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SunEdison audit panel identifies cash accounting issues

(Reuters) – SunEdison Inc said an independent audit committee had identified several issues with the company’s cash-flow management but found no “material misstatements” in its historical financial reports.

SunEdison, which has more than $12 billion in debt, is widely expected to file for bankruptcy this week.

Shares of the company, which has delayed filing its 2015 annual report twice, rose 43 percent to 53 cents in premarket trading on Thursday.

The committee said in a regulatory filing that management’s assumptions about the company’s cash forecasts were overly optimistic and it did not respond appropriately when forecasts were not met.

“These accounting issues are a side issue … SunEdison’s fundamental problem is the excessive leverage, which is why there is a high likelihood of bankruptcy within weeks,” Raymond James analyst Pavel Molchanov said.

SunEdison was until recently the fastest growing renewable energy developer in the United States but now faces a severe cash crunch.

Its shares have tumbled about 99 percent over the past 12 months. The company is under regulatory scrutiny over a failed deal to buy solar panel installer Vivint Solar Inc.

The panel said it wants SunEdison to implement improved cash forecasting systems, flag changes in outlook directly to the board and strengthen its internal accounting controls.

The recent hiring of Ilan Daskal as chief financial officer may help resolve these accounting issues, the panel said.

The committee said it had not found substantial evidence of fraud or willful misconduct of management. (http://1.usa.gov/23xjMGq)

However, the panel identified wrongdoing by a former non-executive employee in connection with talks over the termination of SunEdison’s deal to buy Vivint.

The panel said the employee, whose name was not disclosed, had been subsequently fired by SunEdison. (Reporting by Amrutha Gayathri and Arathy S Nair in Bengaluru; Editing by Kirti Pandey and Saumyadeb Chakrabarty)

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