Wildbilly
8 years ago
'Under my thumb is a dog who just had its day'
...This is where we get to the stuff that SunEdison and its creditors may fight over. And because of the structure we just discussed, it's not just a fight between SunEdison and its creditors. The yieldco shareholders have a dog in the fight too.
That is because one of the ways SunEdison can raise some money is by messing with its about $700 million worth of Class B shares in TerraForm Global and TerraForm Power.
There are two ways this could go, according to Credit Sights:
SUNE creditors can seek to maximize the value of those Class B shares 2 ways: 1) restart the SUNE DevCo/drop down machine by growing TERP and GLBL and possibly hitting the incentive distribution rights (IDR) splits, which would potentially increase cash sent back to SUNE; or 2) sell the Class B shares to a third party, which will likely create stronger corporate governance and investor confidence in TERP and GLBL and possibly more manageable balance sheets. We feel that option 2 may entice the market back to award TERP and GLBL with cheaper costs of capital, which in our minds should be the board's #1 priority as the yieldcos begin their respective healing processes.
You already know what yieldco shareholders probably want â option two. They probably want to be free of take-or-pay agreements and operate more independently.
SunEdison creditors, though, may want to retain the yieldcos to hit them up for more consistent cash. Plus, who knows who would buy the yieldcos? It might be someone or some people who won't be as friendly to SunEdison's management and control.
Isn't that something you would fight over?
Oh, you thought the drama was over now that Wall Street's nightmare stock filed for bankruptcy? - Yahoo Finance
http://finance.yahoo.com/news/oh-thought-drama-over-now-173326444.html
Wildbilly
8 years ago
TerraForm(TERP) sues Sunedison over breach of contract
Bankruptcy Buzz Saws Sunedison Inc (SUNE) in Half - Schaeffer's Investment Research
Sunedison Inc (SUNE) is fresh off record lows
4/4/2016 10:41 AM
Sunedison Inc (NYSE:SUNE) has lost almost half of its remaining value today to trade at $0.24, after reports over the weekend suggested the solar firm is preparing to file for bankruptcy protection -- echoing previous rumors -- and that it is being sued by its yieldco, TerraForm Power Inc (NASDAQ:TERP), for breach of contract. Also, as the heavily indebted company looks to sell its India assets, it may have a buyer in the form of Adani Group. Against this backdrop, traders both in and out of the options arena are likely cheering SUNE's downfall.
In the options pits, the stock's 10-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at 1.08 -- outstripping all but 9% of readings taken in the past year. What's more, SUNE's Schaeffer's put/call open interest ratio (SOIR) registers at 1.08, just 4 percentage points from a 12-month put-skewed peak. In other words, speculative players are more put-heavy than usual.
Options traders aren't the only ones betting on SUNE's downfall. During the latest reporting period, short interest on the stock spiked over 12%, and over half its float is currently sold short. Likewise, roughly 73% of analysts rate the shares a "hold" or worse.
If you've been following Sunedison Inc's (NYSE:SUNE) performance on the charts, this skepticism is anything but surprising. Year-over-year, the stock has lost 99% of its value, and earlier touched an all-time low of $0.20.
http://www.schaeffersresearch.com/Content/news/2016/04/04/bankruptcy-buzz-saws-sunedison-inc-sune-in-half?&utm_source=4%2f4%2f2016&utm_medium=email&utm_campaign=MMC&trackback=mmcezine&utm_content=topheadlines
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Wildbilly
8 years ago
What Happens to SunEdison Inc If It Goes Under?
In addition, the 90m shares of TERP held by SUNE get sold in some manner should SUNE BK which looks likely. SUNE closed $.24 AH
All indications are that SunEdison Inc (NYSE:SUNE) is on the brink of bankruptcy. The stock has fallen well below $1, multiple government agencies are investigating the company, executives are fleeing, and one of its subsidiaries explicitly stated that there is "substantial risk that SunEdison will soon seek bankruptcy protection."
If the self proclaimed largest renewable energy developer in the world ends up going under, what happens to all of those assets? The answer may be more complicated than you might think.
SunEdison's bankruptcy would be different
Most bankruptcy reorganizations involve debt holders trading debt for equity in a new company, leaving the company with new owners and a less burdensome debt load. The operations of the business itself may not even notice a bankruptcy restructuring.
But SunEdison as it's currently constructed doesn't really make sense as a going concern. It has a mix of development pipeline, operating assets, long-term operating & maintenance contracts, and even assets in other companies. Keeping all of these assets together may not make any sense.
I think there will be a combination of a liquidation and restructuring of SunEdison's assets. Here's what to keep an eye on.
