Terraform Global refinancing suggests yieldco health

Terraform Global has finalized the refinance of a $521 million note at 9.75%, with a new $400 million note at 6.125%. The former note had a due date of 2022, while the new note’s due date is 2026.

The debt package is being bought back at full market prices, showing that Terraform Global has performed at required levels in the transaction. That Terraform Global was allowed extend the payback period and lower the loan rate demonstrates a positive market reception following its acquisition by Canadian asset manager Brookfield.

Per SEC filings from 2015, the original bond issue was for $810 million. The capital was raised for multiple purposes, including ‘transactions’ paying for two under construction projects – one wind and one solar, plus aquiring seven portfolios of projects from around the world. The two projects under construction, defined as ‘acquired projects’ were:

• Chint-NSM Transaction—the acquisition from an affiliate of Chint Solar (Zhejiang) Co., Ltd., of the remaining 51% interest in the 23.9 MW solar project NSM 24 located in India; and
• Hercules Transaction—the acquisition of two wholly owned subsidiaries of Honiton, which includes the 148.5 MW wind project located in China.

The seven portfolio level transactions were:

• Solarpack Transaction—the acquisition from Solarpack Corporación Tecnológica, S.L., a Spanish solar developer, or “Solarpack,” of the 26.4 MW solar project Alto Cielo located in Uruguay;
• Chint-Soutpan/Witkop Transaction—the acquisition of an additional 41.3% interest in the solar projects Soutpan and Witkop located in South Africa and currently owned by an affiliate of Chint Solar (Zhejiang) Co., Ltd., representing 26.4 MW in the aggregate;
• BioTherm Transaction—the acquisition from BTSA Netherlands Cooperative U.A., a South African renewable project developer, or “BioTherm,” of the solar projects Aries and Konkoonsies and the wind project Klipheuwel located in South Africa, representing 32.6 MW in the aggregate;
• FERSA Transaction—the acquisition from Fersa Energías Renovables, S.A., a Spanish wind energy developer, of the wind projects Bhakrani, Gadag and Hanumanhatti located in India, representing 101.6 MW in the aggregate;
• Renova Transaction—the acquisition from Renova of three wind and hydro-electric projects located in Brazil, representing 336.2 MW in the aggregate;
• LAP Transaction—the acquisition of six hydro-electric projects located in Peru, representing 72.5 MW in the aggregate, as part of our Sponsor’s acquisition of LAP, a developer and operator of hydro-electric generation facilities; and
• GME Transaction—the acquisition of Globeleq Mesoamérica Energy Wind Energy Limited, or “GME,” including a portfolio consisting of solar and wind projects located in Honduras, Costa Rica and Nicaragua, representing 326.0 MW in the aggregate.

Terraform Global is one of two yieldcos created by SunEdison. Terraform Power held U.S. based assets, while Terraform Global held globally placed assets for the renewable energy developer.

SunEdison, as part of their bankrupcty processes, sold the two groups to Brookfield. The Terraform Global transaction closed in January, while the purchase of TerraForm Power was completed in October, 2017.

Market acceptance of solar yieldcos has been stressed both by the demise of SunEdison and the recent fire sale of 8Point3 by First Solar and SunPower. The asset class has seen investor skepticism, in part due to the conflict of interest between the relationship of yieldcos to the companies that form them and their responsibilities to their shareholders. However, the successful refinancing of TerraForm Power and TerraForm Global shows that at least these two companies are experiencing greater confidence in financial markets.

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