SunEdison lines up NRG Renew as ‘stalking horse’ bidder for a number of power projects

SunEdison on Aug. 9 asked its bankruptcy court for entry of two orders; to approve a sale process for certain power project development assets and to approve a “stalking horse” bid from NRG Renew LLC as the bid to beat in that auction process. 

On April 21, SunEdison and affiliates sought Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of New York. The “stalking horse” purchase agreement says that NRG Energy (NYSE: NRG) has provided a financial guaranty to NRG Renew under this agreement.

Key dates in the sale process motion include:

  • Bid Deadline – To participate in the bidding process, each potential bidder, other than the Stalking Horse Buyer, must deliver a written offer by no later than Sept. 6 at 4:00 p..m. (EST);
  • Auction – If SunEdison receives one or more Qualified Bids, in addition to the Stalking Horse Agreement, an auction would be held on Sept. 9 at 10:00 a.m. (EST) at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, NY 10036, or such other location and time as shall be timely communicated to all entities entitled to attend the auction.
  • Sale Hearing – The hearing to approve the sale or sales to winning buyer or buyers is scheduled to take place on Sept. 15 at 10:00 a.m. (EST). 

Under the Stalking Horse Agreement, SunEdison has agreed to sell these equity Interests for $144 million plus potential earnout payments less certain potential purchase price reductions.

The affiliates of SunEdison selling assets in this process are SUNE Wind Holdings Inc., SunE Waiawa Holdings LLC, First Wind California Holdings LLC, First Wind Solar Portfolio LLC, Somerset Wind Holdings LLC, Buckthorn Renewables Holdings LLC, Rattlesnake Flat Holdings LLC, SunE Hawaii Solar Holdings LLC and Greenmountain Wind Holdings LLC.

The Utah/Development Group owns equity Interests in the following projects:

  • Enterprise Project, the 108 MW DC solar project located in Iron County, Utah;
  • Escalante I Project, the 108 MW DC solar project located in Beaver Country, Utah;
  • Escalante II Project, the 108 MW DC solar project located in Beaver County, Utah;
  • Escalante III Project, the 108 MW DC solar project located in Beaver County, Utah;
  • Granite Mountain East Project, the 80 MW AC solar power project located in Iron County, Utah;
  • Granite Mountain West Project, the 50.4 MW AC solar power project located in Iron County, Utah; 
  • Iron Springs Project, the 80 MW AC solar project located in Iron County, Utah, and owned by Iron Springs Solar LLC, an indirect wholly-owned subsidiary of SunE Wind Holdings Inc.;
  • Jupiter Project, the 329 MW DC solar project located in California and owned by California Jupiter LLC, a wholly-owned subsidiary of First Wind California Holdings LLC;
  • Somerset Project, the 85 MW AC wind project located in Maine and owned by Somerset Wind LLC, a wholly-owned subsidiary of Somerset Wind Holdings LLC;
  • Rattlesnake Project, the 150 MW AC wind project located in Washington and owned by Rattlesnake Flat LLC, a wholly-owned subsidiary of Rattlesnake Flat Holdings LLC; and
  • County Line Project, the 449 MW AC wind project located in Maine and owned by Greenmountain Wind LLC, a wholly-owned subsidiary of Greenmountain Wind Holdings LLC.

The Hawaii Group owns equity Interests in the following projects:

  • Waiawo (Waipio) Project, the 64 MW DC solar project located in Waipio, Hawaii (the “Waipio Project”) and owned by Waipio PV LLC, an indirect wholly-owned subsidiary of SunE Hawaii Solar Holdings LLC;
  • Mililani II (Lanikuhana) Project, the 19 MW DC solar project located in Mililani, Hawaii (the “Mililani II Project”) and owned by Lanikuhana Solar LLC, an indirect wholly-owned subsidiary of SunE Hawaii Solar Holdings LLC;
  • Kawailoa Project, the 66 MW DC solar project located in Kawailoa, Hawaii and owned by Kawailoa Solar LLC, an indirect wholly-owned subsidiary of First Wind Solar Portfolio LLC;
  • Waiawa Project, the 65 MW DC solar project located in Waiawa, Hawaii and owned by SunE Waiawa Solar LLC, a wholly-owned subsidiary of SunE Waiawa Holdings LLC; and
  • Mililani South I Project, the 27 MW DC solar project located in Mililani, Hawaii and owned by Welawela Solar LLC, an indirect wholly-owned subsidiary of First Wind Solar Portfolio LLC.

The Buckthorn Group owns equity Interests in the Buckthorn Project, the 200 MW DC solar project located in Texas and owned by Buckthorn Westex LLC, an indirect wholly-owned subsidiary of Buckthorn Renewables Holdings LLC.

SunEdison said the prompt commencement of the public sale process is important because, among other reasons, the Buckthorn Project faces an April 2017 “Commercial Operation Date” or “COD.” Failure to reach COD by Oct. 25, 2017, would constitute a termination event under the applicable power purchase agreement (PPA), and daily delay damages between the scheduled COD of April 28, 2017, and the final COD of Oct. 25, 2017 are significant. In order to meet the final COD and obtain construction financing, the Buckthorn Project owner must issue a “Final Notice to Proceed” or “FNTP” by the end of September 2016 (or, at the latest, early October 2016).

John S. Dubel, the Chief Executive Officer and Chief Restructuring Officer of SunEdison, said in companion testimony: “The Debtors seek authority to enter into the Purchase and Sale Agreement as a stalking horse purchase agreement and market the Equity Interests in an auction process designed to determine whether any higher or otherwise better bids are forthcoming from interested parties. The deadlines proposed in the Bidding Procedures and Stalking Horse Agreement, in light of the already extensive marketing and competitive bidding processes, will allow the Debtors sufficient time to market test the Purchase Price of the Equity Interests proposed by the Buyer (in its role as a Stalking Horse Buyer). Accordingly, based on my professional experience, I believe that the timeline set forth in the Bidding Procedures and the Stalking Horse Agreement are fair and reasonable under the circumstances.

“Specifically, the Company has been marketing the Projects for several months, and given the various bids received to date, I believe that the sale transaction set forth in the Purchase and Sale Agreement represents the highest or otherwise best bid received for the Projects to date. In addition, I believe that the proposed net sale proceeds represent fair consideration and reasonably equivalent value in exchange for the Projects, and are generally commensurate with consideration received for similarly situated projects. The Bidding Procedures provide the Debtors with a further opportunity to market the Projects and obtain the highest or otherwise best price for the Projects.”

The sale motion says about marketing efforts up to now: “In connection with a potential sale process for some or all of the Company’s interests in various project companies, Rothschild identified and developed a list of potentially interested parties and solicited such parties’ interest in one or more sale transactions. Beginning in April, 2016, Rothschild contacted 346 potential buyers, of which 254 of these parties entered into non-disclosure agreements (“NDAs”) with the Debtors to further explore the potential purchase of certain of the Company’s equity interests in various project companies. Of these parties, 112 parties were interested in the Debtors’ Utility business. Among other things, a virtual data room was established containing extensive information about, among other assets and businesses, the Utility business and the projects that fall within the Utility business. In connection with the Utility business, 34 parties submitted bids for one or more of the Projects sought to be sold pursuant to the Purchase and Sale Agreement, with 10 parties submitting a bid for the Utah/Development Projects (whether alone or as part of a larger portfolio bid for a number of assets). Rothschild assisted the Debtors in reviewing and evaluating all bids received in the competitive, comprehensive post-petition marketing process.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.