This piece was updated on Mar. 31, 2016, at 12:45 p.m. ET to include details from the amended complaint and management changes.
Was there ever any doubt that there would be more drama in the SunEdison (SUNE) universe? After Wednesday's close, there was yet another double whammy for SunEdison.
Reports emerged that activist investor David Tepper's hedge fund, Appaloosa Management, filed an amended suit against the beleaguered renewable energy company and its yieldco TerraForm Power's (TERP) board in Delaware's Chancery Court, calling for an overhaul of the conflicts committee on TerraForm Power's board.
The suit is an effort to restore corporate governance at TerraForm Power that should be in place -- and should have been in place, sources close to the matter told Real Money. The goal is to make TerraForm Power a good company again, the sources added.
Meanwhile, a SunEdison representative told Real Money that the company continues to believe that Appaloosa's claims are without merit.
Appaloosa, which has a 9.5% stake in TerraForm Power, initially filed suit against SunEdison in January for "breach of fiduciary" duty to TerraForm Power and its shareholders tied to SunEdison's now-failed bid to acquire Vivint Solar (VSLR). Even though the Vivint deal is dead, Appaloosa worries about SunEdison's control over TerraForm Power's board and management structure, which became blatantly apparent to Appaloosa following sweeping changes to TerraForm Power's board in November.
The changes, which Appaloosa referred to as the "Friday Night Massacre" in its amended complaint, included the resignations several of TerraForm Power's board members, including members of the conflicts committee. They were replaced with what the complaint called a "sham committee designed to allow SunEdison to take advantage of TERP and its public stockholders at will."
Also included in the November changes was the appointment of Brian Wuebbels as CEO of both TerraForm Power and SunEdison's other yieldco, TerraForm Global (GLBL). At the time of the announcement, he was SunEdison's CFO and he held all three titles until earlier this month when he stepped down from his role at SunEdison.
Wednesday's news, however, also brought changes for Wuebbels. He stepped down as CEO at both of the yieldcos. The resignation was one that Appaloosa called for in its complaint, but the short-term remedy for Wuebbels' absence is likely not one that will be supported by the hedge fund.
On an interim basis, the yieldcos created a four-person "office of the chairman" led by current Chairman Peter Blackmore to fulfill the duties of CEO. Three of the four are defendants in Appaloosa's amended suit.
Wuebbels resignation sparks even more questions, as SunEdison had not yet released its financial statements for 2015, due in part to what the company called "material weaknesses" in its financial reporting. Making matters worse, TerraForm Global said on Monday in a filing with the Securities and Exchange Commission that there was a "substantial risk" SunEdison would seek bankruptcy protection.
Stay tuned.