Assets will go somewhere
Let's start with the known assets in the portfolio. SunEdison owns 48.2 million shares of TerraForm Power (NASDAQ:TERP) and 63.3 million shares of TerraForm Global (NASDAQ:GLBL) along with the incentive distribution rights of both companies. In the case of bankruptcy, those assets will go somewhere. It's possible they'll be given to debtors as compensation, but someone will own them, whether it's SunEdison or not. I think shares will be sold off, but the O&M contracts may stay with SunEdison.
As of Sept. 30, 2015, the last time the company reported earnings, SunEdison had 2,884 megawatts of renewable energy projects under construction with $537.4 million of equity invested and $328.7 million of debt funding these projects. These projects are worth something and they could be sold or folded into a SunEdison emerging from bankruptcy. Remember that third party sales became the company's strategy late in 2015, so selling these projects wouldn't be all that unusual.
The more uncertain assets are a six gigawatt pipeline of solar projects and a 1.9 gigawatt pipeline of wind projects worldwide. Even a signed power purchase agreement could be sold to another developer, but for over a year, reports have been that SunEdison was bidding extremely aggressively to build its pipeline. If contracts aren't lucrative enough for competitors to buy they might just be cancelled. In any event, it's unlikely a SunEdison emerging from bankruptcy would be able to fund these new developments itself.
Operations and maintenance are a conundrum in bankruptcy
According to SunEdison, in 2016 the company will generate $443 million of revenue and $223 million of EBITDA from services for renewable energy projects. These are primarily service contracts with projects it has built and sold or dropped down to yieldcos.
That number may need to be taken with a grain of salt, given the fallout of bankruptcy, but there's work that needs to be done and value for whoever owns the O&M business. It's this core business that I think the new SunEdison will emerge as. It could be a small project developer and an O&M company and quietly run a very profitable business.
Is a solar development company worth anything?
Here's the biggest question in a potential SunEdison bankruptcy: What is the renewable energy development business worth?
In theory, developing renewable energy projects should drive everything from the O&M business to yieldcos. But developing projects requires a lot of money, including debt, which SunEdison has found out the hard way. If that funding dries up, so does the business.
If debtholders are willing to keep the business intact, they could keep the development business and some of the pipeline as is, but I'm not sure that's something debt holders will want to take on in a highly competitive market. Most renewable energy developers are now attached to either solar or wind companies or utilities. So, why should this one be a stand-alone company?
It could be that SunEdison's development business and pipeline is packaged together and sold to a company like Canadian Solar or NextEra Energy, who are trying to expand their development pipelines. But we don't know what the market would be for such a company or whether debt holders would want to sell it. In bankruptcy, that might be the biggest debate.
Don't expect an easy bankruptcy battle
There's certainly value within SunEdison, but there will be a long battle over the company's assets. Pieces with certain value will likely be sold off with more uncertain value generators, like the development business, may emerge under the SunEdison umbrella once again. I just wouldn't expect this to remain the world's biggest renewable energy developer because that strategy has fallen flat in a big way.
http://www.fool.com/investing/general/2016/04/01/what-happens-to-sunedison-inc-if-it-goes-under.aspx?source=yahoo-2&utm_campaign=article&utm_medium=feed&utm_source=yahoo-2
The Madhouse Monster
8 years ago
See the revolution - SUNE,VSLR,ENPH,WEST,GLBL,TERP,CAFD,RUN,JKS,CSIQ
Wildbilly
8 years ago
TerraForm Power Announces Delayed Filing of Annual Report
on Form 10-K and Receipt of NASDAQ Letter
TerraForm Power, Inc. (Nasdaq:TERP), an owner and operator of clean energy power plants, announced that it is delaying the filing of its Annual Report on Form 10-K for the year ended December 31, 2015.
On February 29, 2016, TerraForm Power filed a Form 12b-25, Notification of Late Filing, with the Securities and Exchange Commission (the âSECâ) regarding our delayed Form 10-K principally due to the need to complete all steps and tasks necessary to finalize our annual financial statements and other disclosures. At that time, we expected that we would be able to file our Form 10-K within the 15-day extension period provided by Form 12b-25.
On February 29, 2016, SunEdison, Inc. (âSunEdisonâ), a Delaware corporation and our controlling shareholder, also filed a Form 12b-25, Notification of Late Filing, regarding the delayed filing of SunEdisonâs Annual Report on Form 10-K for the year ended December 31, 2015. SunEdison announced that its delay in filing its Form 10-K was principally due to (1) the need to complete all tasks and steps necessary to finalize the annual financial statements and the other disclosures required to be included in that filing, and (2) ongoing inquiries and investigations by the Audit Committee of its Board of Directors and its advisors relating to allegations concerning the accuracy of SunEdisonâs anticipated financial position based on certain issues raised by former executives and current and former employees of SunEdison (the âSUNE-Related Mattersâ).
