SunEdison Inc., one of the biggest and most successful solar panel installers in the world, filed for bankruptcy protection Thursday after overextending itself on acquisitions.
The Chapter 11 filing in a New York court will give the Maryland-based project developer time to reorganize, but it is a blow to the solar sector, which is in the midst of a growth spurt thanks to a decline in panel prices and a broad global shift to renewable sources of power.
SunEdison is also an important player in Canada's solar industry, having built well over a dozen large solar farms in Ontario, and many rooftop systems over the last few years. It became less active recently as its big ground-mounted projects were completed, but the company still has operations here and an office in Toronto.
It is not clear how the Canadian division will be directly affected by the U.S. filing, or whether it will file for bankruptcy protection in Canada. A subsidiary called SunEdison Canada LLC was one of the "affiliated entities seeking relief" that filed in the U.S. bankruptcy court, but a SunEdison spokesman said "despite its name, there is not an indication that the Canadian operations will file."
SunEdison Canada is involved in a number of ongoing projects. In a partnership with electricity producer Ontario Power Generation and a First Nations development company, it recently won a contract to build a 44-megawatt solar farm at the now-closed Nanticoke coal-fired power generation station on Lake Erie. An OPG spokesman said development of the project will continue, and it is "premature" to say whether that will happen without SunEdison's involvement.
SunEdison Canada has also signed a 10-year agreement with Ontario's electrical system operator to supply five megawatts of battery storage to Ontario's power system. The Independent Electricity System Operator said Thursday that it is not clear how the U.S. bankruptcy filing will affect that project.
On a website set up to provide information about the bankruptcy filing, the parent company said it intends to "continue work on our ongoing projects around the world." However, it added that "we will continue to rigorously evaluate our portfolio of development projects within the context of our current operating environment."
SunEdison's problems stemmed from debt built up through expansion and acquisitions. The most recent large deal, a plan to buy Utah-based residential solar installer Vivint Solar Inc. for about $2-billion (U.S.), fell through in March. But SunEdison has made many other purchases of companies that install solar panels, and even branched into wind power.
The company's stock, which traded over $30 a share on the New York Stock exchange last summer, fell below 35 cents this week. In 2004, the company generated about $2.5-billion in revenue, and about $350-million of that was in Canada.
SunEdison chief executive officer Ahmad Chatila said in a statement Thursday that the bankruptcy filing is "a difficult but important step to address our immediate liquidity issues." The company will shed "non-core assets," he said, and take other steps to "get the most value out of our technological and intellectual property."
The company has already lined up $300-million of debtor-in-possession financing, funds which will help it keep functioning while it reorganizes under bankruptcy protection.
SunEdison has also been hit by a number of legal claims, some from shareholders who say it issued misleading information about its finances. It is also under investigation by justice and securities bodies in the United States.
John Gorman, president of the Canadian Solar Industries Association, said "you never like to see this happen in any industry," but he didn't think the bankruptcy filing would damage the sector globally. "This is par for the course for a maturing industry."
The solar sector has grown to include large companies all over the world, Mr. Gorman said, and "it is too big now to be hurt by any one company having difficulties." A substantial proportion of all new electrical generation projects around the world now involve solar technology, he noted.