The separation of SunEdison and TerraForm Power (NASDAQ: TERP) and TerraForm Global (NASDAQ:GLBL) has been a messy divorce. Following SunEdison’s collapse into bankruptcy a little more than a year ago, the two companies have slowly but surely separated their operations and finances from their sponsor, and in the process courted a new, more stable suitor in the form of Canadian asset manager Brookfield.
Yesterday a major milestone was achieved in this separation in the form of bankruptcy court approval of a March 7 settlement between TerraForm Power and Global and SunEdison, under which the latter is releasing all legal claims to the two companies – in exchange for an increase in its actual holdings of SunEdison stock. Call it alimony, if you will.
This was a major step to clear the way for Brookfield to both take over as the sponsor of TerraForm Power and Global and acquire the two companies, under the terms of an agreement which was also reached on March 7. “We look forward to completing the remaining conditions to the closing of the sponsorship transaction,” notes Peter Blackmore, the chair and interim CEO of both TerraForm Power and Global.
Brookfield appears to be getting the TerraForm companies for a good price, if not a bargain. Under the March agreement, Brookfield will be buying outstanding shares at only $11.46 per share, roughly the mid-point of what the stock traded at over the month prior to the deal.
Through this deal Brookfield will get access to over 3.5 GW of solar and wind assets. Roughly 2/3 of this capacity is in the United States, but this also includes nearly 800 MW of wind and solar plants in Brazil, China and India held by TerraForm Global.
However, the new marriage is still not finalized. The boards of directors at both yieldcos have already approved the settlement agreement, but both acquisitions still need approval by the majority of shareholders at both companies (excluding SunEdison and Brookfield), regulatory approval, and in the case of TerraForm Global, the resolution of other lawsuits.