On March 16, 2016, SunEdison announced a further delay in filing its Form 10-K. This delay is principally due to the additional scope of work required from the identification by SunEdisonâs management of material weaknesses in its internal controls over financial reporting, primarily due to deficient information technology controls in connection with newly implemented systems (the âSUNE-Internal Control Mattersâ). Because of these material weaknesses, additional procedures are necessary for SunEdisonâs management to complete SunEdisonâs annual financial statements and related disclosures, and in order for SunEdisonâs independent registered accounting firm to finalize its audits of SunEdisonâs annual financial statements and the effectiveness of internal controls over financial reporting as of December 31, 2015. SunEdison also announced that they have not completed the SUNE-Related Matters, including the investigation described above.
Due to our management services arrangement with SunEdison under the Management Services Agreement, our financial reporting and control processes rely to a significant extent on SunEdison systems and personnel. As a result, if there are control deficiencies at SunEdison, including with respect to the systems we utilize, it is necessary for us to assess whether those deficiencies could affect our financial reporting and, if so, address them to the extent necessary and appropriate prior to filing our Form 10-K.
SunEdison has informed us that they are continuing to work through the SUNE-Related Matters and SUNE-Internal Control Matters and we have been assessing whether the SUNE-Related Matters and SUNE-Internal Control Matters could affect our financial statements. To date, we have not identified any material misstatements or restatements of our audited or unaudited financial statements or disclosures for any period previously reported.
Additionally, we have not yet completed all steps and tasks necessary to finalize our financial statements and other required disclosures. We currently have identified material weaknesses in internal controls over financial reporting primarily due to ineffective controls in relation to our Enterprise Resource Planning (ERP) systems and processes for validating revenue recognition. We are working to remediate these issues as promptly as practicable.
As anticipated, because the filing of our Form 10-K will be delayed beyond the 15-day extension period of Form 12b-25, on March 15, 2016 we received a notification letter from a Director of NASDAQ Listing Qualifications. The notification letter stated that because we have not yet filed our Form 10-K for the year ended December 31, 2015, TerraForm Power is no longer in compliance with NASDAQ Marketplace Rule 5250(c)(1), which requires timely filing of periodic reports with the SEC.
Under the NASDAQ Listing Rules, TerraForm Power has until May 16, 2016, to submit a plan to NASDAQ as to how it plans to regain compliance with NASDAQâs continued listing requirements. If we are still unable to file our Form 10-K by May 16, 2016, then we intend to submit a compliance plan on or prior to that date. If NASDAQ accepts our plan, NASDAQ can grant an exception of up to 180 calendar days from the filingâs due date, or until September 12, 2016, to regain compliance. TerraForm Power may regain compliance at any time during this 180-day period upon filing with the SEC its Form 10-K, as well as all subsequent required periodic financial reports that are due within that period. If NASDAQ does not accept our plan, we will have the opportunity to appeal that decision to a NASDAQ Hearings Panel. The NASDAQ notification letter has no immediate effect on the listing of our common stock on the NASDAQ Global Select Market.
http://ih.advfn.com/p.php?pid=nmona&article=70782776&symbol=TERP
Wildbilly
8 years ago
Example of an activist investor's value to shareholders imo
SUNE's difficulties aren't over by a long shot.
This post has been updated at 2:22 p.m. EST to include analyst commentary, market movement, and additional details.
David Tepper of Appaloosa Management welcomed the end of the merger of Vivint Solar (VLSR) with SunEdison (SUNE), just as the latter's shares surged as high as 24% in Tuesday's trading.
"SunEdison's failure to consummate the merger when required pursuant to the terms of the merger agreement constitutes a willful breach of the merger agreement, and Vivint Solar intends to seek all legal remedies available to it in respect of such willful breach," Vivint said in Tuesday's statement.
In a note released on Tuesday morning, Jeffrey Osborne of Cowen & Co. said that he expected that the ultimate settlement SunEdison would have to pay to Vivint may be "well above" the $34 million breakup fee though quantifying the amount was difficult.
"We believe Vivint will point to lost market cap since the July 2015 announcement; however, the peer group has compressed sharply since that period and the company appears to have lost market share during this period," Osborne added.
Representatives from SunEdison did not immediately respond to requests to comment.
The Deal: Vivint Terminates Purchase by SunEdison
Shares of Vivint fell as much as 22% in Tuesday's trading.
However, there was one other beneficiary of the news: SunEdison's yieldco TerraForm Power (TERP), which was trading as much as 10% higher early on Tuesday.
