Precarious circumstances at TerraForm Power, TerraForm Global

This morning TerraForm Power and TerraForm Global, the two yieldcos of bankrupt renewable energy developer SunEdison, released preliminary, unaudited results for the second quarter of 2016.

These filings show the two companies in holding patterns as they attempt to untangle the financial and legal mess caused by the fall of their sponsor. TerraForm Global’s acquisition of a 26 MW wind farm was the sole purchase by either company during the quarter, and TerraForm Power reported negative earnings and cash available for distribution (CAFD) caused by $68 million in cash restrictions due to spillover impacts of “SunEdison bankruptcy-triggered or related defaults”.

In more specific details, TerraForm’s nearly 3 GW of wind and solar assets brought in $182-$190 million during the quarter, up significantly from Q1, but also a net loss of $6-20 million, and CAFD of $9-17 million.

TerraForm Global fared better, with 917 MW of projects bringing in $52-$56 million, an 11% fall from the previous quarter, but a net income of $0-8 million and CAFD of $18-24 million. Global also reported impacts from SunEdison’s legal and financial problems, but saw only $13 million of cash restrictions.

Both companies still hold substantial unrestricted cash, although Global was sitting in an even better position at the end of Q2 with an estimated $770 million versus TerraForm Power’s $523 million.

And while TerraForm Power and Global are presenting preliminary, unaudited financial information, more formal accounting is a different story. Last week both companies requested hearings to stave off being de-listed from the NASDAQ exchange due to a failure to file annual financial reports from 2015 in a timely manner.

As they wait on the graces of regulators, TerraForm Power and Global are also making it clear that they are open to being bought out. Both companies put out notices this morning announcing that their boards have initiated process “to explore and evaluate potential strategic alternatives to maximize stockholder value”, including mergers or sales of the business.

If this follows the process at SunEdison, it may be easier to sell the pieces than the whole. Last week a judge approved the sale of 2.1 GW of the company’s wind and solar projects to NRG, as the latest step in the carving up of what was once the world’s largest solar and wind developer.