(Reuters) - Embattled solar company SunEdison Inc is in talks with holders of its second-lien loans to fund a debtor-in-possession financing facility, Debtwire reported, citing two sources familiar with the matter.
Shares of the company, which is grappling with a huge debt load caused by its aggressive acquisition strategy, fell as much as 19.4 percent to $1.62 on Tuesday.
The talks this week have focused on providing the company with about $300 million in new liquidity, Debtwire reported.
“DIP negotiation means that the company has effectively run out of cash and they get to pay their creditors ‘fair market value’ for the secured assets versus the contracted value,” Axiom Capital analyst Gordon Johnson told Reuters.
The talks follow unsuccessful attempts by second-lien lenders to reach an out-of-court solution for the company’s cash shortage and debt issues, Debtwire reported, citing the sources.
The investor group includes those holding term loans of a total of $725 million, Debtwire reported.
“We decline to comment on rumors and speculation,” SunEdison spokesman Ben Harborne said in an email.
SunEdison delayed filing its annual report for the second time on March 16 after identifying “material weaknesses” in its financial reporting, primarily related to problems with a newly implemented IT system.
The company had outstanding debt of $11.67 billion and cash and cash equivalents of $2.39 billion as of Sept. 30.
Solar panel installer Vivint Solar Inc earlier this month terminated a deal to be taken over by SunEdison, amid concerns about SunEdison’s weak finances.
SunEdison’s shares have fallen about 92 percent in the past 12 months.
Reporting by Amrutha Gayathri and Anet Josline Pinto in Bengaluru; Editing by Sriraj Kalluvila
Our Standards: The Thomson Reuters Trust Principles.