"This is a good result for TerraForm Power," Tepper said in a phone interview with Real Money on Tuesday.
Appaloosa filed suit against SunEdison in January, in an effort to block the Vivint deal from going through. The deal, which was worth $2.2 billion when announced in July, would have required TerraForm Power to acquire Vivint Solar's portfolio of residential solar projects, which were considered to be less creditworthy than TerraForm Power's usual portfolio of commercial projects.
Last month, a Delaware court denied a preliminary injunction order on the proposed transaction but left open the possibility of going to trial. In his ruling, Judge Andre Bouchard questioned the fairness of the transaction as well as broader concerns over SunEdison's control over TerraForm Power, which were discussed in Appaloosa's filing.
In November, TerraForm Power announced several changes to its board and management structure following a meeting of its board. Brian Wuebbals, who had served -- and continues to serve -- as SunEdison's CFO, was named CEO of TerraForm Power. Peter Blackmore resigned from SunEdison's board and assumed the role of chairman of TerraForm Power's board as well as chairman of the company's corporate governance and conflicts committee.
"It is quite reasonable to think that a nine-year director would have difficulty becoming an adversary to SunEdison and its stockholders over the course of a single day," Judge Bouchard said in his ruling, referring to Blackmore.
The November board meeting saw the resignation of five board members; Alejandro Hernandez and Steven Tesoriere resigned after Wuebbals was appointed CEO of SunEdison. The remaining three board members, Francisco Perez Gundin, Mark Florian and Mark Lerdal, resigned at the conclusion of the meeting due to their disagreements with the changes to TerraForm Power's board and management structure, according to a filing SunEdison posted with the Securities and Exchange Commission.
Although Gundin resigned from TerraForm Power's board, he continued serving as COO of SunEdison until Jan. 14, 2016, according to the filing.
Earlier this month, SunEdison said in another filing with the SEC that it was unable to release its 2015 financial results on time due in part to an internal investigation, which was launched late in 2015, tied to allegations former executives at SunEdison made about the company's financial position. So far, the audit committee conducting the investigation has found no wrongdoing based on the allegations. SunEdison declined to comment further on the investigation.
The Vivint deal may be dead, but the SunEdison saga may not be over yet. Investors should stay tuned.
End of SunEdison-Vivint Deal Good for TerraForm Power, Says Tepper
http://realmoney.thestreet.com/articles/03/08/2016/end-sunedison-vivint-deal-good-terraform-power-says-tepper?puc=yahoo&cm_ven=YAHOO
Wildbilly
8 years ago
SunEdison delays annual report citing internal probe
(Adds TerraForm Power delaying annual filing, details, background.)
Feb 29 (Reuters) - SunEdison Inc said on Monday it has delayed filing its annual report, mainly due to an internal investigation into the solar company's financial position.
The investigation, which began late last year, is based on allegations by former executives concerning SunEdison's anticipated financial position disclosed to the board, the company said in a filing. (http://1.usa.gov/1LR74Vu)
The investigation is being conducted by a committee set up by the board and no wrongdoing has been found so far based on the executives' allegations, SunEdison said.
SunEdison did not comment further, when contacted by Reuters.
In mid-November, SunEdison reported a wider-than-expected quarterly loss, prompting the company to stop selling projects to its "yieldcos"- dividend-paying units that hold solar, wind or other power assets for the parent company.
Later in the month, the chief executives of SunEdison's two yieldcos stepped down.
One of SunEdison's yieldcos, TerraForm Power Inc, is also delaying its annual report, according to a company filing on Monday. (http://1.usa.gov/1L0zzoF)
Last week, SunEdison fought off an injunction filed by Appaloosa Management which prevented Terraform Power from buying some assets from Vivint Solar Inc.
David Tapper's Appaloosa said the acquisition of Vivint's assets - which had an initial purchase price of $922 million - was not in the interest of the yieldco's shareholders, mainly because it would alter the company's business model and force it to take on debt of $960 million.
TerraForm Power could not be reached for comment, outside regular business hours.
http://finance.yahoo.com/news/sunedison-delays-annual-report-citing-051431977.html
Wildbilly
8 years ago
TerraForm Reports a Delay in Filing !0-K
TerraForm Power, Inc. Reports a Delay in Filing Its Form 10-K
BETHESDA, Md., Feb. 29, 2016 (GLOBE NEWSWIRE) -- TerraForm Power, Inc. (TERP), an owner and operator of clean energy power plants, today filed Form 12b-25 with the SEC indicating that the filing of our annual financial statements for 2015 on Form 10-K will be delayed. The delay in filing is due principally to the need to complete all steps and tasks necessary to finalize the Companyâs annual financial statements and other disclosures required to be in the filing. We currently expect to file Form 10-K by the extended deadline of March 15, 2016. We are deferring a decision on our 4Q 2015 dividend until we complete our annual financial statements and resolve other pending matters
http://finance.yahoo.com/news/terraform-power-inc-reports-delay-235519593.html
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Wildbilly
8 years ago
Denial of Injunction Lifts SunEdison Shares
Stock quotes in this article: SUNE, TERP, VSLR
Don't let anyone say the stock market lacks a sense of humor.
