TerraForm Power announces billion-dollar bond refinancing

The yieldco is planning to replace $950 million in bonds due 2023 with $1 billion due up to 10 years from now, as its second major move this month to restructure its finances.

November 28, 2017 Christian Roselund

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On the heels of Brookfield’s acquisition of a majority stake in TerraForm Power, the yieldco is making moves to put its financial house in order. Yesterday TerraForm announced that it will offer up a billion dollars in new bonds with terms up to 10 years in a private offering and use the proceeds to pay off $950 million in notes due 2023.

This follows on TerraForm’s closing on a $350 million term loan credit facility two weeks ago which, like the bonds, will be mostly used to pay off other obligations – in this case a portfolio term loan entered into by one of its subsidiaries.

And while interest rates for the $1 billion bond offering are not yet know, Mercom Capital says that the TerraForm’s acquisition by Brookfield puts it in a better position to get better terms, including potentially better interest rates.

“You are not going to do a billion dollars and pay more,” Mercom Capital CEO Raj Prabhu told pv magazine. “For an extra $50 million, you are not going to go through all these hoops.”

The previous $950 million in notes hold a 5.875% interest rate, and if all goes as planned TerraForm will redeem these on December 12. It is unclear what TerraForm plans to do with any extra proceeds once associated fees and expenses are paid.

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