The fate of SunEdison’s two yieldcos has finally been settled, as Canadian asset management firm Brookfield Asset Management has agreed to assume a controlling stake and assume sponsorship of TerraForm Power, and acquire TerraForm Global.
Earlier this year we reported that Brookfield Asset Management had entered into exclusive talks with both of SunEdison’s yieldcos — TerraForm Power and TerraForm Global — nearly a year after their parent company filed for bankruptcy. The rumors around the exclusivity talks suggested that a potential acquisition of the two yieldcos could be worth as much as $2.46 billion.
Announced on Tuesday, Brookfield revealed that it would take on a 51% controlling interest in TerraForm Power and assume sponsorship for the company. The transaction will see Brookfield take 51% ownership of the company, paying $11.46 per Class A share. TerraForm Power will in turn have access to a portfolio of approximately 3,500 megawatts (MW) Right of First Offer (ROFO) provided by Brookfield, made up of around 1,200 MW of operating wind farms and around 2,300 MW of development-stage wind and solar projects across North America and Western Europe. Brookfield will also sponsor TerraForm Power to the tune of $500 million in equity, helping to “position TerraForm Power as a premier wind and solar energy company focused on North America and Western Europe.”
“We are pleased to increase our significant investment in TerraForm Power and to contribute our operating expertise in the sector to position the company for growth,” said Sachin Shah, Senior Managing Partner of Brookfield. “We are confident that our significant renewable power operating experience, financial resources and global institutional relationships will provide TerraForm Power with strong financial flexibility and an attractive pipeline for growth moving forward. We look forward to participating alongside all shareholders in capturing future upside and helping the business to achieve its full potential over time.”
“With the successful completion of the Board’s strategic alternatives process, the TerraForm Power Board and management team are confident that Brookfield’s sponsorship will enable our company to deliver cash to shareholders while strengthening our operations for future value creation,” added Peter Blackmore, Chairman and Interim Chief Executive Officer of TerraForm Power.
In addition, Brookfield will acquire TerraForm Global for approximately $787 million in cash and will also assume approximately $455 million in net debt.
This serves as a significant move not only for the companies involved, but for the industry. SunEdison’s two yieldcos are in control of significant capacity — a total of nearly 3 GW for TerraForm Power, and nearly 1 GW for TerraForm Global. Brookfield’s intervention not only provides both companies with a way forward, but a way forward with further room to grow. While I would not necessarily look to see TerraForm Power run the gamut of headlines this year, it will nevertheless be interesting to see how it proceeds to grow over the next few years.
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