TERRAFORM POWER, INC. (NASDAQ:TERP) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
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Entry into a Material Definitive Agreement.
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Merger and Sponsorship Transaction Agreement
On March 6, 2017, TerraForm Power, Inc., a Delaware corporation
(the Company), entered into a Merger and Sponsorship
Transaction Agreement (the Transaction Agreement) with
Orion US Holdings 1 L.P., a Delaware limited partnership
(Sponsor), and BRE TERP Holdings Inc., a Delaware
corporation and a wholly-owned subsidiary of Sponsor (Merger
Sub), providing for the merger of Merger Sub with and into
the Company (the Merger), with the Company as the
surviving corporation in the Merger (the Surviving
Corporation) in which Sponsor will hold an approximately 51%
interest. The Transaction Agreement provides that, at or prior to
the effective time of the Merger, the Company and Sponsor (or one
of its affiliates) will enter into a suite of agreements
providing for sponsorship arrangements as described in greater
detail below (the Sponsorship Transaction, and together
with the Merger and the other transactions contemplated by the
Transaction Agreement, the Transactions). Concurrently
with the announcement of the Transaction Agreement, TerraForm
Global, Inc., a Delaware corporation (GLBL), announced the
entry into an Agreement and Plan of Merger, by and among GLBL,
Sponsor and BRE GLBL Holdings Inc., a Delaware corporation and a
wholly-owned subsidiary of Sponsor (the GLBL Merger Sub),
to which GLBL Merger Sub will merge with and into GLBL and GLBL
will survive the merger as a wholly-owned subsidiary of Sponsor.
(the Company), entered into a Merger and Sponsorship
Transaction Agreement (the Transaction Agreement) with
Orion US Holdings 1 L.P., a Delaware limited partnership
(Sponsor), and BRE TERP Holdings Inc., a Delaware
corporation and a wholly-owned subsidiary of Sponsor (Merger
Sub), providing for the merger of Merger Sub with and into
the Company (the Merger), with the Company as the
surviving corporation in the Merger (the Surviving
Corporation) in which Sponsor will hold an approximately 51%
interest. The Transaction Agreement provides that, at or prior to
the effective time of the Merger, the Company and Sponsor (or one
of its affiliates) will enter into a suite of agreements
providing for sponsorship arrangements as described in greater
detail below (the Sponsorship Transaction, and together
with the Merger and the other transactions contemplated by the
Transaction Agreement, the Transactions). Concurrently
with the announcement of the Transaction Agreement, TerraForm
Global, Inc., a Delaware corporation (GLBL), announced the
entry into an Agreement and Plan of Merger, by and among GLBL,
Sponsor and BRE GLBL Holdings Inc., a Delaware corporation and a
wholly-owned subsidiary of Sponsor (the GLBL Merger Sub),
to which GLBL Merger Sub will merge with and into GLBL and GLBL
will survive the merger as a wholly-owned subsidiary of Sponsor.
The Transaction Agreement was approved unanimously by the members
of the board of directors of the Company (the Board of
Directors) voting on the matter, following the unanimous
recommendation of its Corporate Governance and Conflicts
Committee (Conflicts Committee). Completion of the
Sponsorship Transaction is expected to occur, subject to
satisfaction of closing conditions, in the second half of 2017.
of the board of directors of the Company (the Board of
Directors) voting on the matter, following the unanimous
recommendation of its Corporate Governance and Conflicts
Committee (Conflicts Committee). Completion of the
Sponsorship Transaction is expected to occur, subject to
satisfaction of closing conditions, in the second half of 2017.
At the effective time of the Merger, each share of Class A common
stock of the Company, par value $0.01 per share (the Class A
Shares), issued and outstanding immediately prior to the
effective time of the Merger (other than the Excluded Shares (as
defined in the Transaction Agreement)), will be converted into
the right to, at the holders election and subject to proration as
described below, either (i) receive $9.52 per Class A Share, in
cash, without interest (the Per Share Cash Consideration)
or (ii) retain one share of Class A common stock, par value $0.01
per share, of the Surviving Corporation (the Per Share Stock
Consideration, and, together with the Per Share Cash
Consideration (without duplication), the Per Share Merger
Consideration). The Per Share Stock Consideration will be
subject to proration in the event that the aggregate number of
Class A Shares for which an election to receive the Per Share
Stock Consideration has been made exceeds a certain maximum
number as described more fully in the Transaction Agreement, and
the Per Share Cash Consideration will be subject to proration in
the event that the aggregate number of Class A Shares for which
an election to receive the Per Share Cash Consideration has been
made exceeds a certain maximum number as described more fully in
the Transaction Agreement.
stock of the Company, par value $0.01 per share (the Class A
Shares), issued and outstanding immediately prior to the
effective time of the Merger (other than the Excluded Shares (as
defined in the Transaction Agreement)), will be converted into
the right to, at the holders election and subject to proration as
described below, either (i) receive $9.52 per Class A Share, in
cash, without interest (the Per Share Cash Consideration)
or (ii) retain one share of Class A common stock, par value $0.01
per share, of the Surviving Corporation (the Per Share Stock
Consideration, and, together with the Per Share Cash
Consideration (without duplication), the Per Share Merger
Consideration). The Per Share Stock Consideration will be
subject to proration in the event that the aggregate number of
Class A Shares for which an election to receive the Per Share
Stock Consideration has been made exceeds a certain maximum
number as described more fully in the Transaction Agreement, and
the Per Share Cash Consideration will be subject to proration in
the event that the aggregate number of Class A Shares for which
an election to receive the Per Share Cash Consideration has been
made exceeds a certain maximum number as described more fully in
the Transaction Agreement.
Immediately prior to the effective time of the Merger, the
Company will declare the payment of a special cash dividend
(the Special Dividend) in the amount of $1.94 per share,
as more particularly described in the Transaction Agreement.
Company will declare the payment of a special cash dividend
(the Special Dividend) in the amount of $1.94 per share,
as more particularly described in the Transaction Agreement.
Concurrently with the execution and delivery of the Transaction
Agreement, SunEdison, Inc. (SunEdison) executed and
delivered a voting and support agreement (the Voting and
Support Agreement), to which it has agreed to vote or cause
to be voted any shares of common stock, par value $0.01 per
share, of the Company (each, a Share and, collectively,
the Shares) held by it or any of its controlled
affiliates in favor of the Merger and to take certain other
actions to support the consummation of the Transactions.
Agreement, SunEdison, Inc. (SunEdison) executed and
delivered a voting and support agreement (the Voting and
Support Agreement), to which it has agreed to vote or cause
to be voted any shares of common stock, par value $0.01 per
share, of the Company (each, a Share and, collectively,
the Shares) held by it or any of its controlled
affiliates in favor of the Merger and to take certain other
actions to support the consummation of the Transactions.
The Transaction Agreement includes a non-waivable condition to
closing that the Transaction Agreement and the Transactions be
approved by holders of a majority of the outstanding Class A
Shares, excluding SunEdison, Sponsor, any of their respective
affiliates or any person with whom any of them has formed (and
not terminated) a group (as such term is defined in the
Securities Exchange Act of 1934, as amended).
closing that the Transaction Agreement and the Transactions be
approved by holders of a majority of the outstanding Class A
Shares, excluding SunEdison, Sponsor, any of their respective
affiliates or any person with whom any of them has formed (and
not terminated) a group (as such term is defined in the
Securities Exchange Act of 1934, as amended).
Closing of the Merger is subject to certain additional
conditions, including the adoption of the Transaction Agreement
by the holders of a majority of the total voting power of the
outstanding Shares entitled to vote on the Merger, the
expiration or early termination of the waiting period
applicable to consummation of the Merger under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the entry by the United States Bankruptcy Court
for the Southern District of New York (the Bankruptcy
Court) of orders authorizing and approving the entry by
SunEdison (and if, applicable, SunEdisons debtor affiliates)
into the Settlement Agreement, the Voting and Support Agreement
and any other agreement entered into in connection with the
Merger or the other Transactions to which SunEdison or any
other debtor will be a party (the Bankruptcy Court
Order), and other customary closing conditions.
conditions, including the adoption of the Transaction Agreement
by the holders of a majority of the total voting power of the
outstanding Shares entitled to vote on the Merger, the
expiration or early termination of the waiting period
applicable to consummation of the Merger under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the entry by the United States Bankruptcy Court
for the Southern District of New York (the Bankruptcy
Court) of orders authorizing and approving the entry by
SunEdison (and if, applicable, SunEdisons debtor affiliates)
into the Settlement Agreement, the Voting and Support Agreement
and any other agreement entered into in connection with the
Merger or the other Transactions to which SunEdison or any
other debtor will be a party (the Bankruptcy Court
Order), and other customary closing conditions.
There is no financing condition to the consummation of the
Transactions. to the Transaction Agreement, the Company has
agreed to provide cooperation as reasonably requested by
Sponsor in Sponsors efforts to obtain debt financing that is to
be made available to the Company from and after the closing of
the Merger. to an executed debt commitment letter delivered by
lenders party thereto (the Lenders), such Lenders have
committed, upon the terms and subject to the conditions set
forth therein, to provide the amount of financing set forth
therein to repay, refinance, redeem, defease or otherwise
repurchase certain Company indebtedness. Sponsor has also
delivered to the Company the Guaranty, dated as of March 6,
2017, to which Brookfield Infrastructure Fund III-A (CR), L.P.,
a limited partnership organized under the laws of Delaware,
Brookfield Infrastructure Fund III-A, L.P., a limited
partnership organized under the laws of Delaware, Brookfield
Infrastructure Fund III-B, L.P., a limited partnership
organized under the laws of Delaware, Brookfield Infrastructure
Fund III-D, L.P., a limited partnership organized under the
laws of Delaware, and Brookfield Infrastructure Fund III-D
(CR), L.P., a limited partnership organized under the laws of
Delaware (collectively, the Guarantors) have guaranteed
certain obligations of Sponsor under the Transaction Agreement.
