TerraForm Power & Global Expect To Be “Operationally Independent” By 2017

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Ever since the once-global renewable energy developer leader SunEdison filed for bankruptcy in April, many have been wondering what would become of the company’s two yieldcos — TerraForm Power & TerraForm Global. In presentations given to investors, both yieldcos reported that they intend and expect to be “operationally independent” by January 2017.

SunEdison Logo (PRNewsFoto/SunEdison, Inc.)The story has been a long run so far (you can trace my extensive coverage here), climaxing with SunEdison’s official filing for bankruptcy in April of 2016. The fate of TerraForm Power (Power) and TerraForm Global (Global) has been uncertain for some time, though the stakes were raised somewhat when the three went into talks to determine the best way to settle existing financial issues. Both Power and Global announced in late-September that they were seeking billions in settlement from SunEdison, a claim to which SunEdison was less than impressed with.

However, earlier this week, both Power and Global published presentations they had given to their investors, in which they presented estimates for key financial metrics for 2016 and outlined plans for the respective companies’ paths forward.

Peter Blackmore, who serves as both TerraForm Power and TerraForm Global’s Chairman and Interim Chief Executive Officer, told Power shareholders that “The Board and management team continue to successfully execute on our strategy and make significant progress towards achieving our objectives, and independence,” and told Global’s investors that “We continue to take action to strengthen our company, improve performance, and operate independently.”

The highlights from the individual presentations are below, but the key takeaway that has the most long-term importance is the dual promise that both yieldcos are intending “to be operationally independent by January 2017” — the exact same wording was used for both companies.

Further highlights from the individual presentations are as follows:

TerraForm Power logo (PRNewsFoto/SunEdison, Inc.)TerraForm Power

TerraForm Power’s Best-in-Class Contracted Renewable Generation Portfolio Remains Strong:

  • TerraForm Power’s 3.0 GW wind and solar portfolio is comprised exclusively of renewable assets with an average age of 3 years and average estimated remaining lifespan of 27 years.
  • Assets are under long-term contracts with average remaining PPA life of 15 years with high-quality credit counterparties.
  • Portfolio boasts a diverse mix of assets across attractive and stable markets with low concentration risk.

Forecasted 2016 Results:

  • For full year 2016, TerraForm Power expects to deliver adjusted revenue of $697 – $712 million, a net loss of $105 – $145 million and adjusted EBITDA of $517 – $532 million.
  • Forecasted 2016 financial metrics are in-line with management expectations post-SunEdison bankruptcy.
  • 2016 cash available for distribution (“CAFD”) is expected to be substantially lower than pre-SunEdison bankruptcy estimates due to various factors, including loss of financial and operational support from SunEdison, increased debt service costs and uncertainty regarding the resolution of project-level restrictions on dividends and other payments.

TerraForm Power’s Clear Path Forward as an Operationally Independent Company:

  • The Company is taking significant actions to ensure business continuity as it separates operations from SunEdison:
    • Management has focused on developing a stand-alone structure that will allow the Company to operate independently from SunEdison.
    • Implementing a retention plan to maintain its experienced team and developing a new organization structure to streamline and allocate responsibilities.
    • Increased authority of the Corporate Governance and Conflicts Committee.
    • Added three new independent directors on November 23, 2016, bringing the Board’s independent director composition to six of ten directors.
  • TerraForm Power expects to be operationally independent by January 2017.

TerraForm Global, Inc. Logo (PRNewsFoto/SunEdison, Inc.)TerraForm Global

TerraForm Global’s High-Quality Contracted Renewable Generation Portfolio Remains Strong:

  • The Company’s diverse mix of assets across seven countries, including 947 MW of wind and solar power plants. This portfolio of renewable assets has an average age of 4 years and average estimated remaining lifespan of 26 years.
  • TerraForm Global’s wind and solar power plant assets are under long-term contracts with average remaining PPA life of 17 years.

Preliminary 2016 Financial Estimates:             

  • For full year 2016, TerraForm Global expects to deliver revenue of $215 – $242 million, a net loss of $11 – $51 million and adjusted EBITDA of $153 – $180 million.
  • The Company expects key 2016 financial metrics to be in-line with management expectations post-SunEdison bankruptcy with curtailment and turbine outages offset by favorable performance, cost optimization and currency appreciation.
  • 2016 cash available for distribution (“CAFD”) is expected to be substantially lower than forecasted pre-SunEdisonbankruptcy due to various factors, including loss of financial and operational support from SunEdison.

TerraForm Global’s Clear Path Forward as an Operationally Independent Company:

  • The Company is taking significant actions to ensure business continuity as it separates operations from SunEdison:
    • Management is focused on implementing a stand-alone structure that will allow the Company to operate independently from SunEdison.
    • Established a retention plan for in-house talent to minimize attrition and stabilize business operations.
    • Developed a new organization structure to streamline business and allocate responsibilities.
    • Increased authority of the Corporate Governance and Conflicts Committee.
    • Appointed two new independent Board members on October 13, 2016, bringing the Board’s independent director composition to five of nine directors.
  • TerraForm Global expects to be operationally independent by January 2017.

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Joshua S Hill

I'm a Christian, a nerd, a geek, and I believe that we're pretty quickly directing planet-Earth into hell in a handbasket! I also write for Fantasy Book Review (.co.uk), and can be found writing articles for a variety of other sites. Check me out at about.me for more.

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