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SunEdison Closes Deal with Deutsche Bank
DB FSLR SPWR
Solar technology company,
SunEdison Inc recently closed a non-recourse debt financing agreement with Deutsche Bank AG ( DB - Analyst Report) . Through this deal, SunEdison is expected to expand its reach in the UK solar market and create employment opportunities.
Per the agreement, the proceeds would be used to finance the construction of a 56 megawatt (MW) utility-scale solar portfolio in the UK. Construction of the four constituent projects is expected to get underway by the end of Mar 2014.
Moreover, this debt financing agreement would also help in accelerating growth of the company’s project portfolio. Also, this financing would increase the confidence of prospective project partners.
SunEdison ended the fourth quarter with cash, cash equivalents and restricted cash of $643.6 million compared with $757.4 million in the previous quarter. Long-term debt (excluding current portion) stood at $875.8 million. SunEdison used $413.3 million cash in operations. During the quarter, SunEdison also completed 333 megawatts (MW) of solar energy projects while retaining 127 MW on the balance sheet worth $257 million.
Apart from this, SunEdison announced that the portfolios will be acquired by Foresight Solar Fund Limited through a Share Purchase Agreement (SPA). These projects are located in Swindon, Wiltshire, North Devon and on the Essex/Suffolk border.
The United Kingdom targets to deploy more than 20 gigawatts (GW) of solar energy by 2020. SunEdison is expected to benefit from the rise in demand for solar energy and the spinning-off of its semiconductor business, which would further enable it to concentrate on its core competencies. Moreover, its recent partnerships and cost reduction initiatives are expected to expand margins.
Nonetheless, the pricing environment remains a concern for the company. Competition from SunPower Corp. ( SPWR - Analyst Report) and First Solar Inc. ( FSLR - Analyst Report) also remains a headwind.
Currently, SunEdison has a Zacks Rank #4 (Sell).