Brookfield, Appaloosa propose expedited buy-out of TerraForm Power, Global

The two companies say they are willing to sign a contract for TerraForm by December 6 to avoid an additional payment to bondholders under the consent solicitation.

November 18, 2016 Christian Roselund

Image: TerraForm Power

It’s no secret that Canada’s Brookfield Asset Management (NYSE: BAM) and hedge fund manager David Tepper’s Appaloosa have long been trying to get their hands on yieldco TerraForm Power (NASDAQ: TERP). Today they upped the ante with a new offer which would save TerraForm from having to make a payment to bondholders if it accepts a buyout by December 6.

Brookfield and Appaloosa say they are ready to make a similar offer for TerraForm Global (NASDAQ: GLBL).

This move has been spurred by the two yieldcos’ request that bondholders give their consent to yet another delay in financial filings, in exchange for various payments. The reporting at TerraForm Power and Global has been a mess following SunEdison’s bankruptcy, and the two companies have yet to file annual reports for 2015.

Specifically, Brookfield and Appaloosa are offering to make an all-cash offer for 100% of TerraForm Power’s shares, or alternately to increase their holdings from the 1/3 that the two companies currently own to 50-60% of share capital in connection with Brookfield replacing SunEdison as TerraForm Power’s sponsor.

Brookfield says that if it were to become TerraForm Power’s sponsor, it would bring a substantial right of first offer pipeline and additional capital. The company states that there are a number of TerraForm stockholders that would prefer the sponsorship option.

Brookfield also says that it is ready to step into that role immediately, acting as an interim sponsor for up to six months solely on a cost-recovery basis.

Incidentally, Brookfield’s offer to take over as sponsor is not the first, as it follows a similar offer that renewable energy investor D.E. Shaw made nearly a month ago.

However, as before Brookfield and Appaloosa appear to be trying to get TerraForm Power on the cheap. The two companies are offering $13 per TerraForm share, which is exactly what the company’s stock is currently valued at. The companies have said that they can make another bid for TerraForm Global, but have not said at what price.

Brookfield and Appaloosa are putting the pressure on TerraForm Power, stating that if the deal is to go forward that TerraForm must engage with the two companies by close of business on November 21, with the mutual objective of trying to reach a binding agreement by December 6.

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