WFR Sunedison, Inc.

The Securities and Exchange Commission is investigating SunEdison Inc.'s disclosures to investors about how much cash the solar-power company had on hand as its stock price collapsed last year, according to people familiar with the matter.

Officials in the SEC's enforcement unit are looking into whether SunEdison overstated its liquidity last fall when it told investors it had more than $1 billion in cash, the people said.

At the time, SunEdison shares had fallen about 75% since midsummer. The slide has continued, with shares down 96% from a July high, and the company is working with advisers on a potential bankruptcy filing, according to people familiar with the matter. The company's market value has fallen to around $400 million from nearly $10 billion in July.

A SunEdison spokesman declined to comment.

SunEdison last month delayed filing its annual financial statements, citing concerns raised by unnamed current and former employees about the "accuracy of the company's anticipated financial condition." In a regulatory filing, the company said its board was looking into the matter and that the company could "be required to reassess [its] liquidity position." Earlier this month, the company said it had found "material weakness in its internal controls over financial reporting" but that it had not yet identified any material misstatements.

On a Nov. 10 earnings call, SunEdison reported $1.4 billion in cash and said it had "sufficient liquidity" to weather a sharp downturn in its stock price and cover upcoming obligations, including a milestone payment related to its 2015 acquisition of First Wind LLC.

People familiar with the matter said that $1.4 billion figure consisted largely of cash that SunEdison couldn't access. The company had direct access to only a few hundred million dollars throughout September and October, and by November, the balance had dropped under $100 million, the people said.

The bigger number reported to investors included cash that was trapped inside individual power projects and earmarked for construction or debt service, the people said. It also included a roughly $500 million credit facility, whose funds could only be accessed by delivering projects that met certain criteria, of which SunEdison had few, some of the people said.

Such loans, known as "warehouses," are common in the clean-energy industry. Companies place projects into the facilities and take cash out, typically in the form of debt. But few of SunEdison's projects fit the warehouse's criteria, which made it highly unlikely that SunEdison would be able to tap the funds, some of the people said.

By late 2015, SunEdison had stopped paying some contractors and suppliers and was scrambling internally for ways to raise cash, according to people familiar with the matter.

The Maryland Heights, Mo.-based company's share price has plummeted since last summer on a confluence of factors. An announced $1.9 billion takeover of residential-rooftop installer Vivint Solar Inc. was unpopular among investors. Meanwhile, falling oil prices caused a broad selloff for energy stocks, and turbulence in the capital markets stoked concerns that SunEdison wouldn't be able to finance its breakneck pace of acquisitions.

The Vivint deal was terminated earlier this month after banks balked at providing the funding, The Wall Street Journal reported. At least four other takeovers SunEdison struck last year were subsequently canceled or renegotiated.

SunEdison's woes have tarnished a corporate structure once seen as a breakthrough for energy financing, known as yieldcos. These vehicles raise money from public investors to buy power projects from developers, then sell power to utilities under long-term contracts. SunEdison has two yieldcos, publicly traded TerraForm Power Inc. and TerraForm Global Inc.

Renewable-energy companies, looking to free up cash for new investments, began adopting the model about three years ago. Investors piled in, attracted by yieldcos' high dividend payouts during a time of ultralow interest rates, before a sharp decline in oil prices battered energy stocks.

SunEdison stock closed up about 4% at $1.26 Monday after rising as much as 15% earlier in the day on a debunked news report of a takeover bid for the company.

Matt Jarzemsky contributed to this article.

Write to Liz Hoffman at liz.hoffman@wsj.com and Aruna Viswanatha at Aruna.Viswanatha@wsj.com

(END) Dow Jones Newswires

March 28, 2016 20:35 ET (00:35 GMT)

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