On Thursday, shares of SunEdison (SUNE) soared 36% during regular trading on news that shareholders of Vivint Solar (VSLR) approved plans to be acquired by SunEdison. Shares continued rallying above 30% after the close as it was revealed a Delaware court denied an injunction filed by David Tepper's Appaloosa Management attempting to block the deal.
"We are gratified that the court denied the injunction and now we look ahead to continuing to navigate current market conditions," SunEdison said in a statement released Thursday evening.
While investors are celebrating the deal, they weren't liking it when it was announced back in July. In the chart below, which was pulled for Thomson Reuters, you can see that while shares of SunEdison are down 92% over the last year, much of that drop occurred just as the Vivint deal was announced in July.
At the time, investors felt SunEdison was biting off more than it could chew and that Vivint's portfolio of residential projects was of inferior credit quality compared to SunEdison's more commercial projects.
To be sure, terms of the Vivint deal were amended in December. Among the changes to the original deal, SunEdison was able to lower the cash amount it was paying to Vivint by $2 a share. While the economics were better, Appaloosa Management, which had a stake in SunEdison's yieldco, TerraForm Power (TERP), took issue with aspects of the proposed deal that would require TerraForm Power to purchase Vivint's projects from SunEdison.
In January, Appaloosa Management filed a complaint against SunEdison alleging it "breached its fiduciary duties to TERP and its minority stockholders."
Shares of TerraForm Power closed up a more modest 2% and are down 5% in after-hours trading.
"This should clear the way for SUNE to acquire VSLR and potentially place the operating assets at TERP instead of holding the assets on their balance sheet (which is very constrained)," Patrick Jobin, an analyst at Credit Suisse, wrote in a note after the announcement. Credit Suisse has a Neutral rating on the company and a price target of $3.
Perhaps the yieldco isn't feeling like a winner?
http://realmoney.thestreet.com/articles/02/25/2016/denial-injunction-lifts-sunedison-shares?puc=yahoo&cm_ven=YAHOO
Wildbilly
8 years ago
SunEdison Evaluating `Least Bad' Options to Close Vivint Deal
Deal hinges on flipping Vivint portfolio of rooftop systems
Alternate buyers are looking at Vivint assets, Jobin says
SunEdison Inc. has several options for closing its complicated and contentious $1.9 billion acquisition of Vivint Solar Inc. and none of them look good for its balance sheet.
The Vivint deal has long hinged on SunEdison immediately flipping a chunk of the Utah-based companyâs assets to its TerraForm Power Inc. yieldco unit. That plan was placed in jeopardy last month when billionaire hedge-fund manager David Tepperâs Appaloosa Management LP sued to block that portion of the transaction.
With SunEdisonâs Plan A in question, the worldâs biggest clean-power developer may need to come up with almost $800 million, the amount TerraForm was going to pay. That might include finding another buyer for the Vivint portfolio or selling other assets to complete the purchase from Blackstone Group LP.
âThey need $800 million one way or another, whether from TerraForm or at the SunEdison level,â Michael Morosi, an analyst at Avondale Partners, said in an interview.
SunEdison is seekinganother buyer for the portfolio of rooftop solar systems, and some candidates are looking, said Patrick Jobin, an analyst at Credit Suisse Group AG who has a buy rating on SunEdison shares. However, his models show that a new buyer such as a private equity company would pay about $100 million less than TerraForm.
âLeast-Bad Alternativeâ
âThey are a very motivated seller,â Jobin said in an interview Tuesday. âThe least bad alternative is for SunEdison to take that loss.â
SunEdison announced the Vivint deal in July and the terms were renegotiated in December. TerraForm had initially agreed to pay $922 million for a portfolio of 523 megawatts of Vivintâs rooftop solar systems, and under the revised terms itâs supposed to pay $799 million for 470 megawatts. The company said in December that it expects to complete the acquisition in the first quarter.
Ben Harborne, a SunEdison spokesman, declined to comment, as did Paula Chirhart, a spokeswoman at Blackstone.
Tepperâs Appaloosa owns a 9.5 percent stake in TerraForm, the third-biggest shareholder, and has said the Vivint deal is âfundamentally unfairâ to TerraForm investors. A judge is expected to hear the dispute at a Feb. 16 hearing.
