date, the additional procedures performed as
a result of the material weaknesses identified and the
investigation by the audit committee "have not resulted in the
identification of any material misstatements or restatements of the
company's audited or unaudited consolidated financial statements or
disclosures for any period previously reported by the company."
Vivint had terminated its merger agreement with SunEdison,
saying the solar-energy company's mounting financial woes had kept
it from meeting the deal's obligations.
Vivint said SunEdison's failure to consummate the merger when
required constitutes a willful breach of the agreement, and the
rooftop-solar company plans to "seek all legal remedies available
to it."
Barclays PLC, Citigroup Inc., Goldman Sachs Group Inc. and UBS
Group AG had balked at providing loans they had committed to fund
the takeover, according to people familiar with the matter. The
banks had told SunEdison its failure to provide them with
up-to-date financial statements meant it hadn't fulfilled a
condition of the loan agreement, the people said.
Investors have soured on SunEdison's "yieldco" business model,
which relies heavily on selling finished power projects to two
publicly traded subsidiaries. Stock-price tumbles at those
entities, TerraForm Power Inc. and TerraForm Global Inc., made it
harder for them to raise funds to buy projects, setting off a
series of investor worries.
TerraForm on Wednesday also said it would delay the filing of
its annual report as its financial reporting and control processes
rely significantly on SunEdison systems and personnel. TerraForm
said it hasn't identified any material misstatements or
restatements in its previously reported financials.
The company said, however, it has discovered material weaknesses
in internal controls over financial reporting primarily because of
ineffective controls in relation to its Enterprise Resource
Planning systems and processes for validating revenue
recognition.
"We are working to remediate these issues as promptly as
practicable," it said in a statement.
TerraForm said that because it delayed filing its 10-K beyond
the 15-day extension period, it received a notification letter from
Nasdaq saying it is no longer in compliance with market rules. The
company has until May 16 to submit a plan to Nasdaq as to how it
plans to regain compliance with listing requirements. TerraForm
said if it is unable to file its 10-K by then, it intends to submit
a compliance plan.
Shares of TerraForm, which have fallen 20% over the past three
months and 70% over the past year, skidded 19% lower to $8.56
premarket.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
March 16, 2016 08:45 ET (12:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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