SunEdison lacked sufficient controls over cash flow management

SunEdison lacked sufficient controls over cash flow management

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THURSDAY: SunEdison Inc. has released press releases claiming that an ongoing internal investigation on it has come to an end by U.S. Justice Department – stating solar-energy company to have lacked accounting operation. Hence, no material mis-statements/evidence of fraud has been unveiled as a result.

In a regulatory filing, company stated ‘certain assumptions underlying the cash forecast were overly optimistic,’ and that it lacked sufficient controls over its management of cash flow, ‘including extensions of accounts payable and the use of cash committed for projects.’

“We identified no material misstatement in historical financial statements, as well as no substantial evidence to support a finding of fraud or willful misconduct of management.” – U.S. Justice Department

This gave SunEdison’s shares a boost during PREMARKET TRADING. It shares hiked with 61 cents apiece – astonishingly a rebound from 37 cents yesterday.

INSIGHT: Company’s shares have lost approx. 93% their value since beginning of year 2016.

Background

Earlier this year in February, the company had *delayed filing its annual financial statements considering it prone to vulnerability. Last month, SunEdison revealed U.S. Justice Department to be investigating solar energy company’s internally following a receipt of inquiry from the Securities and Exchange Commission over disclosures to investors about cash on hand. The company had also warned of an imminent restructuring due to its high debt load, inadequate liquidity and delayed financial filings.

(*Those delayed financials also caused banks to pull financing from SunEdison’s proposed deal to acquire Vivint Solar worth $1.9 billion. The deal as a result had collapsed. Vivint is now suing SunEdison for deliberately calling off the deal)

UPDATE: CreditSights believes SunEdison may be in technical default after investors said the debt-laden renewable energy developer missed a $2.6 million interest payment on its convertible bonds due in 2018.

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