TerraForm Power explores alternatives, including merger or sale

Renewable energy producer TerraForm Power (Nasdaq: TERP) announced Sept. 19 that, at the recommendation of its Corporate Governance and Conflicts Committee, its Board of Directors has initiated a process to explore and evaluate potential strategic alternatives to maximize stockholder value, including a merger or sale of its entire business.

TerraForm Power is a spin-off of bankrupt renewable energy developer SunEdison, which is in the process of selling off assets.

“Our Board and management team have been working to preserve and protect stockholder value and, after careful review, we have decided that exploring all possible alternatives to maximize that value is in the best interests of all our stockholders,” said Peter Blackmore, Interim Chief Executive Officer. “With a diverse portfolio of assets and record of strong operating performance, TerraForm Power offers a unique opportunity for a broad range of potential acquirers and investors.”

“We are actively exploring the potential sale of all of TerraForm Power’s equity interests, as well as alternative structures,” continued Blackmore. “We are open to considering a transaction involving a new sponsor that would contribute to the stabilization and future growth of the Company’s very attractive platform of generation assets in a way that benefits TerraForm Power stockholders, including through negotiation of new sponsorship arrangements or through assumption of SunEdison’s existing sponsorship agreements. TerraForm Power also is taking appropriate steps to operate as an independent company without a new sponsor, if that should become necessary in the short or long term. Our benchmark for decisions will be the best interests of TerraForm Power stockholders.”

TerraForm Power has entered into confidentiality arrangements with SunEdison and representatives for certain of its stakeholders to allow TerraForm Power to share confidential information about strategic alternatives and other matters. Certain strategic alternatives for TerraForm Power may require stockholder approval.

Since SunEdison is operating under Chapter 11 bankruptcy protection, many decisions made by SunEdison – such as how to vote its shares in TerraForm Power to approve a merger or sale of substantially all of TerraForm Power’s assets – may require the approval of the U.S. Bankruptcy Court for the Southern District of New York.

Said Blackmore: “We have been working closely with SunEdison on disposition alternatives so far and regard a collaborative exploration of strategic alternatives to be in the best interests of TerraForm Power, its public stockholders and SunEdison given the collective alignment of interests in maximizing stockholder value.”

TerraForm Power also has notified SunEdison that its Corporate Governance and Conflicts Committee is prepared to enter into discussions with SunEdison and/or its stakeholders to settle intercompany claims and defenses between TerraForm Power and SunEdison on a schedule that is consistent with the pursuit of strategic alternatives by TerraForm Power.

“We believe it is in the best interests of TerraForm Power and SunEdison for there to be a prompt settlement of all intercompany claims and defenses to facilitate the strategic review process,” said Jack Stark, Chairman of the Corporate Governance and Conflicts Committee. “We are committed to negotiate actively with SunEdison to resolve intercompany matters consensually on arm’s-length terms as soon as possible, although we stand ready to enforce our rights in litigation if necessary.”

TerraForm Power noted that its publicly traded sister company, TerraForm Global (Nasdaq: GLBL), has also announced that it is undertaking a similar review of strategic alternatives.

TerraForm Power has engaged Centerview PartnersMorgan Stanley and AlixPartners as financial advisors and Sullivan & Cromwell LLP as its legal advisor.

TerraForm Power is a diversified owner of clean power generation assets in developed markets. This includes solar and wind assets located in the U.S., Canada and other developed markets. TerraForm Power has a 2,987-MW renewable energy portfolio. It owns and operates over 500 hundred wind and solar clean energy power installations. The assets were acquired through its sponsor, SunEdison, and other third parties.

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.