Transactions. to the Transaction Agreement, the Company has
agreed to provide cooperation as reasonably requested by
Sponsor in Sponsors efforts to obtain debt financing that is to
be made available to the Company from and after the closing of
the Merger. to an executed debt commitment letter delivered by
lenders party thereto (the Lenders), such Lenders have
committed, upon the terms and subject to the conditions set
forth therein, to provide the amount of financing set forth
therein to repay, refinance, redeem, defease or otherwise
repurchase certain Company indebtedness. Sponsor has also
delivered to the Company the Guaranty, dated as of March 6,
2017, to which Brookfield Infrastructure Fund III-A (CR), L.P.,
a limited partnership organized under the laws of Delaware,
Brookfield Infrastructure Fund III-A, L.P., a limited
partnership organized under the laws of Delaware, Brookfield
Infrastructure Fund III-B, L.P., a limited partnership
organized under the laws of Delaware, Brookfield Infrastructure
Fund III-D, L.P., a limited partnership organized under the
laws of Delaware, and Brookfield Infrastructure Fund III-D
(CR), L.P., a limited partnership organized under the laws of
Delaware (collectively, the Guarantors) have guaranteed
certain obligations of Sponsor under the Transaction Agreement.
Sponsor and the Company have made customary representations and
warranties in the Transaction Agreement. The Company has also
agreed to various agreements and covenants, including, subject
to certain exceptions, to conduct its business in the ordinary
course of business between execution of the Transaction
Agreement and closing of the Merger and not to engage in
certain specified types of transactions during such period. In
addition, the Company is subject to a no change of
recommendation restriction and no shop restriction on its
ability to solicit alternative business combination proposals
from third parties and to provide information to, and engage in
discussions with, third parties regarding alternative business
combination transactions, except as permitted under the terms
of the Transaction Agreement. The Company may not terminate the
Transaction Agreement to accept an alternative business
combination and is required to hold a shareholder vote on the
Transaction Agreement even if the Board of Directors withdraws
its recommendation to vote in favor of the Merger. Sponsor has
also made certain covenants in respect of the operation of the
business of Brookfield and its affiliates in a manner that
would not impair the ability of Brookfield and its affiliates
to perform their sponsorship obligations from and after the
effective time of the Merger.
warranties in the Transaction Agreement. The Company has also
agreed to various agreements and covenants, including, subject
to certain exceptions, to conduct its business in the ordinary
course of business between execution of the Transaction
Agreement and closing of the Merger and not to engage in
certain specified types of transactions during such period. In
addition, the Company is subject to a no change of
recommendation restriction and no shop restriction on its
ability to solicit alternative business combination proposals
from third parties and to provide information to, and engage in
discussions with, third parties regarding alternative business
combination transactions, except as permitted under the terms
of the Transaction Agreement. The Company may not terminate the
Transaction Agreement to accept an alternative business
combination and is required to hold a shareholder vote on the
Transaction Agreement even if the Board of Directors withdraws
its recommendation to vote in favor of the Merger. Sponsor has
also made certain covenants in respect of the operation of the
business of Brookfield and its affiliates in a manner that
would not impair the ability of Brookfield and its affiliates
to perform their sponsorship obligations from and after the
effective time of the Merger.
The Transaction Agreement contains specified termination
rights, including the right for each of the Company or
Sponsor to terminate the Merger Agreement if the Merger is
not consummated by December 6, 2017, subject to extension
until March 6, 2018 to obtain required regulatory approvals.
The Transaction Agreement also provides for other customary
termination rights for both the Company and Sponsor, as well
as a mutual termination right in the event that the
Settlement Agreement is terminated in accordance with its
terms. In the event the Transaction Agreement is terminated
by either the Company or Sponsor due to the failure to obtain
the requisite stockholder approvals or the termination of the
Settlement Agreement or failure to obtain the Bankruptcy
Court Orders, and the Board of Directors did not change its
recommendation to the Companys stockholders to approve the
Merger, the Company will pay to Sponsor all reasonable and
documented out-of-pocket expenses incurred in connection with
the Transaction Agreement and the Transactions, in an amount
not to exceed $17,000,000. The Transaction Agreement further
provides that upon termination of the Transaction Agreement
under certain other specified circumstances, the Company will
be required to pay Sponsor a termination fee of $50,000,000
(it being understood that in no event will the Company be
required to pay any combination of such out-of-pocket
expenses and such termination fee aggregating to more than
$50,000,000).
rights, including the right for each of the Company or
Sponsor to terminate the Merger Agreement if the Merger is
not consummated by December 6, 2017, subject to extension
until March 6, 2018 to obtain required regulatory approvals.
The Transaction Agreement also provides for other customary
termination rights for both the Company and Sponsor, as well
as a mutual termination right in the event that the
Settlement Agreement is terminated in accordance with its
terms. In the event the Transaction Agreement is terminated
by either the Company or Sponsor due to the failure to obtain
the requisite stockholder approvals or the termination of the
Settlement Agreement or failure to obtain the Bankruptcy
Court Orders, and the Board of Directors did not change its
recommendation to the Companys stockholders to approve the
Merger, the Company will pay to Sponsor all reasonable and
documented out-of-pocket expenses incurred in connection with
the Transaction Agreement and the Transactions, in an amount
not to exceed $17,000,000. The Transaction Agreement further
provides that upon termination of the Transaction Agreement
under certain other specified circumstances, the Company will
be required to pay Sponsor a termination fee of $50,000,000
(it being understood that in no event will the Company be
required to pay any combination of such out-of-pocket
expenses and such termination fee aggregating to more than
$50,000,000).
The representations, warranties and covenants of the Company
contained in the Transaction Agreement have been made solely
for the benefit of Sponsor and Merger Sub. In addition, such
representations, warranties and covenants (a) have been made
only for purposes of the Transaction Agreement, (b) have been
qualified by confidential disclosures made to Sponsor and
Merger Sub in connection with the Transaction Agreement, (c)
are subject to materiality qualifications contained in the
Transaction Agreement which may differ from what may be
viewed as material by investors, (d) were made as of the date
of the Transaction Agreement, the closing date or such other
date as is specified in the Transaction Agreement and (e)
have been included in the Transaction Agreement for the
purpose of allocating risk between the contracting parties
rather than establishing matters as facts. Accordingly, the
Transaction Agreement is included with this filing only to
provide investors with information regarding the terms of the
Transaction Agreement, and not to provide investors with any
other factual information regarding the Company or its
business. Investors should not rely on the representations,
warranties and covenants or any descriptions thereof as
characterizations of the actual state of facts or condition
of the Company or any of its subsidiaries or affiliates.
Moreover, information concerning the subject matter of the
representations and warranties may change after the date of
the Transaction Agreement, which subsequent information may
or may not be fully reflected in the Companys public
disclosures. The Transaction Agreement should not be read
alone, but should instead be read in conjunction with the
other information regarding the Company that is or will be
contained in, or incorporated by reference into, the Forms
10-K, Forms 10-Q and other documents that the Company files
with the Securities and Exchange Commission (the SEC).
contained in the Transaction Agreement have been made solely
for the benefit of Sponsor and Merger Sub. In addition, such
representations, warranties and covenants (a) have been made
only for purposes of the Transaction Agreement, (b) have been
qualified by confidential disclosures made to Sponsor and
Merger Sub in connection with the Transaction Agreement, (c)
are subject to materiality qualifications contained in the
Transaction Agreement which may differ from what may be
viewed as material by investors, (d) were made as of the date
of the Transaction Agreement, the closing date or such other
date as is specified in the Transaction Agreement and (e)
have been included in the Transaction Agreement for the
purpose of allocating risk between the contracting parties
rather than establishing matters as facts. Accordingly, the
Transaction Agreement is included with this filing only to
provide investors with information regarding the terms of the
Transaction Agreement, and not to provide investors with any
other factual information regarding the Company or its
business. Investors should not rely on the representations,
warranties and covenants or any descriptions thereof as
characterizations of the actual state of facts or condition
of the Company or any of its subsidiaries or affiliates.
Moreover, information concerning the subject matter of the
representations and warranties may change after the date of
the Transaction Agreement, which subsequent information may
or may not be fully reflected in the Companys public
disclosures. The Transaction Agreement should not be read
alone, but should instead be read in conjunction with the
other information regarding the Company that is or will be
contained in, or incorporated by reference into, the Forms
10-K, Forms 10-Q and other documents that the Company files
with the Securities and Exchange Commission (the SEC).
In addition, the Transaction Agreement provides that, at or
prior to the effective time of the Merger, the Company will
enter into (a) the Master Services Agreement (the
MSA) by and among the Company, TerraForm Power, LLC
(TERP LLC), Terraform Power Operating, LLC (TERP
Operating LLC), Brookfield Asset Management Inc.
(Brookfield) and certain affiliates of Brookfield
(collectively, the MSA Providers) to which the MSA
Providers will provide certain services to the Company and
its subsidiaries commencing at the effective time of the
Merger, (b) a revolving credit line agreement,
substantially consistent with the term sheet as agreed
between Sponsor and the Company as of the date of the
Transaction Agreement, (the Sponsor Line Agreement)
by and among the Company and Brookfield (the Sponsor
Line Provider) to which the Sponsor Line Provider will
commit up to a $500 million revolving unsecured credit line
to the Company, (c) the Relationship Agreement (the
Relationship Agreement) by and among the Company,
TERP LLC, TERP Operating LLC and Brookfield, to which,
among other things, Brookfield will provide the Company and
its subsidiaries with a right of first offer on certain
wind and solar assets in North America and other
Organisation for Economic Co-operation and Development
(OECD) nations that have been developed by Sponsor
(the ROFO Pipeline), on the terms set forth therein
and (d) the Registration Rights Agreement (the
Registration Rights Agreement) by and among the
Company and Sponsor providing Sponsor with registration
rights with respect to its shares in the Surviving
Corporation (together with the IDR Transfer Agreement, MSA,
Sponsor Line Agreement, Relationship Agreement and
Registration Rights Agreement, collectively, the
Ancillary Agreements and individually, each an
Ancillary Agreement). The Transaction Agreement also
requires the Company to issue to Sponsor additional Class A
Shares in respect of any losses to the Company arising out
of certain specified litigation matters upon the final
resolution of such matters.
prior to the effective time of the Merger, the Company will
enter into (a) the Master Services Agreement (the
MSA) by and among the Company, TerraForm Power, LLC
(TERP LLC), Terraform Power Operating, LLC (TERP
Operating LLC), Brookfield Asset Management Inc.