Selling Assets
If SunEdison canât find another buyer, it may end up selling some other assets, probably at a discount, said Gordon Johnson, an analyst at Axiom Capital Management. That may include a swath of North American wind farms that were developed by First Wind Holdings LLC, a company SunEdison bought for $1.9 billion a year ago. SunEdison already agreed to transfer some old First Wind assets back to their prior owners.
âThese assets have some value, but we just donât know how much,â Johnson said. âOr how big the discounts will be.â
One option that may be off the table is for SunEdison to issue more shares to fund the purchase. As part of a deal last week with David Einhornâs Greenlight Capital, the activist investor that owns a 6.6 percent stake in SunEdison, the company agreed to refrain from selling new shares for two years after the Vivint deal closes.
Another option that doesnât appear to be under consideration is canceling the Vivint deal. Despite widespread criticism, SunEdison has consistently said it plans to complete the acquisition, and Johnson said the seller is equally committed.
âBlackstone is not going to let them out of the deal,â said Johnson.
http://www.bloomberg.com/news/articles/2016-02-02/sunedison-evaluating-least-bad-options-to-close-vivint-deal?cmpid=yhoo.headline
Wildbilly
8 years ago
Appaloosa sues to block SunEdison unit from buying Vivint assets
| Reuters
David Tepper-led hedge fund Appaloosa Management LP sued to prevent SunEdison Inc's (SUNE.N) yieldco from buying some of Vivint Solar Inc's (VSLR.N) assets after SunEdison acquires the rooftop panel installer.
The yieldco, TerraForm Power Inc (TERP.O), is to acquire Vivint's residential solar rooftop portfolio for $799 million after SunEdison completes the Vivint transaction.
Appaloosa is seeking "immediate injunctive relief", given that SunEdison's acquisition of Vivint could close "at any time," the hedge fund said in a filing in a Delaware court on Tuesday.
SunEdison declined to comment on the lawsuit.
SunEdison shares fell as much as 17 percent in morning trading on Wednesday, while Vivint shares declined as much as 5 percent. TerraForm Power shares rose as much as 4.5 percent, but gave up gains and turned slightly negative.
Appaloosa has repeatedly said TerraForm Power's acquisition of Vivint's assets - which had an initial purchase price of $922 million - was not in the interest of the yieldco's shareholders, mainly because it would alter the company's business model and force it to take on debt of $960 million.
Funds affiliated with Appaloosa owned 9.5 percent of TerraForm Power's outstanding class A shares as of December.
SunEdison is already in talks to sell these assets to a third party, Avondale Partners analyst Michael Morosi said.
Appaloosa said it filed the lawsuit instead of asking TerraForm Power to do so because it doubted the yieldco's ability to "exercise independent judgment."
Two of TerraForm Power's independent directors stepped down in November, saying the board's actions were making it difficult for them to act in the interest of the shareholders.
Appaloosa had sought to inspect TerraForm Power's books to study its dealings with SunEdison, but the yieldco had rejected the request.
"Although Appaloosa served a revised demand and was attempting in good faith to resolve the company's objections, it has thus far been unable to do so," Appaloosa said in the filing.
The hedge fund named three TerraForm Power directors, Peter Blackmore, Jack Jenkins-Stark and Christopher Compton, as defendants in Tuesday's lawsuit.
Buckling under pressure from Appaloosa, SunEdison cut the purchase price for Vivint's portfolio in December.
http://www.reuters.com/article/us-terraform-power-appaloosa-idUSKCN0UR1ZQ20160113
Wildbilly
8 years ago
Still some good things about yieldcos
There are still some good things one can say about yieldcos
- FT.com
John Dizard considers some interesting pieces of wreckage from the green-energy panic
Wrecking, or looting the washed-up debris of shipwrecks, was a big industry in Cornwall in the south of England in the 19th century.
Then along came the spoilsports with their lighthouses and closer policing of the coast and the seaside people had to get by with honest trades, most of the time anyway.
Just as the wreckers looked forward to stormy nights, some energy assets are looking interesting to investors who do not mind doing serious research and getting cold and wet.
Take âyieldcoâ securities, which are the green first cousins of the oil and gas master limited partnerships. Yieldcos were sold as a way for portfolio investors to earn growing dividends from captive entities sponsored by renewable energy developers.
The developers, on completing a wind or solar project, would âdrop downâ or sell the now-earning asset to the yieldcos, which would pay for the energy farms with sales of new equity and debt.
Since renewables assets in the US can take advantage of very rapid depreciation to shelter cash flow from the taxman, the payouts could be even fatter than those from oil and gas MLPs.
