WFR Sunedison, Inc.

TerraForm Global Inc. has accused its corporate parent, embattled renewable energy company SunEdison Inc., of an "unlawful scheme to misappropriate" TerraForm's assets.

In a lawsuit filed Sunday in the Delaware Court of Chancery, TerraForm Global said SunEdison misappropriated $231 million of cash that TerraForm Global provided its parent to help it complete construction of renewable-energy projects in India. Instead, SunEdison "diverted the funds to prop up its flagging liquidity position," TerraForm Global said in the complaint.

TerraForm Global is seeking $231 million from SunEdison. It also named SunEdison Chief Executive Ahmad Chatila, General Counsel Martin Truong and Brian Wuebbels, SunEdison's former chief financial officer, in the lawsuit, saying the three men breached their fiduciary duty.

A spokesman for SunEdison declined to comment. Messrs. Chatila, Wuebbels and Truong couldn't immediately be reached. Mr. Wuebbels last week resigned as CEO of TerraForm Global and its sister company, TerraForm Power Inc.

A TerraForm Global spokeswoman declined to comment beyond the complaint.

The lawsuit marks yet another setback for Maryland Heights, Mo.-based SunEdison, which grew to a market value of $10 billion last year and is now preparing to file for bankruptcy protection, The Wall Street Journal reported Friday. The developer's aggressive borrowing and the swift deterioration of its "yieldco" financing strategy caught it in a financial squeeze.

SunEdison's two yieldcos—TerraForm Global and TerraForm Power—raise money from public investors to buy power projects from developers, then sell power to utilities under long-term contracts. Investors initially rewarded the structure, attracted by yieldcos' high dividend payouts during a time of ultralow interest rates, but expectations of rising rates damped their enthusiasm.

SunEdison shares were down 49% in midday trading at 22 cents. The company's market capitalization currently stands at around $70.4 million, according to FactSet.

According to the complaint, SunEdison executives in November told TerraForm Global they needed it to "make a large prepayment" related to TerraForm Global's planned acquisition of Indian power projects from its parent. TerraForm Global believed the cash would be used to finish the projects and deliver them on time, it said.

But the executives "falsely represented" that SunEdison really needed the money to repay a margin loan secured by shares of TerraForm Power Inc., another SunEdison subsidiary, according to the complaint. SunEdison had been unable to refinance the margin loan and faced a repayment deadline on Nov. 20, the complaint says.

Write to Matt Jarzemsky at matthew.jarzemsky@wsj.com and Liz Hoffman at liz.hoffman@wsj.com

(END) Dow Jones Newswires

April 04, 2016 13:15 ET (17:15 GMT)

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