(Brookfield) and certain affiliates of Brookfield
(collectively, the MSA Providers) to which the MSA
Providers will provide certain services to the Company and
its subsidiaries commencing at the effective time of the
Merger, (b) a revolving credit line agreement,
substantially consistent with the term sheet as agreed
between Sponsor and the Company as of the date of the
Transaction Agreement, (the Sponsor Line Agreement)
by and among the Company and Brookfield (the Sponsor
Line Provider) to which the Sponsor Line Provider will
commit up to a $500 million revolving unsecured credit line
to the Company, (c) the Relationship Agreement (the
Relationship Agreement) by and among the Company,
TERP LLC, TERP Operating LLC and Brookfield, to which,
among other things, Brookfield will provide the Company and
its subsidiaries with a right of first offer on certain
wind and solar assets in North America and other
Organisation for Economic Co-operation and Development
(OECD) nations that have been developed by Sponsor
(the ROFO Pipeline), on the terms set forth therein
and (d) the Registration Rights Agreement (the
Registration Rights Agreement) by and among the
Company and Sponsor providing Sponsor with registration
rights with respect to its shares in the Surviving
Corporation (together with the IDR Transfer Agreement, MSA,
Sponsor Line Agreement, Relationship Agreement and
Registration Rights Agreement, collectively, the
Ancillary Agreements and individually, each an
Ancillary Agreement). The Transaction Agreement also
requires the Company to issue to Sponsor additional Class A
Shares in respect of any losses to the Company arising out
of certain specified litigation matters upon the final
resolution of such matters.
Further, at the effective time of the Merger, the governing
documents of the Surviving Corporation, including its
by-laws and certificate of incorporation, will be amended
and restated to be substantially consistent with the
governance terms agreed to between Sponsor and the Company
as of the date of the Transaction Agreement.
documents of the Surviving Corporation, including its
by-laws and certificate of incorporation, will be amended
and restated to be substantially consistent with the
governance terms agreed to between Sponsor and the Company
as of the date of the Transaction Agreement.
The foregoing description of the Transaction Agreement, the
Ancillary Agreements and the Transactions does not purport
to be complete and is subject to, and qualified in its
entirety by, the full text of the Transaction Agreement
attached as Exhibit 2.1 hereto and incorporated herein by
reference.
Ancillary Agreements and the Transactions does not purport
to be complete and is subject to, and qualified in its
entirety by, the full text of the Transaction Agreement
attached as Exhibit 2.1 hereto and incorporated herein by
reference.
Settlement Agreement
The Company also entered into the Settlement Agreement to
which SunEdison will exchange, effective as of
immediately prior to the record time for the Special
Dividend, all of the Class B Units (as defined in the
Transaction Agreement) of TERP LLC held by it or any of
its controlled affiliates for 48,202,310 Class A Shares
(the Exchange Shares) (the Exchange). As a
result of and following completion of the Exchange, all
of the issued and outstanding shares of Class B common
stock, par value $0.01 per share, of the Company will be
redeemed and retired. In addition, also as part of the
settlement, SunEdison agreed to deliver the outstanding
incentive distribution rights of TERP LLC (the
IDRs) held by SunEdison or certain of its
affiliates to Brookfield and in connection therewith,
concurrently with the execution and delivery of the
Transaction Agreement, the Company, TERP LLC, BRE
Delaware, Inc. (the Brookfield IDR Holder) and
SunEdison and certain of its affiliates have entered into
an Incentive Distribution Rights Transfer Agreement (the
IDR Transfer Agreement), to which certain
SunEdison affiliates will transfer all of the IDRs to
Brookfield IDR Holder at the effective time of the Merger
on the terms and conditions set forth in the IDR Transfer
Agreement. The Company will also authorize and issue to
SunEdison a number of additional Class A Shares (the
Additional SunEdison Shares, together with the
Exchange Shares, the SunEdison Shares), such that,
immediately prior to the effective time of the Merger,
SunEdison will hold an aggregate number of Class A Shares
equal to 36.9% of the Companys Fully Diluted Share Number
(as defined in the Transaction Agreement).
which SunEdison will exchange, effective as of
immediately prior to the record time for the Special
Dividend, all of the Class B Units (as defined in the
Transaction Agreement) of TERP LLC held by it or any of
its controlled affiliates for 48,202,310 Class A Shares
(the Exchange Shares) (the Exchange). As a
result of and following completion of the Exchange, all
of the issued and outstanding shares of Class B common
stock, par value $0.01 per share, of the Company will be
redeemed and retired. In addition, also as part of the
settlement, SunEdison agreed to deliver the outstanding
incentive distribution rights of TERP LLC (the
IDRs) held by SunEdison or certain of its
affiliates to Brookfield and in connection therewith,
concurrently with the execution and delivery of the
Transaction Agreement, the Company, TERP LLC, BRE
Delaware, Inc. (the Brookfield IDR Holder) and
SunEdison and certain of its affiliates have entered into
an Incentive Distribution Rights Transfer Agreement (the
IDR Transfer Agreement), to which certain
SunEdison affiliates will transfer all of the IDRs to
Brookfield IDR Holder at the effective time of the Merger
on the terms and conditions set forth in the IDR Transfer
Agreement. The Company will also authorize and issue to
SunEdison a number of additional Class A Shares (the
Additional SunEdison Shares, together with the
Exchange Shares, the SunEdison Shares), such that,
immediately prior to the effective time of the Merger,
SunEdison will hold an aggregate number of Class A Shares
equal to 36.9% of the Companys Fully Diluted Share Number
(as defined in the Transaction Agreement).
The foregoing description of the Settlement Agreement
does not purport to be complete and is subject to, and
qualified in its entirety by, the full text of the
Settlement Agreement attached hereto as Exhibit 2.2,
which is incorporated herein by reference.
does not purport to be complete and is subject to, and
qualified in its entirety by, the full text of the
Settlement Agreement attached hereto as Exhibit 2.2,
which is incorporated herein by reference.
Overview of Principal Events Leading to the Transaction
Agreement with Brookfield
Agreement with Brookfield
On March 6, 2017, following the unanimous recommendation
of the Conflicts Committee, the members of the Board of
Directors voting on the matter unanimously (i) determined
that the Merger is fair to, and in the best interests of,
the Company and its stockholders, approved and declared
advisable the Transaction Agreement and the Transactions
and resolved to recommend that the holders of Shares
approve the Transaction Agreement and the Transactions
and (ii) directed that the Transaction Agreement be
submitted to the holders of Shares for their adoption and
approval.
of the Conflicts Committee, the members of the Board of
Directors voting on the matter unanimously (i) determined
that the Merger is fair to, and in the best interests of,
the Company and its stockholders, approved and declared
advisable the Transaction Agreement and the Transactions
and resolved to recommend that the holders of Shares
approve the Transaction Agreement and the Transactions
and (ii) directed that the Transaction Agreement be
submitted to the holders of Shares for their adoption and
approval.
The Board of Directors recommendation marks the
culmination of a strategic review process that was
initiated by the Board of Directors and Conflicts
Committee in anticipation of and in response to
SunEdisons financial and operating difficulties, which
culminated in SunEdisons voluntary filing for
bankruptcy protection to Chapter 11 of the U.S.
Bankruptcy Code on April 21, 2016. This review process
was initiated as part of an effort to preserve and
protect stockholder value in connection with the
disruption caused by SunEdisons financial distress, and
included governance, operations and business
performance initiatives deemed especially critical
because SunEdison provided all personnel and services
to the Company (other than those operational services
provided by third parties). Following completion of a
stand-alone business plan reflecting the absence of
SunEdisons sponsorship and support, the Board of
Directors, based upon the recommendation of the
Conflicts Committee, expanded the strategic review
process to include an exploration and evaluation of all
potential strategic alternatives to maximize
stockholder value, including potential transactions to
secure a new sponsor or to sell the Company. In
particular, the Company, acting on the authority or
recommendation of the Conflicts Committee, undertook
the following initiatives over this year-long process:
culmination of a strategic review process that was
initiated by the Board of Directors and Conflicts
Committee in anticipation of and in response to
SunEdisons financial and operating difficulties, which
culminated in SunEdisons voluntary filing for
bankruptcy protection to Chapter 11 of the U.S.
