SunEdison shutters high cost USA polysilicon and wafer facilities to conserve cash

SunEdison is closing its polysilicon and solar wafer production facilities in USA as the company hunts for cash, since solvency fears have risen due to increasing aversion towards energy sector debt. SunEdison management is trying hard to adapt to changing industry circumstances as it faces the hangover of a debt binge. While the fundamentals of the company’s projects across the world remain strong and it remains a top brand, the debt is weighing on the company. SunEdison is being forced to cut all flab as quickly as possible, to prevent a debt spiral. It is also being pressed against the wall by its investors and former acquisition targets. The room to maneuver has shrunk, as the world is becoming risk averse particularly towards the energy sector which has seen oil price crash to a historic low.

The company had already closed its Italian poly plant last year and now it will close the Texan plant. Note poly prices have remained low for the last one year, with most companies running near cash costs. SunEdison with its older plant was probably running losses and it was good that it cut the plant. The restructuring costs will be high at more than $350 million, but most of it will be non-cash based in my view as only 180 workers will lose their jobs. It will also close its experimental wafer plant.

Besides these plants, the company will sell its Malaysian wafer manufacturing plant to the world’s largest mono wafer producer Longi Silicon. The company as a part of a multi-dimensional deal has agreed to buy solar cells and modules form Longi subsidiary Lerri, while selling it polysilicon from its Korean JV with Samsung. SunEdison Semiconductor has already started preparing by hoarding polysilicon, as it uses this material to make its mainstay semiconductor wafers.