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Business News/ Companies / News/  Terraform Global sues SunEdison over funds for India projects

Wilmington, Delaware: Terraform Global Inc. sued its parent, SunEdison Inc., for breach of contract on Monday, alleging the struggling renewable energy company misappropriated $231 million of Terraform’s cash, according to a lawsuit filed in a Delaware court.

Terraform alleged SunEdison misappropriated the cash by representing that the money would be used to finish nearly complete renewable energy projects in India. In return, Terraform would receive SunEdison’s equity interests in those deals, according to the lawsuit.

“SunEdison instead diverted the funds to prop up its flagging liquidity position rather than to fund the projects in India as promised," said the lawsuit.

Shares of SunEdison plunged 53% to 20 cents on the New York Stock Exchange, and have plummeted about 98% over the past 12 months. Terraform fell 6% to $2.20 in early Nasdaq trading. They traded at a 52-week high of $14.40 last July.

The lawsuit came after Terraform warned last week that SunEdison might not transfer the India projects and might not complete other deals. Terraform also warned SunEdison might soon seek bankruptcy protection.

SunEdison faces a cash crunch, a $12 billion debt pile, and scrutiny by US regulators over a failed deal, among other problems.

Terraform’s lawsuit named three members of its own board of directors as defendants: Ahmad Chatila, Martin Truong, and Brian Wuebbels. The three are also senior executives of SunEdison and participated in the plan to misappropriate Terraform’s assets, according to the lawsuit, which was filed in the Court of Chancery in Delaware.

Monday’s lawsuit is the latest legal headache for SunEdison. In recent months, businesses including Silicon Valley venture capitalists have said they were owed money by SunEdison, underscoring the breadth of a breakneck expansion that contributed to its financial woes.

In a separate litigation, two creditors filed a lawsuit Sunday against TerraForm Power Inc. holding company seeking $231 million related to an acquisition last year.

D.E. Shaw & Co. LP and Madison Dearborn Capital Partners IV LP say the funds in the TerraForm Power matter are owed as deferred payment for SunEdison’s $1.9 billion purchase of First Wind Holdings LLC in January 2015, and will be due “immediately" if SunEdison files for bankruptcy or restructures its debt, according to the suit filed in the Supreme Court of the State of New York.

First Wind was one of SunEdison’s biggest purchases, and made it the world’s biggest renewable-energy company. It was part of a massive buying spree that racked up $11.7 billion in debt by the end of September and helped drive the company to the edge of failure.

Under the First Wind deal, SunEdison and TerraForm Power bought 500 megawatts of operating wind farms, 21 megawatts of operating solar farms and 1.6 gigawatts of development-stage projects. They deferred about $510 million in earn-out project payments, and about $231 million of that amount remains unpaid. Reuters

Bloomberg contributed to this story.

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Updated: 04 Apr 2016, 10:46 PM IST
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