Bankruptcy Code on April 21, 2016. This review process
was initiated as part of an effort to preserve and
protect stockholder value in connection with the
disruption caused by SunEdisons financial distress, and
included governance, operations and business
performance initiatives deemed especially critical
because SunEdison provided all personnel and services
to the Company (other than those operational services
provided by third parties). Following completion of a
stand-alone business plan reflecting the absence of
SunEdisons sponsorship and support, the Board of
Directors, based upon the recommendation of the
Conflicts Committee, expanded the strategic review
process to include an exploration and evaluation of all
potential strategic alternatives to maximize
stockholder value, including potential transactions to
secure a new sponsor or to sell the Company. In
particular, the Company, acting on the authority or
recommendation of the Conflicts Committee, undertook
the following initiatives over this year-long process:
|
Developed an emergency plan to provide
continuity in the Companys operations and cash flows following the disruption in services provided by SunEdison, and retained AlixPartners LLP to provide consulting services in planning and operational functions necessary to preserve the Companys business; |
|
Strengthened corporate governance by amending
the limited liability company agreement of its operating subsidiary to provide an independent conflicts committee the exclusive power to manage and control business decisions relating to or involving SunEdison (in light of the directors serving on the Board of Directors being subject to removal by SunEdison); |
|
Delegated to the Conflicts Committee, given the
potentially conflicting interests of SunEdison, oversight of the strategic review process, with a mandate to be guided solely by consideration of the best interests of all of the Companys stockholders and to ensure interactions with SunEdison were conducted on an arms-length basis; |
|
Increased the number of directors on the Board
of Directors from seven to nine; eight of the Companys current directors satisfy NASDAQs independence standards and five are independent of both SunEdison and GLBL and serve on the Conflicts Committee; |
|
Mandated that all decisions with respect to any
strategic transaction, including the Transactions, be made following a determination that the decision would be in the best interests of all of the Companys stockholders and with the consent of a majority of the independent directors; |
|
Engaged financial and legal advisors, including
Centerview Partners LLC (Centerview) as joint financial advisor with GLBL and Morgan Stanley, Inc. (Morgan Stanley) as independent financial advisor, as well as Sullivan Cromwell LLP as legal advisor in addition to Greenberg Traurig, LLP, the Conflicts Committees legal advisor, and Hughes Hubbard Reed LLP, as legal advisor to the directors who are not also directors of GLBL and, following the appointment of such directors to the Conflicts Committee, as legal advisor to the Conflicts Committee; |
|
Implemented a stockholder protection rights
plan in July 2016, after consultation with legal and financial advisors and after the Board of Directors, following the recommendation of the Conflicts Committee, determined doing so would be in the best interests of the Company and its stockholders because it would maximize the Companys options in its strategic review process; |
|
Developed a process and protocol for
collaborating with SunEdison in the strategic alternatives process on an arms-length basis, with a goal of permitting the Company to maximize value for its public stockholders as compared to a separate process or a delayed process, including by giving the Company the ability to jointly decide with SunEdison the structure and organization of the strategic alternatives process and any potential transaction, particularly in light of SunEdisons voting power and the need to obtain the Bankruptcy Courts approval for any SunEdison voting decision regarding a strategic transaction; |
|
Developed business plans and forecasts
assuming the Company would continue as a stand-alone entity (without a sponsor) either on a stabilization basis without acquisitions or on a growth case assuming the ability to achieve approximately $10.8 billion in acquisitions over 10 years and addressing multiple areas, including growth prospects, dividend targets, organizational design, investment strategy, capital structure, competitive position, project operations and corporate costs and engaged in a detailed review of the stand-alone plans, including key execution risks and financial analyses, in consultation with financial and legal advisors, with a view toward determining whether it was advisable to pursue such a stand-alone plan or to pursue a strategic alternatives process; |
|
Developed a sponsorship business plan and
forecasts in collaboration with Brookfield, including a potential asset acquisition pipeline, cash flow projections and capital structure details, as well as assumptions regarding costs and fees and engaged in a review of the sponsorship plan under Brookfields sponsorship, including key execution risks and financial analyses, in consultation with financial and legal advisors, with a view towards determining whether a sponsorship plan would yield greater value for the Companys stockholders than a stand-alone plan or other strategic alternatives; |
|
Analyzed and filed proofs of claims against
SunEdison and negotiated the Settlement Agreement on a timeline parallel to the pursuit of strategic alternatives following the determination by the Conflicts Committee that a settlement with SunEdison on an arms-length basis would likely increase the value that could be obtained for all stockholders in a potential strategic alternative; and |
|
Conducted a strategic alternatives process
in which: |
|
o
|
In the first phase, approximately 96
different parties were contacted, of which 35 entered into non-disclosure agreements, resulting in the submission of preliminary non-binding indications of interest by nine different parties, including three strategic bidders and six financial bidders; |
|
o
|
In the second phase, bidders were provided
access to a virtual data room, a draft sponsorship term sheet and management presentations, resulting in the submission of offers from three different parties, including one financial bidder, one strategic bidder and Brookfield: |
|
Party A, a strategic bidder, proposed a
whole company transaction for $10.10 per Class A Share; |
|
Party B, a financial bidder, proposed a
sponsorship transaction resulting in the acquisition of a maximum of 33% of the outstanding equity of the Company (including shares to be issued to settle a litigation claim by Party A against the Company) for $13.00 per Class A Share; and |
|
Brookfield, which offered $11.50 per Class
A Share for a sponsorship transaction or a whole company transaction (with the Company only) and $12.50 per Class A Share for a double sponsorship transaction or a double whole company transaction (in each case, if the second transaction was with GLBL); |
|
o
|
Through negotiation, the Board of
Directors, in each case, following the recommendation of the Conflicts Committee, sought to improve the terms of the three cash offers, but was unable to do so, ultimately determining that the Brookfield proposal, although it was less than the offer included in the letter Brookfield sent to the independent directors on November 18, 2016, indicating its interest in offering $13.00 per Class A Share in a whole company or sponsorship transaction, appeared to offer superior value as compared to the other two offers; |
|
o
|
The Board of Directors, following the
recommendation of the Conflicts Committee, agreed to negotiate exclusively with Brookfield with respect to a business combination until 11:59 p.m. New York City time on February 21, 2017, which was subsequently extended to March 6, 2017; |
|
o
|
During the exclusivity period with
Brookfield, the Company negotiated certain improvements to the economic terms of Brookfields proposal; and |
|
o
|
The terms of the Transaction Agreement and
the terms of the Settlement Agreement were robustly negotiated by the Company, were approved unanimously by members of the Board of Directors voting on the matter, following the unanimous recommendation of the Conflicts Committee, and were executed substantially concurrently as of March 6, 2017. |
The Conflicts Committees and Board of Directors
Reasons for the Transactions
Reasons for the Transactions
In evaluating the Transaction Agreement and the
Transactions, the Conflicts Committee and the
Board of Directors compared a variety of
alternatives and considered numerous factors,
including the following non-exhaustive list of
material factors and benefits of the
Transactions, each of which the Conflicts
Committee and the Board of Directors believed
supported their respective determinations that
the Transactions, resulting in a sponsorship of
the Company, were superior to other strategic
alternatives or a stand-alone alternative:
Transactions, the Conflicts Committee and the
Board of Directors compared a variety of
alternatives and considered numerous factors,
including the following non-exhaustive list of
material factors and benefits of the
Transactions, each of which the Conflicts
Committee and the Board of Directors believed
supported their respective determinations that
the Transactions, resulting in a sponsorship of
the Company, were superior to other strategic
alternatives or a stand-alone alternative:
|
the fact that while the stand-alone
business plans could provide the Companys stockholders the opportunity to participate in 100% of the potential future increases in trading value of the Companys stock, the stand-alone business plans were subject to significant risks: |
|
o
|
a transition from a sponsored yieldco
model to a sponsorless yieldco model was unproven and investor reception for such a model was uncertain, in particular because: |
|
there was a projected lag in the Companys
dividend growth under the stand-alone business plan as compared to that of comparable companies; and |
|
the likelihood that the Companys share
price would be depressed or volatile until management could establish a track record of outperforming the stand-alone business plan; |
|
o
|
the lack of an asset acquisition pipeline
or visible growth trajectory, including the need to identify suitable markets for investment and a lack of readily discernible paths to strategic partnerships; |
|
o
|
assuming development of an asset
acquisition pipeline, an uncertain capability, in the absence of a reputable and financially credible sponsor, to compete for stabilized, yield generating infrastructure as a stand-alone Company relative to competitors, given the Companys potentially high cost of capital, negative operational history and track record of failed transactions; |
|
o
|
the Companys ability to successfully
execute the initial asset sales required to fund deleveraging, which was essential to achieve competitive equity yields and more attractive interest rates under the stand-alone business plans, was uncertain, and after completing such initial asset sales, the Company would still remain more levered than its peers; |
|
o
|
the uncertainty of investors appetite
for the Companys equity securities in the absence of a reputable and financially credible sponsor in light of the erosion in stockholder value since the Companys initial public offering; |
|
o
|
the uncertain ability of the Companys
existing management to efficiently manage the Companys existing portfolio due to the fact that only since the launch of the strategic alternatives process had the Company pursued contracts with third parties for services or opted to bring services in-house for operations and maintenance and asset management; |
|
o
|
the Companys ability to execute various
aspects of the stand-alone business plans depended on the Companys ability to retain management and key personnel, including to develop, operate and optimize fleet; and |
|
o
|
the uncertainty surrounding the
Companys ability to successfully execute the management growth plan, and managements advice that fully achieving the results contemplated by that plan was highly unlikely; |
|
the Companys financial condition and
reputation in the power industry, its high cost of capital and the uncertainty of its ability to access capital markets in the absence of a reputable and financially credible sponsor, combined with the Conflicts Committees and the Board of Directors assessment of macroeconomic factors and uncertainty around forecasted economic conditions, both in the near and the long term and within the renewable power industry in particular; |
|
Brookfield and Sponsor can utilize
their reputation in the power industry as seasoned, well-known operators and their capacity as a sponsor to provide the Company with operational, financial and investment expertise that will stabilize the Companys growth and strengthen operations over time; |
|
the alignment of Brookfields and the
Companys financial incentives through a 51% cornerstone investment in the common stock, the IDR Transfer Agreement and Brookfields annual MSA fee will provide the Company with services and foster economic growth; |
|
the belief that, notwithstanding the
additional costs associated with sponsorship, a sponsorship with Brookfield will provide a lower cost of capital for the Company in the medium and long term, providing it with the ability to successfully pursue a high quality and diversified portfolio of renewable assets; |
|
the fact that Brookfield will provide
the Company and its subsidiaries access to wind and solar assets in North America and Western Europe through Sponsors ROFO Pipeline; |
|
the belief that Brookfields
large-scale operations and strong financial performance will provide the Company with advantaged access to capital, larger investment opportunities, the ability to grow its fleet size and pay greater dividends; |
|
the belief that the Company can
leverage the strength of Brookfields renewable power businesses globally to develop future development pipelines and renewable power projects; |
|
the certainty of realizing value in
cash combined with the ability to benefit from potential future increases in the trading value of the Companys public float if a stockholder elects to retain stock; |
|
the opinions of Centerview and Morgan
Stanley, respectively, each dated March 6, 2017, to the effect that, as of that date and based upon and subject to the various assumptions made, procedures followed, matters considered and limitations on the review undertaken set forth in each respective opinion, that the applicable Per Share Merger Consideration, together with the Special Dividend, to be received by the holders of the Class A Shares in the Merger is fair from a financial point of view, as of the date of such opinion, to such holders (other than Sponsor and its subsidiaries), as will be disclosed in the proxy statement that the Company intends to file with the SEC as described below under Additional Information and Where to Find It; |
|
the financial condition of Brookfield
and Sponsor and Brookfields ability to pay all amounts required to consummate the Transactions, including the Per Share Cash Consideration, out of its cash on hand and to financing arrangements committed in the Debt Commitment Letter, without a financing condition to the Merger and with the payment and other obligations of Sponsor guaranteed by the Guarantors to the Guaranty; |
|
the belief that Brookfield, as a
seasoned and well-known operator in the renewable energy industry, may be able to promptly obtain certain regulatory approvals necessary to close the Transactions more quickly than other potential bidders; and |
|
the fact that the terms of the
Transaction Agreement will require the adoption of the Transaction Agreement by the holders of a majority of the outstanding Shares as well as the approval of the Transaction Agreement by the holders of a majority of the Class A Shares excluding SunEdison, Sponsor, their respective affiliates or any person with whom any of them has formed (and not terminated) a group (as such term is defined in the Securities Exchange Act of 1934, as amended) (which is a non-waivable condition to closing). |
In view of the variety of factors considered
in connection with their respective
evaluation of the Transaction Agreement and
Transactions, neither the Conflicts Committee
nor the Board of Directors found it
practicable to, and neither the Conflicts
Committee nor the Board of Directors did,
quantify or otherwise assign relative weights
to the specific factors considered in
reaching their respective determination and
their respective recommendation. In addition,
individual directors may have given different
weights to different factors. Neither the
Conflicts Committee nor the Board of
Directors undertook to make any specific
determination as to whether any factor, or
any particular aspect of any factor,
supported or did not support their respective
ultimate determination. Each of the Conflicts
Committee and the Board of Directors based
its respective recommendation on the totality
of the information presented.
