Canada's largest alternative-asset manager has submitted proposals regarding its interest in buying the yieldcos of bankrupt solar company SunEdison (OTCPK:SUNEQ).
Brookfield Asset Management (NYSE:BAM) would purchase all of TerraForm Power (NASDAQ:TERP) for $11.50 per share in cash, or a total consideration of $1.6B, and may even raise its offer to $12.50 per share if can also buy TerraForm Global (NASDAQ:GLBL).
Edison International (NYSE:EIX) subsidiary SoCore Energy agrees to acquire equity interests in 22 community solar garden development projects in Minnesota as part of SunEdison's (OTCPK:SUNEQ) bankruptcy proceedings.
The deal was approved today by the U.S. Bankruptcy Court in New York for a total of as much as $79.8M if all projects are completed.
SoCore says the projects would provide up to 140 MW of solar generated power to meet the growing demand for renewable energy in Minnesota.
Shares of TerraForm Power (NASDAQ:TERP) spiked into the close for a 4.4% gain following a Bloomberg report that BlackRock (NYSE:BLK) has joined a list of potential buyers for the company.
BLK, which owned 5.3% of TERP’s class A shares as of June 30, would be joining several investors including Brookfield Asset Management (NYSE:BAM), Appaloosa Management and China's Golden Concord Holdings as possible bidders, according to the report.
“If investors believe TerraForm can transition to a competently managed company freed of its ties to SunEdison, it would be a natural institutional target amidst the global search for yield,” a Bloomberg analyst says.
TERP and fellow SunEdison (OTCPK:SUNEQ) yieldco TerraForm Global (NASDAQ:GLBL) said earlier this week that they were seeking to sell their entire businesses or operate independently.
GCL-Poly says in a filing it has agreed to buy SunEdison's (OTCPK:SUNEQ) polysilicon business, its subsidiaries including SunEdison Products Singapore, MEMC Psadena, Solaicx, and its shares in SMP, a Korea JV.
GCL lists the "target assets" as "solar materials businesses including relevant platform, people, intellectual property processes and advanced manufacturing technology to (i) enhance its research and development on electronic grade granular polysilicon on FBR technology; (ii) increase its production capacity of electronic grade granular polysilicon; (iii) substantially improve pulling efficiency and quality of its single crystalline ingots production with SunEdison’s proprietary technology; (iv) reduce the production costs of single crystalline ingots and electronic grade granular polysilicon with SunEdison’s advanced manufacturing technology; and (v) maintain the cost advantage and competitiveness the Group currently has in producing solar materials by securing the relevant patents."
Deal is worth a cash consideration of $150M on a cash-free, debt-free basis.
$50M of the cash consideration will be funded into escrow accounts and distributed back to GCL (OTCPK:GCPEF, OTC:GCPEY) if certain post-closing conditions are not satisfied.
It is unclear what effect, if any, the deal will have on the company's shareholders.
D.E. agreed to buy the plants in December, before Hawaiian pulled out of its electricity-purchase contracts. D.E. managing director Bryan Martin stated in a letter his firm thinks the purchase of the plants "should help to alleviate" Hawaiian's concerns about "SunEdison's ability to perform as the projects' sponsor."
Hawaiian spokesman Darren Pai: "We remain concerned that D.E. Shaw is a creditor of SunEdison and is trying to acquire the solar contracts to help settle that debt. Should SunEdison later go into bankruptcy, as many financial media outlets are speculating, those projects could be tied up in a fight amongst creditors for a long time."
VSLR says it will "seek all legal remedies available" as a result of the "willful breach" of the merger agreement by SUNE.
SUNE had agreed to buy VSLR, which is controlled by Blackstone Group (NYSE:BX), on July 20 in a cash-and-stock deal valued at ~$2.2B; As part of the deal, SUNE yieldco TerraForm Power (NASDAQ:TERP) had agreed to buy VSLR's rooftop solar portfolio for $799M.
TerraForm Power (TERP +13.9%) and (to a lesser extent) TerraForm Global (GLBL +7.8%) are posting big gains following news David Einhorn's Greenlight Capital (a major SunEdison shareholder) is pushing for a sale of part or all of SunEdison (SUNE +5.2%).
Greenlight, which is also reportedly due to get a SunEdison board seat, adds it has held talks with SunEdison about management changes, while cautioning a deal hasn't been reached. The firm owned 6.8% of SunEdison as of Jan. 15.
