Brookfield bids to take over TerraForm Power, Global on the cheap

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As yieldco TerraForm Power makes progress in establishing itself as a company independent of the mess that is SunEdison, the moment of truth may finally be arriving where TerraForm goes under either new sponsorship or ownership. However, the latest offer is not exactly generous.

In early December TerraForm gave a January deadline for companies to submit bids to take it over. What may be the first of these arrived on Monday when Brookfield formally made an offer to either buy out TerraForm Power or replace SunEdison as the company’s sponsor. The asset manager has likewise extended both offers to include TerraForm Global.

Under the terms of the buyout offer, Brookfield will offer $11.50 per share to buy out all outstanding shares of TerraForm Power, or $12.50 if it can also buy all of Global. This is a decline from both the $13 per share that TerraForm and Appaloosa offered in November, and below the $12.80-$13.30 that TerraForm stock has been trading at for the last three weeks.

For the sponsorship option Brookfield would invest in TerraForm in exchange for newly issued stock that would allow it to own 50.1% of the company. The compensation would be the same: $11.50 per share for TerraForm, and $12.50 it if gets to buy Global as well.

Reuters estimates that Brookfield is currently TerraForm’s largest shareholder, with 12% stake in the company, and has been trying to get its hands on TerraForm for some time. The Canadian company notes that it brings a pipeline of 3.5 GW of renewable energy projects, and as sponsor would provide additional financing of up to $500 million.

While Brookfield and Appaloosa proposed a joint buy-out in November, the regulatory filing for Brookfield’s latest bid states that Brookfield and Appaloosa are filing individually. Appaloosa is a private company and thus not subject to the same reporting requirements that TerraForm, Global and Brookfield are.