in connection with their respective
evaluation of the Transaction Agreement and
Transactions, neither the Conflicts Committee
nor the Board of Directors found it
practicable to, and neither the Conflicts
Committee nor the Board of Directors did,
quantify or otherwise assign relative weights
to the specific factors considered in
reaching their respective determination and
their respective recommendation. In addition,
individual directors may have given different
weights to different factors. Neither the
Conflicts Committee nor the Board of
Directors undertook to make any specific
determination as to whether any factor, or
any particular aspect of any factor,
supported or did not support their respective
ultimate determination. Each of the Conflicts
Committee and the Board of Directors based
its respective recommendation on the totality
of the information presented.
Certain Company Projections
The Company does not, as a matter of
course, publicly disclose long term
detailed financial forecasts as to future
performance, earnings or other results due
to the difficulty of predicting economic
and market conditions and accurately
forecasting the Companys performance,
particularly for extended periods, other
than limited financial metrics from time to
time as part of the Companys ongoing
efforts to communicate with investors
regarding the Companys business continuity
and progress toward operational
independence from SunEdison. Management of
the Company prepared unaudited forecasts to
contemplate two different scenarios, which
we refer to as the Management Stabilize
Case and the Management Growth Case. In the
Management Stabilize Case, management of
the Company employed assumptions based on a
scenario in which the Company would use
existing cash and proceeds from asset sales
to delever the business to a level
consistent with that of peers, and
thereafter would face challenges pursuing
growth opportunities due to an inability to
compete for and fund acquisitions. In the
Management Growth Case, management of the
Company employed assumptions based on a
scenario in which the Company would use
existing cash and proceeds from asset sales
to delever the business to a level
consistent with that of peers, and
thereafter would successfully pursue growth
through acquisitions of assets funded with
equity and debt. The cases provided are
illustrative of potential standalone
company outcomes and do not necessarily
reflect a base case view. The Management
Growth Case is intended to illustrate a
scenario wherein the Company is able to
successfully navigate in an unproven
sponsorless yieldco structure. Management
does not consider this a probable scenario.
course, publicly disclose long term
detailed financial forecasts as to future
performance, earnings or other results due
to the difficulty of predicting economic
and market conditions and accurately
forecasting the Companys performance,
particularly for extended periods, other
than limited financial metrics from time to
time as part of the Companys ongoing
efforts to communicate with investors
regarding the Companys business continuity
and progress toward operational
independence from SunEdison. Management of
the Company prepared unaudited forecasts to
contemplate two different scenarios, which
we refer to as the Management Stabilize
Case and the Management Growth Case. In the
Management Stabilize Case, management of
the Company employed assumptions based on a
scenario in which the Company would use
existing cash and proceeds from asset sales
to delever the business to a level
consistent with that of peers, and
thereafter would face challenges pursuing
growth opportunities due to an inability to
compete for and fund acquisitions. In the
Management Growth Case, management of the
Company employed assumptions based on a
scenario in which the Company would use
existing cash and proceeds from asset sales
to delever the business to a level
consistent with that of peers, and
thereafter would successfully pursue growth
through acquisitions of assets funded with
equity and debt. The cases provided are
illustrative of potential standalone
company outcomes and do not necessarily
reflect a base case view. The Management
Growth Case is intended to illustrate a
scenario wherein the Company is able to
successfully navigate in an unproven
sponsorless yieldco structure. Management
does not consider this a probable scenario.
The internal financial forecasts summarized
below (the Forecasts) were prepared
by or at the direction of and approved by
management for internal use in connection
with the Companys exploration and
evaluation of strategic alternatives to
maximize stockholder value, including
transactions to secure a new sponsor or a
sale of the Company.
below (the Forecasts) were prepared
by or at the direction of and approved by
management for internal use in connection
with the Companys exploration and
evaluation of strategic alternatives to
maximize stockholder value, including
transactions to secure a new sponsor or a
sale of the Company.
While the Forecasts were prepared in good
faith by management, no assurance can be
made regarding future events and the
disclosure of these Forecasts should not be
regarded as an indication that the Company,
the Board of Directors, the Conflicts
Committee, their respective advisors or any
other person considered, or now considers,
the Forecasts to be a reliable prediction
of future results, and the Forecasts should
not be relied upon as such. The Forecasts
cover multiple years and prospective
financial information by its nature becomes
subject to greater uncertainty with each
successive year. In addition, the Forecasts
were prepared at a prior period in time and
reflect estimates, assumptions and business
decisions as of the time of preparation,
all of which are subject to change. The
estimates, assumptions and business
decisions made by management upon which the
Forecasts are based involve judgments with
respect to, among other matters, future
industry performance, general business,
economic, regulatory, market and financial
conditions, many of which are difficult or
impossible to predict accurately, are
subject to significant operational,
economic, competitive or other third party
risks and uncertainties, and are beyond the
Companys control. Management of the Company
has limited visibility into the likelihood
of the occurrence and potential magnitude
of the material risks to the Companys
performance in the unpredictable operating
environment surrounding the Company, and as
a result faces challenges in being able to
accurately forecast the Companys
performance and predict the effectiveness
of initiatives designed to enable the
Company to operate as an independent
Company (with or without a sponsor) and to
improve the performance of the business and
revenue. There can be no assurance that the
estimates and assumptions made in preparing
the Forecasts will prove accurate, that the
projected results will be realized or that
actual results will not be significantly
higher or lower than projected results. The
Forecasts also reflect estimates,
assumptions and business decisions that do
not reflect the effects of the Transactions
(or any failure of the Transactions to
occur), or any other changes that may in
the future affect the Company or its
assets, business, operations, properties,
policies, corporate structure,
capitalization and management.
faith by management, no assurance can be
made regarding future events and the
disclosure of these Forecasts should not be
regarded as an indication that the Company,
the Board of Directors, the Conflicts
Committee, their respective advisors or any
other person considered, or now considers,
the Forecasts to be a reliable prediction
of future results, and the Forecasts should
not be relied upon as such. The Forecasts
cover multiple years and prospective
financial information by its nature becomes
subject to greater uncertainty with each
successive year. In addition, the Forecasts
were prepared at a prior period in time and
reflect estimates, assumptions and business
decisions as of the time of preparation,
all of which are subject to change. The
estimates, assumptions and business
decisions made by management upon which the
Forecasts are based involve judgments with
respect to, among other matters, future
industry performance, general business,
economic, regulatory, market and financial
conditions, many of which are difficult or
impossible to predict accurately, are
subject to significant operational,
economic, competitive or other third party
risks and uncertainties, and are beyond the
Companys control. Management of the Company
has limited visibility into the likelihood
of the occurrence and potential magnitude
of the material risks to the Companys
performance in the unpredictable operating
environment surrounding the Company, and as
a result faces challenges in being able to
accurately forecast the Companys
performance and predict the effectiveness
of initiatives designed to enable the
Company to operate as an independent
Company (with or without a sponsor) and to
improve the performance of the business and
revenue. There can be no assurance that the
estimates and assumptions made in preparing
the Forecasts will prove accurate, that the
projected results will be realized or that
actual results will not be significantly
higher or lower than projected results. The
Forecasts also reflect estimates,
assumptions and business decisions that do
not reflect the effects of the Transactions
(or any failure of the Transactions to
occur), or any other changes that may in
the future affect the Company or its
assets, business, operations, properties,
policies, corporate structure,
capitalization and management.
Important factors that may affect actual
results and cause the Forecasts to not be
achieved include risks and uncertainties
described below under the section titled
Forward-Looking Statements and in the
Companys filings with the SEC. None of
the Company, Brookfield, Brookfield
Sponsor or any of their respective
affiliates, advisors, officers, directors
or representatives has made or makes any
representation to any Company stockholder
or any other person regarding the
information included in the Forecasts or
the ultimate performance of the Company
compared to the information included in
the Forecasts or that the Forecasts will
ultimately be achieved. In light of the
foregoing factors and the uncertainties
inherent in the Forecasts, the Companys
stockholders are cautioned not to place
undue, if any, reliance on the Forecasts.
The Company does not intend to update or
otherwise revise the Forecasts for any
reason or purpose, even in the event that
any or all of the assumptions on which
the Forecasts were based are no longer
appropriate.
results and cause the Forecasts to not be
achieved include risks and uncertainties
described below under the section titled
Forward-Looking Statements and in the
Companys filings with the SEC. None of
the Company, Brookfield, Brookfield
Sponsor or any of their respective
affiliates, advisors, officers, directors
or representatives has made or makes any
representation to any Company stockholder
or any other person regarding the
information included in the Forecasts or
the ultimate performance of the Company
compared to the information included in
the Forecasts or that the Forecasts will
ultimately be achieved. In light of the
foregoing factors and the uncertainties
inherent in the Forecasts, the Companys
stockholders are cautioned not to place
undue, if any, reliance on the Forecasts.
The Company does not intend to update or
otherwise revise the Forecasts for any
reason or purpose, even in the event that
any or all of the assumptions on which
the Forecasts were based are no longer
appropriate.
The Forecasts include certain financial
measures that do not conform to U.S.