Einhorn's efforts come as David Tepper's Appaloosa Management (a major TERP shareholder) continues its efforts to halt TERP's planned purchase of SunEdison acquisition target Vivint Solar's rooftop solar portfolio.
SunEdison (NYSE:SUNE) will now pay $2/share less in cash for Vivint Solar (NYSE:VSLR) than it previously agreed to pay, and $0.75/share more in stock. Vivint shareholders will now get $7.89/share in cash, 0.12 SunEdison shares, $3.30/share in convertible notes, and additional SunEdison shares worth $0.75/share.
In addition, Vivint shareholders can opt to be paid entirely in cash. If this occurs, a Blackstone-sponsored vehicle owning Vivint shares will receive extra stock and convertible notes as its payout. The Blackstone vehicle is set to "become a leading shareholder of SunEdison," and is providing the company with a $250M credit facility.
The deal is expected to close in Q1 2016. SunEdison, which has received many calls over the last few months to cancel the Vivint deal, is up 17.4% to $4.05 premarket. Vivint is up 7.9% to $9.05.
Update: Some more details: 1) Vivint is free to solicit competing bids, but has to pay a $34M termination fee if it agrees to one. If the deal goes through, 2) SunEdison's TerraForm Power (NASDAQ:TERP) YieldCo will buy Vivint's rooftop solar portfolio for $799M, with SunEdison promising to make "best efforts" to sell some of the Vivint assets acquired by TERP. TERP has obtained a new $795M bridge loan facility to pay for the purchase. 3) SunEdison will pay for the cash portion of the Vivint deal via the sale of a assets to TERP and a new $300M debt facility.
Beaten-down SunEdison (NYSE:SUNE) has received a lift from vague rumors the company could walk way away from its planned acquisition of #3 U.S. residential solar installer Vivint (NYSE:VSLR). Vivint naturally is heading in the opposite direction.
SunEdison has promised to pay $9.81/share in cash, $3.31/share in stock, and $3.30 in convertible notes to Vivint shareholders. With SunEdison's own shares having nosedived over the last month, the Street is less enthusiastic about the deal than it initially was.
SunEdison remains below $10 after posting a double-digit drop yesterday in the wake of a UBS downgrade. There has been speculation some of the company's many prominent hedge fund investors have been selling, either by choice or due to forced liquidations.
"The residential [solar] market can have very attractive PPA pricing relative to utility-scale and [commercial & industrial] solar markets," writes Cowen's Jeff Osborne, reacting positively to SunEdison (NYSE:SUNE) and TerraForm Power's (NASDAQ:TERP) $2.2B deal to buy #3 U.S. residential solar installer Vivint (NYSE:VSLR). "This is partly due to the high barriers to entry for the residential market, which can sometimes have prohibitively high customer acquisition costs for new participants with little branding power."
Osborne adds Vivint's projects have a 10-year estimated cash-on-cash yield of 9.5%, above the 8.4% for SunEdison/TerraForm's recent $2B deal to buy wind plants for Invenergy.
Deutsche's Vishal Shah also notes the residential market has relatively high margins and barriers to entry. He adds the deal backs up Deutsche's view that SunEdison/TerraForm are "best positioned to acquire assets due to cost of capital/structure and scale advantages over other players in the industry.
Meanwhile, SunEdison's TerraForm Global emerging markets solar/wind YieldCo (first announced in March) has set an IPO range of $19-$21. At the midpoint, that implies a valuation of $3.6B, and gross proceeds of ~$1.2B from the sale of ~60M shares through the IPO and a concurrent private placement. (prospectus)
TerraForm Global will trade under the symbol GLBL. For those interested, the IPO underwriters include JPMorgan, Barclays, Citi, Morgan Stanley, Goldman, BofA/Merrill, Deutsche, and SocGen.
SunEdison rose 0.3% today, and TerraForm Power fell 6.2%. FBR's Aditya Satghare: "We see today’s weakness in TerraForm’s stock as unjustified and believe it has more to do with the launch of the TerraForm Global IPO, with an initial price range that is a substantial discount to peers and TERP."
SunEdison (NYSE:SUNE) and its TerraForm Power (NASDAQ:TERP) subsidiary agree to acquire Vivint Solar (NYSE:VSLR) in a deal valued at ~$2.2B.
