SunEdison

Documented cause

SunEdison began as a semiconductor company in 1959 and was reinvented under CEO Ahmad Chatila as a renewable energy developer and operator. By 2015 it was the world's largest renewable energy company by installed capacity, with a $9-10B market cap. The aggressive growth was built almost entirely on debt: SunEdison used a yieldco structure — spinning off TerraForm Power and TerraForm Global as publicly traded dividend vehicles — to raise cheap capital and fuel acquisitions. The debt load reached $12B+. When interest rates ticked up and renewable energy valuations compressed in late 2015, TerraForm's stock collapsed, eliminating SunEdison's primary refinancing mechanism. A failed $1.9B acquisition of Vivint Solar consumed management bandwidth during the liquidity crisis. SunEdison filed Chapter 11 in April 2016 with $16B in total liabilities. TerraForm Power survived and was ultimately acquired by Brookfield Asset Management.

Lesson

Failure anatomy