Generally Accepted Accounting Principles,
which we refer to as GAAP, including
adjusted earnings before interest, taxes,
depreciation and amortization
(Adjusted EBITDA) and cash
available for distribution (CAFD)
(each as further described below). This
information is included because
management believes these non-GAAP
financial measures could be useful in
evaluating the business, potential
operating performance and cash flow of
the Company. Non-GAAP financial measures
should not be considered in isolation
from, or as a substitute for, financial
information presented in compliance with
GAAP, and non-GAAP financial measures as
presented in the Forecasts may not be
comparable to similarly titled amounts
used by other companies in the industry.
measures that do not conform to U.S.
Generally Accepted Accounting Principles,
which we refer to as GAAP, including
adjusted earnings before interest, taxes,
depreciation and amortization
(Adjusted EBITDA) and cash
available for distribution (CAFD)
(each as further described below). This
information is included because
management believes these non-GAAP
financial measures could be useful in
evaluating the business, potential
operating performance and cash flow of
the Company. Non-GAAP financial measures
should not be considered in isolation
from, or as a substitute for, financial
information presented in compliance with
GAAP, and non-GAAP financial measures as
presented in the Forecasts may not be
comparable to similarly titled amounts
used by other companies in the industry.
The Forecasts were not prepared with a
view toward public disclosure, soliciting
proxies or complying with GAAP, the
published guidelines of the SEC regarding
financial projections and forecasts or
the guidelines established by the
American Institute of Certified Public
Accountants for preparation and
presentation of financial projections and
forecasts. Neither the Companys
independent registered public accounting
firm nor any other independent registered
public accounting firm has examined,
compiled or otherwise performed any
procedures with respect to the
prospective financial information
contained in these forecasts and,
accordingly, neither the Companys
independent registered public accounting
firm nor any other independent registered
public accounting firm has expressed any
opinion or given any other form of
assurance on such information or its
achievability, and assumes no
responsibility for, and disclaims any
association with, the prospective
financial information.
view toward public disclosure, soliciting
proxies or complying with GAAP, the
published guidelines of the SEC regarding
financial projections and forecasts or
the guidelines established by the
American Institute of Certified Public
Accountants for preparation and
presentation of financial projections and
forecasts. Neither the Companys
independent registered public accounting
firm nor any other independent registered
public accounting firm has examined,
compiled or otherwise performed any
procedures with respect to the
prospective financial information
contained in these forecasts and,
accordingly, neither the Companys
independent registered public accounting
firm nor any other independent registered
public accounting firm has expressed any
opinion or given any other form of
assurance on such information or its
achievability, and assumes no
responsibility for, and disclaims any
association with, the prospective
financial information.
The following tables present in summary
form certain of the financial measures
projected in the Forecasts:
form certain of the financial measures
projected in the Forecasts:
Management Growth Case ($mm, except as
otherwise noted)
otherwise noted)
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue (1)
|
$640
|
$622
|
$601
|
$600
|
$596
|
$585
|
$585
|
$576
|
$575
|
$573
|
|
Operating Expenses:
|
||||||||||
|
Cost of Operations
|
$149
|
$140
|
$135
|
$132
|
$136
|
$136
|
$137
|
$141
|
$142
|
$144
|
|
General Administrative
|
||||||||||
|
Depreciation Amortization
(2) |
||||||||||
|
Total Operating Expenses
|
$453
|
$387
|
$377
|
$375
|
$380
|
$381
|
$383
|
$387
|
$389
|
$392
|
|
Operating Income
|
$187
|
$235
|
$224
|
$225
|
$216
|
$204
|
$202
|
$189
|
$186
|
$181
|
|
Interest Expense
|
||||||||||
|
Loss (gain) on extinguishment
of debt (3) |
||||||||||
|
Other expense / (income)
(4) |
(3)
|
(6)
|
(12)
|
(19)
|
(24)
|
(29)
|
(27)
|
(24)
|
(27)
|
(27)
|
|
(Loss) Income before income tax
expense |
($50)
|
$35
|
$47
|
$55
|
$53
|
$47
|
$38
|
$25
|
$25
|
$25
|
|
Income Tax Expense (5)
|
(20)
|
|||||||||
|
Net (loss) Income
|
($30)
|
$21
|
$29
|
$33
|
$32
|
$28
|
$23
|
$15
|
$15
|
$15
|
|
Reconciliation of Net Income to
Adjusted EBITDA: |
||||||||||
|
Net (loss) Income
|
($30)
|
$21
|
$29
|
$33
|
$32
|
$28
|
$23
|
$15
|
$15
|
$15
|
|
Interest Expense, net
|
||||||||||
|
Income tax provision (benefit)
|
(20)
|
|||||||||
|
Depreciation amortization
expenses |
||||||||||
|
General Administrative Expense
(Non-Operating) (6) |
||||||||||
|
Stock based compensation
expense (7) |
||||||||||
|
Loss (gain) on extinguishment
of debt (3) |
||||||||||
|
Adjusted EBITDA
|
$467
|
$462
|
$452
|
$460
|
$456
|
$450
|
$446
|
$430
|
$430
|
$425
|
|
Reconciliation of Adjusted
EBITDA to Estimated Cash Available for Distribution (CAFD): |
||||||||||
|
Adjusted EBITDA
|
$467
|
$462
|
$452
|
$460
|
$456
|
$450
|
$446
|
$430
|
$430
|
$425
|
|
Interest Payments
|
(221)
|
(204)
|
(189)
|
(189)
|
(187)
|
(186)
|
(191)
|
(188)
|
(188)
|
(183)
|
|
Principal Payments
|
(98)
|
(99)
|
(93)
|
(97)
|
(99)
|
(92)
|
(94)
|
(92)
|
(92)
|
(95)
|
|
Cash Distributions to
Non-Controlling Interest, net |
(18)
|
(11)
|
(16)
|
(14)
|
(17)
|
(25)
|
(26)
|
(33)
|
(31)
|
(28)
|
|
Non-Expansionary Capital
Expenditures |
(22)
|
(18)
|
(16)
|
(17)
|
(20)
|
(24)
|
(27)
|
(31)
|
(34)
|
(38)
|
|
(Deposits into)/withdrawals
from restricted cash accounts |
(3)
|
|||||||||
|
Other:
|
||||||||||
|
Atlantic Power distributions,
net (4) |
||||||||||
|
Other Items
|
||||||||||
|
Estimated Cash Available for
Distribution (CAFD) |
$118
|
$140
|
$148
|
$150
|
$155
|
$159
|
$125
|
$104
|
$102
|
$97
|
|
Other Key Metrics:
|
||||||||||
|
CAFD from Acquisitions
|
||||||||||
|
HoldCo Debt
|
1,029
|
1,066
|
1,055
|
1,048
|
1,036
|
1,022
|
||||
|
Consolidated Debt
|
3,167
|
2,883
|
2,856
|
2,803
|
2,742
|
2,688
|
2,582
|
2,483
|
2,379
|
2,270
|
|
Total Value of Acquired Assets
|
||||||||||
|
Gross Equity Issuances
|
||||||||||
|
Weighted Average Shares
Outstanding (shares, millions) (8) |
147.7
|
148.3
|
149.2
|
149.9
|
150.6
|
151.2
|
151.6
|
152.1
|
152.7
|
153.3
|
| (1) |
Excludes the potential non-cash
impact of the amortization of favorable or unfavorable rate revenue contracts, unrealized gains or losses on energy derivatives, and amortization of ITC revenue. |
| (2) |
Excludes substantially all of
the U.K. portfolio in 2017 as held for sale. |
| (3) |
Represents net losses on
extinguishment of debt related to forecasted partial repayment of debt. |
| (4) |
Consists of estimated equity in
earnings related to TerraForm Powers ownership in the Atlantic Power portfolio. For forecasting purposes TerraForm Powers ownership for the full ten-year period is treated on an unconsolidated basis. Equity in earnings is not added back in the calculation of Adjusted EBITDA, and the incremental difference between these amounts and forecasted cash distributions is presented in the reconciliation of CAFD. |
| (5) |
We have assumed an average
effective tax rate of 40% in our projections. The actual effective tax rate may differ from this rate primarily due to the recording and/or release of a valuation allowance on certain tax benefits attributed to the Company and to lower statutory income tax rates in the Company’s foreign jurisdictions. The company expects to generate NOLs and has NOL carryforwards that can be utilized to offset future taxable income. As a result, the company does not expect to pay significant United States federal income tax in the near term. |
| (6) |
Non-operating expenses and
other expenses that we do not consider indicative of our core business operations are treated as an addback in the reconciliation of net income (loss) to Adjusted EBITDA. The Companys normal general and administrative expenses are not added back in the reconciliation of net income (loss) to Adjusted EBITDA. For the forecasted year ending December 31, 2017, Terraform Power estimates payments of $27.1M to suppliers for normal operating general and administrative expenses. |
| (7) |
Represents stock-based
compensation expense recorded within General and Administrative Expenses. |
| (8) |
Assumes Class B shares treated
as Class A shares. |
Management Growth Case ($mm, except as
otherwise noted)
otherwise noted)
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue (1)
|
$640
|
$622
|
$601
|
$685
|
$811
|
$938
|
$1,130
|
$1,325
|
$1,446
|
$1,773
|
|
Operating Expenses:
|
||||||||||
|
Cost of Operations
|
$149
|
$140
|
$135
|
$151
|
$185
|
$216
|
$262
|
$312
|
$342
|
$418
|
|
General Administrative
|
||||||||||
|
Depreciation Amortization
(2) |
||||||||||
|
Total Operating Expenses
|
$453
|
$387
|
$377
|
$416
|
$486
|
$553
|
$650
|
$752
|
$813
|
$974
|
|
Operating Income
|
$187
|
$235
|
$224
|
$269
|
$325
|
$385
|
$480
|
$573
|
$633
|
$799
|
|
Interest Expense
|
||||||||||
|
Loss (gain) on extinguishment
of debt (3) |
||||||||||
|
Other expense / (income)
(4) |
(3)
|
(6)
|
(12)
|
(19)
|
(24)
|
(29)
|
(27)
|
(24)
|
(27)
|
(27)
|
|
(Loss) Income before income tax
expense |
($50)
|
$35
|
$47
|
$80
|
$109
|
$142
|
$182
|
$226
|
$264
|
$356
|
|
Income Tax Expense (5)
|
(20)
|
|||||||||
|
Net (loss) Income
|
($30)
|
$21
|
$28
|
$49
|
$66
|
$85
|
$109
|
$136
|
$158
|
$214
|
|
Reconciliation of Net Income to
Adjusted EBITDA: |
||||||||||
|
Net (loss) Income
|
($30)
|
$21
|
$28
|
$49
|
$66
|
$85
|
$109
|
$136
|
$158
|
$214
|
|
Interest Expense, net
|
||||||||||
|
