TerraForm Power, formerly a yieldco of the now-bankrupt SunEdison and now backed by Brookfield Asset Management, has this week launched a takeover bid to acquire controlling interest in leading European renewable energy asset manager Saeta Yield, with an offer approximately worth $1.2 billion.
Once the floundering yieldco of SunEdison — itself a floundering bankrupt solar and renewable energy asset hoarder — TerraForm Power (and its sister TerraForm Global) have now come under the auspices of Canadian asset management firm Brookfield Asset Management, which boasts $265 billion worth of assets under management. Specifically, Brookfield assumed controlling interest and sponsorship of TerraForm Power and acquired TerraForm Global in March of 2017.
On Wednesday, TerraForm Power announced that it had made an offer to acquire 100% of the outstanding shares for leading European renewable energy asset manager Saeta Yield for €12.20 ($14.98) in cash per share. According to TerraForm Power, the aggregate value of the irrevocable commitments, representing more than a 50% interest in Saeta, is approximately $600 million. If Power successfully acquires the remaining shares for Saeta Yield in the tender offer, the total purchase price would be approximately $1.2 billion. TerraForm Power has already secured irrevocable commitments from shareholders, who together own more than a 50% interest, to tender their shares in Saeta under the offer.
The attraction of Saeta Yield comes in the form of 1,028 megawatts (MW) of wind and solar assets across Europe, but located primarily in Spain. The company’s portfolio is made up of 100% owned and recently constructed assets in Western Europe, including 778 MW of onshore wind and another 250 MW of concentrated solar.
“With the Saeta acquisition, we are excited to significantly grow our portfolio of high-quality wind and solar assets and expand our geographic footprint with a scale position in Western Europe,” said John Stinebaugh, Chief Executive Officer of TerraForm Power. “With Brookfield as our sponsor, we believe this transaction demonstrates our ability to originate acquisitions of high-quality assets on a value basis that are highly accretive to our shareholders.”
TerraForm Power considers the acquisition of Saeta Yield a highly valuable commodity and expects the company’s assets will yield significant revenue, adding that it “will have the opportunity to implement multiple value enhancing initiatives that can improve the overall cost profile of the business along with optimizing its capital structure.” TerraForm Power also believes that the acquisition would accelerate the deleveraging of its own balance sheet, furthering its long-term plan to establish an investment grade balance sheet.
TerraForm Power currently boasts over $1 billion of liquidity under committed facilities, including $500 million under its corporate credit facility, which has been upsized to $600 million, and $500 million under the sponsor line with Brookfield. If the acquisition proceeds and is worth the estimated $1.2 billion, TerraForm Power is banking on a $400 million equity offering which Brookfield would backstop, leaving a remaining $800 million to be financed with available liquidity.
The tender offer is expected to be completed in the second quarter, and is subject to certain closing conditions.