SUNE will pay VSLR shareholders $9.89 in cash, $3.31 in SUNE stock and $3.30 in SUNE notes for every VSLR they hold, which works out to $16.50/share, a 51.7% premium to VSLR's closing price on Friday.
In the deal, TERP acquires VSLR's rooftop solar portfolio, which comprises 523 MW expected to be installed by year end, for $922M; TERP will acquire future residential and commercial projects from SUNE, which is expanding its residential and small commercial business unit.
TERP raises its prior 2016 dividend per share guidance of $1.70-$1.75, a 30% Y/Y increase, and initiates 2017 dividend per share guidance of $2.05, up from its prior target of $2.00.
SUNE says it now expects to generate 4.2K-4.5K MW in 2016, up 50% from prior guidance.
Two weeks after TerraForm (NASDAQ:TERP) disclosed it's in talks to buy up to $2.6B worth of wind plants, TerraForm and parent SunEdison (NYSE:SUNE) have announced the former is acquiring 930MW of U.S. and Canadian wind plants from private Invenergy for $2B.
TerraForm will directly acquire 460MW, with the remaining 470MW acquired by a new warehouse facility. The directly-acquired plants will be paid for via cash on hand and new bonds; TerraForm is also assuming $450M in non-recourse project debt.
The acquisitions are expected to produce an average of $141M/year in unlevered cash available for distribution (CAFD) over the next 10 year, yielding a cash-on-cash return of 8.4%. Invenergy will keep a 9.9% stake in the U.S. assets.
TerraForm is hiking its 2016 dividend/share target by $0.17 to $1.70, and its long-term dividend/share growth target to "a 20 percent CAGR from its current [Q1] dividend."
Four days ago, SunEdison announced an MOU for a 1GW wind plant JV with Spanish wind turbine maker Gamesa. The purchases are the latest in a string of wind plant acquisitions by SunEdison/TerraForm (I, II, III).
SunEdison has jumped to $30.05 in AH trading. TerraForm hasn't yet moved.
"[W]e are currently in active negotiations to acquire up to 1.2GW of wind generation power plants for total consideration of up to $2.6 billion," discloses SunEdison's (NYSE:SUNE) TerraForm Power (TERP -1.5%) YieldCo in a prospectus for its $599M stock offering. "We would expect the potential cash flow characteristics of the portfolio of power plants to be generally comparable to our existing portfolio."
Wolfe Research thinks TerraForm's planned acquisitions would allow it to significantly increase its dividend (current yield of 3.4%). The firm maintains an Outperform rating and $44 target on SunEdison.
Last week: SunEdison buying Central American, Indian wind firms
SunEdison (NYSE:SUNE) is acquiring GME, a company declared to be Central America's largest renewable energy firm. GME owns 243MW of wind plants, and an 82MW solar plant. It also has 80MW of wind plants under construction in Costa Rica, and a 246MW Central American wind pipeline.
SunEdison is also buying Continuum Wind Energy, the owner/operator of 242MW of wind plants in the Indian states of Maharashtra and Gujarat. Continuum has 170MW of wind plants under construction in the state of Madhya Pradesh, and over 1GW in development across 6 states.
Terms for both deals are undisclosed. GME and Continuum's plants will be among those SunEdison's TerraForm Global YieldCo (recently filed for an IPO) will have call rights for. This morning, SunEdison has also announced the sale of $403M worth of TerraForm Global membership interests and shares.
The acquisitions follow last year's $2.4B deal to buy top U.S. wind project developer First Wind. SunEdison is close to a 52-week high of $31.34.
SunEdison (SUNE -0.7%) has bought LightWing, a provider of several services (sales support, marketing, project design, financing, and installation) to utilities and retail energy providers looking to sell solar electricity. Terms are undisclosed; SunEdison asserts the deal will give it "access to a significantly broader customer base."
The company has also announced it's launching a residential power purchase agreement product (PPA - solar systems are installed for little or nothing in exchange for a commitment to buy the electricity produced), thereby entering a market where SolarCity and Vivint have major U.S. presences.
To drive PPA growth, SunEdison has struck an reseller deal with major U.S. solar residential reseller Evolve Solar - Evolve will "now exclusively sell SunEdison solar products." The company has also lined up residential PPA tax equity financing through a fund enabled by Morgan Stanley, and launched in partnership with SunEdison's TerraForm Power (TERP -0.7%) YieldCo.
Last month: SunEdison launches rural electric company, aims for 20M customers