Income tax provision (benefit)
|
(20)
|
|||||||||
|
Depreciation amortization
expenses |
||||||||||
|
General Administrative Expense
(Non-Operating) (6) |
||||||||||
|
Stock based compensation
expense (7) |
||||||||||
|
Loss (gain) on extinguishment
of debt (3) |
||||||||||
|
Adjusted EBITDA
|
$467
|
$462
|
$452
|
$526
|
$622
|
$723
|
$866
|
$1,008
|
$1,101
|
$1,351
|
|
Reconciliation of Adjusted
EBITDA to Estimated Cash Available for Distribution (CAFD): |
||||||||||
|
Adjusted EBITDA
|
$467
|
$462
|
$452
|
$526
|
$622
|
$723
|
$866
|
$1,008
|
$1,101
|
$1,351
|
|
Interest Payments
|
(221)
|
(204)
|
(189)
|
(208)
|
(240)
|
(272)
|
(325)
|
(371)
|
(396)
|
(470)
|
|
Principal Payments
|
(98)
|
(99)
|
(93)
|
(107)
|
(126)
|
(136)
|
(163)
|
(188)
|
(206)
|
(253)
|
|
Cash Distributions to
Non-Controlling Interest, net |
(18)
|
(11)
|
(16)
|
(17)
|
(24)
|
(37)
|
(45)
|
(59)
|
(62)
|
(70)
|
|
Non-Expansionary Capital
Expenditures |
(22)
|
(18)
|
(16)
|
(20)
|
(28)
|
(38)
|
(48)
|
(61)
|
(68)
|
(85)
|
|
(Deposits into)/withdrawals
from restricted cash accounts |
(3)
|
|||||||||
|
Other:
|
||||||||||
|
Atlantic Power distributions,
net (4) |
||||||||||
|
Other Items
|
||||||||||
|
Estimated Cash Available for
Distribution (CAFD) |
$118
|
$140
|
$148
|
$181
|
$226
|
$276
|
$302
|
$347
|
$386
|
$489
|
|
Other Key Metrics:
|
||||||||||
|
CAFD from Acquisitions
|
$32
|
$82
|
$135
|
$209
|
$288
|
$338
|
$466
|
|||
|
HoldCo Debt
|
1,021
|
1,190
|
1,364
|
1,570
|
1,785
|
1,908
|
2,255
|
|||
|
Consolidated Debt
|
3,167
|
2,883
|
2,811
|
3,158
|
3,717
|
4,292
|
5,083
|
5,890
|
6,253
|
7,608
|
|
Total Value of Acquired Assets
|
1,031
|
1,071
|
1,496
|
1,560
|
2,521
|
1,532
|
||||
|
Gross Equity Issuances
|
||||||||||
|
Weighted Average Shares
Outstanding (shares, millions) (8) |
147.7
|
148.3
|
149.2
|
180.7
|
218.0
|
254.6
|
302.5
|
349.1
|
374.4
|
448.9
|
| (1) |
Excludes the potential
non-cash impact of the amortization of favorable or unfavorable rate revenue contracts, unrealized gains or losses on energy derivatives, and amortization of ITC revenue. |
| (2) |
Excludes substantially all of
the U.K. portfolio in 2017 as held for sale. |
| (3) |
Represents net losses on
extinguishment of debt related to forecasted partial repayment of debt. |
| (4) |
Consists of estimated equity
in earnings related to TerraForm Powers ownership in the Atlantic Power portfolio. For forecasting purposes TerraForm Powers ownership for the full ten-year period is treated on an unconsolidated basis. Equity in earnings is not added back in the calculation of Adjusted EBITDA, and the incremental difference between these amounts and forecasted cash distributions is presented in the reconciliation of CAFD. |
| (5) |
We have assumed an average
effective tax rate of 40% in our projections. The actual effective tax rate in some of these years may differ from this rate primarily due to the recording and/or release of a valuation allowance on certain tax benefits attributed to the Company and to lower statutory income tax rates in the Company’s foreign jurisdictions. The company expects to generate NOLs and has NOL carryforwards that can be utilized to offset future taxable income. As a result, the company does not expect to pay significant United States federal income tax in the near term. |
| (6) |
Non-operating expenses and
other expenses that we do not consider indicative of our core business operations are treated as an addback in the reconciliation of net income (loss) to Adjusted EBITDA. The Companys normal general and administrative expenses are not added back in the reconciliation of net income (loss) to Adjusted EBITDA. For the forecasted year ending December 31, 2017, Terraform Power estimates payments of $27.1M to suppliers for normal operating general and administrative expenses. |
| (7) |
Represents stock-based
compensation expense recorded within General and Administrative Expenses. |
| (8) |
Assumes Class B shares
treated as Class A shares. |
Definitions of Certain Financial
Terms
Terms
Adjusted EBITDA
The Company believes Adjusted EBITDA
is useful to investors in evaluating
the Companys operating performance
because securities analysts and other
interested parties use such
calculations as a measure of
financial performance and debt
service capabilities. In addition,
Adjusted EBITDA is used by management
of the Company for internal planning
purposes, including for certain
aspects of the Companys consolidated
operating budget.
is useful to investors in evaluating
the Companys operating performance
because securities analysts and other
interested parties use such
calculations as a measure of
financial performance and debt
service capabilities. In addition,
Adjusted EBITDA is used by management
of the Company for internal planning
purposes, including for certain
aspects of the Companys consolidated
operating budget.
The Company defines Adjusted EBITDA
as net income (loss) plus
depreciation, accretion and
amortization, non-cash affiliate
general and administrative costs,
acquisition related expenses,
interest expense, gains (losses) on
interest rate swaps, foreign currency
gains (losses), income tax (benefit)
expense and stock compensation
expense, and certain other non-cash
charges, unusual, non-operating or
non-recurring items and other items
that we believe are not
representative of the Companys core
business or future operating
performance. The Companys definitions
and calculations of these items may
not necessarily be the same as those
used by other companies. Adjusted
EBITDA is not a measure of liquidity
or profitability and should not be
considered as an alternative to net
income, operating income, net cash
provided by operating activities or
any other measure determined in
accordance with U.S. GAAP.
as net income (loss) plus
depreciation, accretion and
amortization, non-cash affiliate
general and administrative costs,
acquisition related expenses,
interest expense, gains (losses) on
interest rate swaps, foreign currency
gains (losses), income tax (benefit)
expense and stock compensation
expense, and certain other non-cash
charges, unusual, non-operating or
non-recurring items and other items
that we believe are not
representative of the Companys core
business or future operating
performance. The Companys definitions
and calculations of these items may
not necessarily be the same as those
used by other companies. Adjusted
EBITDA is not a measure of liquidity
or profitability and should not be
considered as an alternative to net
income, operating income, net cash
provided by operating activities or
any other measure determined in
accordance with U.S. GAAP.
CAFD
The Company believes cash available
for distribution is useful to
investors in evaluating the Companys
operating performance because
securities analysts and other
interested parties use such
calculations as a measure of
financial performance. In addition,
cash available for distribution is
used by the Companys management team
for internal planning purposes.
for distribution is useful to
investors in evaluating the Companys
operating performance because
securities analysts and other
interested parties use such
calculations as a measure of
financial performance. In addition,
cash available for distribution is
used by the Companys management team
for internal planning purposes.
The Company defines cash available
for distribution or CAFD as adjusted
EBITDA of TERP LLC as adjusted for
certain cash flow items that the
Company associates with the Companys
operations. Cash available for
distribution represents adjusted
EBITDA (i) minus deposits into (or
plus withdrawals from) restricted
cash accounts required by project
financing arrangements to the extent
they decrease (or increase) cash
provided by operating activities,
(ii) minus cash distributions paid to
non-controlling interests in the
Companys renewable energy facilities,
if any, (iii) minus scheduled
project-level and other debt service
payments and repayments in accordance
with the related borrowing
arrangements, to the extent they are
paid from operating cash flows during
a period, (iv) minus non-expansionary
capital expenditures, if any, to the
extent they are paid from operating
cash flows during a period, (v) plus
or minus operating items as necessary
to present the cash flows the Company
deems representative of the Companys
core business operations, with the
approval of the Audit Committee of
the Board of Directors.
for distribution or CAFD as adjusted
EBITDA of TERP LLC as adjusted for
certain cash flow items that the
Company associates with the Companys
operations. Cash available for
distribution represents adjusted
EBITDA (i) minus deposits into (or
plus withdrawals from) restricted
cash accounts required by project
financing arrangements to the extent
they decrease (or increase) cash
provided by operating activities,
(ii) minus cash distributions paid to
non-controlling interests in the
Companys renewable energy facilities,
if any, (iii) minus scheduled
project-level and other debt service
payments and repayments in accordance
with the related borrowing
arrangements, to the extent they are
paid from operating cash flows during
a period, (iv) minus non-expansionary
capital expenditures, if any, to the
extent they are paid from operating
cash flows during a period, (v) plus
or minus operating items as necessary
to present the cash flows the Company
deems representative of the Companys
core business operations, with the
approval of the Audit Committee of
the Board of Directors.
|
Item 8.01
|
Other Events.
|
On March 7, 2017, the Company issued
a press release announcing its entry
into the Transaction Agreement. A
copy of the press release is attached
hereto as Exhibit 99.1 and is
incorporated herein by reference.
a press release announcing its entry
into the Transaction Agreement. A
copy of the press release is attached
hereto as Exhibit 99.1 and is
incorporated herein by reference.