The risk-seeking general partners at the renewables developer would then use the cash from the drop down to start new projects, in a nice, clean, repeating cycle. It was, in a way, like the happy world of mortgage securitisation before 2007.
Nothing lasts forever, and the yieldco model did not really get through a full market cycle before breaking down. The first yieldco to be listed was NRG Energyâs NRG Yield in July 2013. By August 2015, the whole mini-boom was over with a rapid decline in prices for the entire group.
The common wisdom is that the then-developing decline in MLP prices, thanks to the hydrocarbon crash, led to a panicked loss of confidence in the comparable renewables.
Then everything seemed to go wrong at once. The Spanish parent of Abengoa Yield began a legal process that now threatens to put it into receivership.
SunEdison, the parent of yieldco TerraForm, drew shareholder rage with dilutive transactions and made the acquaintance of David Tepper of Appaloosa Management, a tough activist investor. NRG Yieldâs parent, NRG Energy, fired its green-friendly chief executive and started formulating break-up plans.
There was a moment of sunshine, so to speak, when in mid-December the US Congress unexpectedly approved a five-year extension of the special tax treatment for renewables.
In one day, SunEdison shares were up 25 per cent, TerraFormâs 6.5 per cent, NextEnergy Partners 8 per cent, and NRG Yieldâs 12 per cent. Some of this was fast short covering, but some was a real, if momentary, revival of hope.
Unfortunately, the acrimony and investor distrust quickly resumed. By Thursday, NextEra Energy Partnersâ shares had registered a year on year decline of 28.3 per cent, NRG Yield was down 49.8 per cent, Terraform 67 per cent and Abengoa Yield 44.6 per cent. So much for offering the âde-riskedâ end of renewables assets.
There are still some good things one can say about the yieldcos. Their revenues are not as subject to the vagaries of the commodity energy markets. For the most part, they are based on contracts with investment-grade counterparties that stretch out up to 20 years. And the shareholder and bondholder rebellions are forcing some of the parent companiesâ managements to show a bit more fiduciary responsibility than they have in the past.
The green-energy panic has led to some interesting pieces of wreckage floating on to the surf-pounded beach. Some of the junk bonds issued by the yieldcos are now trading at yields higher than those of the riskier traded equities. Since the equities no longer have much of an accepted growth story, this means that there is a pricing arbitrage that the careful investor could exploit.
Terraform B- rated junk bonds were, on Thursday, yielding between 9.7 per cent and 9.8 per cent, Abengoa Yield B+ rated bonds are yielding 10.9 per cent, and the NRG Yield bonds will give you 8.5 per cent. That is noticeably better than what you can get from the high-yield index products, and with better security than most junk provides.
Part of the current undervaluation, in my view, is created by the widespread suspicion that the renewables developers have engaged in abusive related-party transactions.
As Hugh Wynne, utilities analyst at Bernstein, the brokerage, says, âOne of the things that worries me about the [yieldco] scheme is that it creates an enormous incentive to play three-card monte with the shareholders. Nobody knows the real value of the wind farms and solar projects they are selling to the yieldcos.â
And the renewables financing structures have just had too many moving parts that make it difficult to value the securities in illiquid markets. As with so many other securitisations gone wrong, they were dependent on the issuers having continuous access to the equity and debt markets. That was a mistake.
The green-energy industry had better come up with a simpler, more transparent set of financing models than it has.
http://www.ft.com/cms/s/0/0bdfc5cc-bb67-11e5-b151-8e15c9a029fb.html
Wildbilly
8 years ago
Why SunEdison Inc Should Drop the Vivint Solar Deal
A powerful hedge fund manager could still keep SunEdison from buying Vivint Solar.
Travis Hoium (TMFFlushDraw) Jan 15, 2016 at 2:00PM
The drama between SunEdison (NYSE:SUNE), TerraForm Power (NASDAQ:TERP), and Vivint Solar (NYSE:VSLR) hasn't died down in 2016 -- it's only heated up. This week, news broke that David Tepper's Appaloosa Management has filed suit against SunEdison and TerraForm Power to try to block the latter buying assets from Vivint Solar.
TerraForm Power has always been key to the Vivint Solar acquisition, and losing it could cause the deal to fall apart. But that may not be bad for everyone involved.
TerraForm Power as a tool for SunEdison
One of the core questions surrounding the Vivint Solar deal is the role TerraForm Power plays with SunEdison. Is the company a tool for SunEdison to drop down assets as it pleases, or is it an independent company that should make independent decisions in the best interest of its shareholders?
