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TechSunEdison

SunEdison Cuts Factories, Jobs in Attempt to Stay Afloat

By
Katie Fehrenbacher
Katie Fehrenbacher
By
Katie Fehrenbacher
Katie Fehrenbacher
February 18, 2016, 4:03 PM ET
SUNEDISON INTERCONNECTS 16.4 MEGAWATT SOLAR POWER PLANT FOR DAVIS-MONTHAN
SunEdison Interconnects 16.4 Megawatt Solar Power Plant for Davis-Monthan Air Force Base. Photo Credit: Davis-Monthan Air Force. (PRNewsFoto/SunEdison) THIS CONTENT IS PROVIDED BY PRNewsfoto and is for EDITORIAL USE ONLY**Photograph by AP/PRNewsFoto/SunEdison

In the wake of a massive acquisition binge gone wrong and a stock that’s plummeted in recent months, beleaguered clean energy company SunEdison is closing factories and cutting jobs in an attempt to right itself.

On Thursday SunEdison (SUNE) announced it plans to sell its silicon wafer factory in Malaysia, close a silicon factory in Texas, and restructure its operations in Oregon. The changes will add a charge of $435 million to SunEdison’s fourth quarter earnings, and eliminate 220 jobs.

As a result of the announcement, SunEdison’s shares sunk more than 11% to $1.49 in morning trading. That’s a small fraction of its stock price, which traded at a high of $33.45 last summer.

For more on on the economics behind clean energy:

A year and a half ago, SunEdison was flying high, acquiring large, clean energy developers like wind company First Wind, and Vivint Solar, which at the time was the second largest solar installer in the U.S. But following the news of the $2.2 billion acquisition of Vivint, investors started to grow wary of the big spending, and SunEdison’s stock began to slide.

In recent months, SunEdison backed away from some of those acquisitions. The company was reportedly shopping around some of the Vivint Solar assets, but private equity group Blackstone Group, which owns shares in Vivint, won’t likely let SunEdison out of the deal. SunEdison did walk away from a deal to buy Latin America Power, which develops clean energy across South America.

However, last week Latin America Power turned around and sued SunEdison, trying to get access to $150 million in arbitration as a result of the failed deal. The lawsuit contends that SunEdison is “teetering on the edge of bankruptcy.”

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In addition to backpedaling on the buying spree, SunEdison is also now desperately cutting costs and slashing some of the divisions that once made it highly valued. Earlier in the month SunEdison sold off its Japanese solar arm to a Thai oil company.

Now it’s continuing its slash and burn strategy to stay afloat. But with a handful of lawsuits pending, and a stock price below $2 per share, how much runway does SunEdison have before it reaches the end of the cliff?

About the Author
By Katie Fehrenbacher
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