By Peg Brickley
Canada's Brookfield Asset Management has floated the possibility of a takeover of both TerraForm Power Inc. and TerraForm Global Inc.
In a Thursday filing with the U.S. Securities and Exchange Commission, Brookfield said it met Wednesday with representatives of the boards of the TerraForm companies to discuss the possibility of a deal.
According to the filing, Brookfield is considering either purchasing the shares of both companies from their stockholders, or buying the companies -- the so-called "yieldcos" that helped fuel the now-bankrupt SunEdison Inc.'s boom -- outright for cash.
A possible purchase price wasn't disclosed.
The Canadian investment firm previously said it was interested in taking charge of TerraForm Power, which owns SunEdison-created projects in the U.S., Canada, U.K. and Chile. Brookfield avoided entering a quiet competition for TerraForm Power due to restrictions on it as a large shareholder, according to people familiar with the matter.
Refusal to enter the competition, however, didn't signal Brookfield had lost interest.
Thursday's revelation that Brookfield is offering to take on the TerraForm companies could catch the attention of creditors of SunEdison, the bankrupt alternative-power developer that has control of both.
TerraForm Global is the smaller and more vulnerable of the two "yieldcos, " owning projects in Brazil, China, India and emerging markets. In a lawsuit filed before SunEdison sought bankruptcy protection, TerraForm Global accused SunEdison of using $231 million earmarked for a TerraForm Global project to shore up SunEdison's shaky finances.
SunEdison has denied wrongdoing in connection with the TerraForm Global lawsuit.
Shares of TerraForm Global were trading at $3.90 per share Thursday afternoon, down more than 40% over the past 52 weeks. TerraForm Power, in contrast, is selling for $12.68 per share, and has dropped only about 2% of its value over the 52-week period.
Those prices are still far off from the heights they reached in 2015, before investors spotted signs of trouble in SunEdison's financial machinery. The TerraForm companies were set up to buy alternative power projects developed by SunEdison, making them a critical component of that machinery.
Any deal for TerraForm Global would depend on Brookfield also picking up TerraForm Power, the investment firm's SEC filing said.
Creditors are looking to the sale ofSunEdison's stakes as a major source of value in a chapter 11 proceeding where the company's assets are estimated to be worth at least $1 billion less its debts. TerraForm Power recently said it is working on a deal to settle disputes over its ties to SunEdison.
Last month, another contender for TerraForm Power, D.E. Shaw & Co., said it would offer to take over management of the company to stabilize it for a future sale. That takeover wouldn't be a buyout that would make it easy for creditors and investors to take their losses, pocket some cash and walk away from the failed SunEdison financial machinery.
In addition to an economic stake and controlling shares, SunEdison is enmeshed in the businesses of both TerraForm companies in a way that has complicated their efforts to stay aloof from SunEdison's bankruptcy troubles.
For example, the three companies shared accounting systems, and SunEdison, not the TerraForm companies, is party to many of the contracts for the power plant operations that the TerraForm companies own.
According to D.E. Shaw, TerraForm Power is suffering due to the prolonged uncertainty about SunEdison's future, and the market price of the stock doesn't reflect its potential as an owner of established power projects.
Write to Peg Brickley at email@example.com
(END) Dow Jones Newswires
November 10, 2016 15:31 ET (20:31 GMT)
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