That question is at the core of Tepper's lawsuit and his letter to the board of directors late last year calling into question "obvious conflicts" between the two companies. In a board meeting in November, TerraForm Power lost two independent directors, a director from a major shareholder quit, and the CFO of SunEdison was announced as CEO of TerraForm Power.
One of the goals of that letter was to get TerraForm Power to act more independently, which included backing out of the Vivint Solar acquisition. If completed, the deal would bring "high risk" residential solar assets onto the balance sheet of a company that had previously focused on lower risk projects with energy sold to utilities.
With the deal expected to be completed sometime this quarter, Tepper is seeking "immediate injunctive relief" to block the acquisition. He would like to see TerraForm Power be a utility scale solar company, not a residential solar company.
UNTIL THE VIVINT SOLAR DEAL, TERRAFORM POWER HAS BEEN FOCUSED ON LARGE SOLAR PROJECTS LIKE THIS ONE. IMAGE: SUNEDISON.
TerraForm Power's cash spend is massive
For TerraForm Power, Vivint Solar is a big deal no matter how you look at it. Under terms of a modified Vivint Solar acquisition, TerraForm Power cut its cash acquisition of residential assets from $922 million to $799 million. Some of that was from a lower price per watt, but most was a decline in MW acquired. That sounds nice, but keep in mind that unlevered cash available for distribution will be about $73 million for those assets, a yield of just 9.1%.
TerraForm Power also recently completed the $1.96 billion acquisition of Invenergy assets, which comes with expected unlevered CAFD before debt of $139 million. That's a CAFD yield of just 7.1%, and a $500 million term loan has a variable interest rate of at least 6.5%.
Remember that these acquisitions are happening as TerraForm Power carries a dividend yield of 14% based on last quarter's payout. Perhaps the company would be better off paying down debt, paying dividends, or even buying back shares than buying assets that can't meet the company's current cost of capital?
What happens next
All three companies have stubbornly moved forward with the merger, but I think all three would be better off if it didn't get completed. SunEdison could do without the debt and the distraction residential solar would bring. TerraForm Power should focus on lower risk projects and de-leveraging its balance sheet. Even Vivint Solar may be better off as an independent company now that the solar investment tax credit has been extended.
If the deal isn't called off we could see modifications, like selling rooftop solar systems to third parties. But we don't know what price a third party may be willing to pay, so that's a wild card.
The drama at SunEdison continues, but now the debate will enter the court room. I think the Vivint Solar acquisition is in trouble, and no matter what company you might be invested in, that's probably a good thing
http://www.fool.com/investing/general/2016/01/15/will-sunedison-still-be-forced-out-of-vivint-solar.aspx?source=eogyholnk0000001&utm_source=yahoo&utm_medium=feed&utm_campaign=article
Wildbilly
8 years ago
SunEdison Announces Agreement to Extinguish $336 Million
of 2020 Exchangeable Notes
MARYLAND HEIGHTS, Mo., Dec. 30, 2015 /PRNewswire/ -- SunEdison, Inc. (the "Company") (NYSE: SUNE) announced today that its wholly-owned subsidiary, Seller Note, LLC, entered into an agreement to extinguish all of its outstanding $336 million aggregate principal amount of 3.75% Guaranteed Exchangeable Senior Secured Notes due 2020 (the "Exchangeable Notes"). In return for extinguishing the Exchangeable Notes, noteholders will receive consideration in the form of SunEdison's membership equity interest in certain under development renewable energy assets as well as a specified number of Class A shares of TerraForm Power, Inc. (NASDAQ: TERP) currently utilized by the Company to secure the Exchangeable Notes. Approximately $121 million of the Exchangeable Notes will be extinguished shortly following the signing of the agreement, with the remainder to be extinguished upon the transfer of the relevant projects.
"We are very pleased to reach an agreement with the holders of the Exchangeable Notes to extinguish the debt." said Brian Wuebbels, SunEdison's chief financial officer. "We believe this was a mutually beneficial solution to deleverage our balance sheet by selling our under development assets as well as the Company's shares of TerraForm Power."
Terms of the Transactions
The Company intends to file a Current Report on Form 8-K that provides additional details on the transaction.
About SunEdison
SunEdison is the largest global renewable energy development company and is transforming the way energy is generated, distributed, and owned around the world. The company develops, finances, installs, owns and operates renewable power plants, delivering predictably priced electricity to its residential, commercial, government and utility customers. SunEdison is one of the world's largest renewable energy asset managers and provides customers with asset management, operations and maintenance, monitoring and reporting services. Corporate headquarters are in the United States with additional offices and technology manufacturing around the world. SunEdison's common stock is listed on the New York Stock Exchange under the symbol "SUNE." To learn more visit www.sunedison.com.
http://ih.advfn.com/p.php?pid=nmona&article=69845443
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