FORWARD-LOOKING STATEMENTS
This Current Report on Form 8-K and
the other documents referenced
therein and the Companys filings
with the SEC contain
forward-looking statements within
the meaning of Section 27A of the
Securities Act of 1933 and Section
21E of the Securities Exchange Act
of 1934. Forward-looking statements
can be identified by the fact that
they do not relate strictly to
historical or current facts. These
statements involve estimates,
expectations, projections, goals,
assumptions, known and unknown
risks, and uncertainties and
typically include words or
variations of words such as expect,
anticipate, believe, intend, plan,
seek, estimate, predict, project,
goal, guidance, outlook, objective,
forecast, target, potential,
continue, would, will, should,
could, or may or other comparable
terms and phrases. All statements
that address operating performance,
events, or developments that the
Company expects or anticipates will
occur in the future are
forward-looking statements. They
may include estimates of financial
metrics such as expected adjusted
earnings before interest, taxes,
depreciation and amortization, cash
available for distribution,
earnings, revenues, capital
expenditures, liquidity, capital
structure, future growth, financing
arrangement and other financial
performance items (including future
dividends per share), descriptions
of managements plans or objectives
for future operations, products, or
services, or descriptions of
assumptions underlying any of the
above. Forward-looking statements
are based on the Companys current
expectations or predictions of
future conditions, events, or
results and speak only as of the
date they are made. Although the
Company believes its respective
expectations and assumptions are
reasonable, it can give no
assurance that these expectations
and assumptions will prove to have
been correct and actual results may
vary materially.
the other documents referenced
therein and the Companys filings
with the SEC contain
forward-looking statements within
the meaning of Section 27A of the
Securities Act of 1933 and Section
21E of the Securities Exchange Act
of 1934. Forward-looking statements
can be identified by the fact that
they do not relate strictly to
historical or current facts. These
statements involve estimates,
expectations, projections, goals,
assumptions, known and unknown
risks, and uncertainties and
typically include words or
variations of words such as expect,
anticipate, believe, intend, plan,
seek, estimate, predict, project,
goal, guidance, outlook, objective,
forecast, target, potential,
continue, would, will, should,
could, or may or other comparable
terms and phrases. All statements
that address operating performance,
events, or developments that the
Company expects or anticipates will
occur in the future are
forward-looking statements. They
may include estimates of financial
metrics such as expected adjusted
earnings before interest, taxes,
depreciation and amortization, cash
available for distribution,
earnings, revenues, capital
expenditures, liquidity, capital
structure, future growth, financing
arrangement and other financial
performance items (including future
dividends per share), descriptions
of managements plans or objectives
for future operations, products, or
services, or descriptions of
assumptions underlying any of the
above. Forward-looking statements
are based on the Companys current
expectations or predictions of
future conditions, events, or
results and speak only as of the
date they are made. Although the
Company believes its respective
expectations and assumptions are
reasonable, it can give no
assurance that these expectations
and assumptions will prove to have
been correct and actual results may
vary materially.
By their nature, forward-looking
statements are subject to risks and
uncertainties that could cause
actual results to differ materially
from those suggested by the
forward-looking statements. Factors
that might cause such differences
include, but are not limited to,
the expected timing and likelihood
of completion of the Transactions,
including the timing, receipt and
terms and conditions of any
required governmental approvals of
the Merger or the other
Transactions that could cause the
parties to abandon the transaction;
the occurrence of any event, change
or other circumstances that could
give rise to the termination of the
Transaction Agreement; the risk of
failure by the Bankruptcy Court to
confirm the Settlement Agreement,
the Voting and Support Agreement
and any other agreement entered
into in connection with the Merger
or the Transactions to which
SunEdison or any other debtor will
be a party; the risk of failure of
the holders of a majority of the
outstanding Shares to adopt the
Transaction Agreement and to obtain
the requisite stockholder
approvals; the risk that the
parties may not be able to satisfy
the conditions to the Transactions
in a timely manner or at all; risks
related to disruption of management
time from ongoing business
operations due to the Transactions;
the risk that any announcements
relating to the Transactions could
have adverse effects on the market
price of the Companys common stock;
the risk that the Transactions and
their announcement could have an
adverse effect on the Companys
ability to retain and hire key
personnel and maintain
relationships with its suppliers
and customers and on its operating
results and businesses generally;
the Companys relationship with
SunEdison, including SunEdisons
bankruptcy filings; risks related
to events of default and potential
events of default arising under
project-level financings and other
agreements due to various factors;
risks related to the Companys
failure to satisfy continued
listing requirements of NASDAQ; the
Companys ability to sell projects
at attractive prices as well as to
integrate the projects the Company
acquires from third parties or
otherwise realize the anticipated
benefits from such acquisitions,
including through refinancing or
future sales; actions of third
parties, including but not limited
to the failure of SunEdison to
fulfill its obligations and the
actions of the Companys bondholders
and other creditors; price
fluctuations, termination
provisions and buyout provisions in
offtake agreements; delays or
unexpected costs during the
completion of projects the Company
intends to acquire; regulatory
requirements and incentives for
production of renewable power;
operating and financial
restrictions under agreements
governing indebtedness; the
condition of the debt and equity
capital markets and the Companys
ability to borrow additional funds
and access capital markets; the
impact of foreign exchange rate
fluctuations; the Companys ability
to compete against traditional and
renewable energy companies; hazards
customary to the power production
industry and power generation
operations, such as unusual weather
conditions and outages or other
curtailment of the Companys power
plants; departure of some or all of
SunEdisons employees, particularly
key employees and operations and
maintenance or asset management
personnel that the Company
significantly relies upon; pending
and future litigation; and the
Companys ability to operate the
Companys business efficiently,
including to manage the transition
from SunEdison information
technology, technical, accounting
and generation monitoring systems,
to manage and complete governmental
filings on a timely basis, and to
manage the Companys capital
expenditures. Many of these factors
are beyond the Companys control.
statements are subject to risks and
uncertainties that could cause
actual results to differ materially
from those suggested by the
forward-looking statements. Factors
that might cause such differences
include, but are not limited to,
the expected timing and likelihood
of completion of the Transactions,
including the timing, receipt and
terms and conditions of any
required governmental approvals of
the Merger or the other
Transactions that could cause the
parties to abandon the transaction;
the occurrence of any event, change
or other circumstances that could
give rise to the termination of the
Transaction Agreement; the risk of
failure by the Bankruptcy Court to
confirm the Settlement Agreement,
the Voting and Support Agreement
and any other agreement entered
into in connection with the Merger
or the Transactions to which
SunEdison or any other debtor will
be a party; the risk of failure of
the holders of a majority of the
outstanding Shares to adopt the
Transaction Agreement and to obtain
the requisite stockholder
approvals; the risk that the
parties may not be able to satisfy
the conditions to the Transactions
in a timely manner or at all; risks
related to disruption of management
time from ongoing business
operations due to the Transactions;
the risk that any announcements
relating to the Transactions could
have adverse effects on the market
price of the Companys common stock;
the risk that the Transactions and
their announcement could have an
adverse effect on the Companys
ability to retain and hire key
personnel and maintain
relationships with its suppliers
and customers and on its operating
results and businesses generally;
the Companys relationship with
SunEdison, including SunEdisons
bankruptcy filings; risks related
to events of default and potential
events of default arising under
project-level financings and other
agreements due to various factors;
risks related to the Companys
failure to satisfy continued
listing requirements of NASDAQ; the
Companys ability to sell projects
at attractive prices as well as to
integrate the projects the Company
acquires from third parties or
otherwise realize the anticipated
benefits from such acquisitions,
including through refinancing or
future sales; actions of third
parties, including but not limited
to the failure of SunEdison to
fulfill its obligations and the
actions of the Companys bondholders
and other creditors; price
fluctuations, termination
provisions and buyout provisions in
offtake agreements; delays or
unexpected costs during the
completion of projects the Company
intends to acquire; regulatory
requirements and incentives for
production of renewable power;
operating and financial
restrictions under agreements
governing indebtedness; the
condition of the debt and equity
capital markets and the Companys
ability to borrow additional funds
and access capital markets; the
impact of foreign exchange rate
fluctuations; the Companys ability
to compete against traditional and
renewable energy companies; hazards
customary to the power production
industry and power generation
operations, such as unusual weather
conditions and outages or other
curtailment of the Companys power
plants; departure of some or all of
SunEdisons employees, particularly
key employees and operations and
maintenance or asset management
personnel that the Company
significantly relies upon; pending
and future litigation; and the
Companys ability to operate the
Companys business efficiently,
including to manage the transition
from SunEdison information
technology, technical, accounting
and generation monitoring systems,
to manage and complete governmental
filings on a timely basis, and to
manage the Companys capital
expenditures. Many of these factors
are beyond the Companys control.
The Company disclaims any
obligation to update or revise any
forward-looking statement to
reflect changes in underlying
assumptions, factors, or
expectations, new information,
data, or methods, future events, or
other changes, except as required
by law. The foregoing list of
factors that might cause results to
differ materially from those
contemplated in the forward-looking
statements should be considered in
connection with information
regarding risks and uncertainties
which are described in the Companys
Form 10-K for the 2015 fiscal year
and Forms 10-Q for the first,
second and third quarters of 2016,
as well as additional factors it
may describe from time to time in
other filings with the SEC or
incorporated herein. You should
understand that it is not possible
to predict or identify all such
factors and, consequently, you
should not consider any such list
to be a complete set of all
potential risks or uncertainties.
obligation to update or revise any
forward-looking statement to
reflect changes in underlying
assumptions, factors, or
expectations, new information,
data, or methods, future events, or
other changes, except as required
by law. The foregoing list of
factors that might cause results to
differ materially from those
contemplated in the forward-looking
statements should be considered in
connection with information
regarding risks and uncertainties
which are described in the Companys
Form 10-K for the 2015 fiscal year
and Forms 10-Q for the first,
second and third quarters of 2016,
as well as additional factors it
may describe from time to time in
other filings with the SEC or
incorporated herein. You should
understand that it is not possible
to predict or identify all such
factors and, consequently, you
should not consider any such list
to be a complete set of all
potential risks or uncertainties.
ADDITIONAL INFORMATION AND WHERE
TO FIND IT
TO FIND IT
This communication may be deemed
to be solicitation material in
respect of the proposed
Transactions. In connection with
the proposed Transactions,
Brookfield and the Company intend
to file relevant materials with
the SEC, including the Companys
proxy statement on Schedule 14A.
STOCKHOLDERS OF THE COMPANY ARE
URGED TO READ ALL RELEVANT
DOCUMENTS FILED WITH THE SEC,
INCLUDING THE COMPANYS PROXY
STATEMENT, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION
ABOUT THE PROPOSED TRANSACTIONS.
Investors and security holders
will be able to obtain the
documents free of charge at the
SECs website, http://www.sec.gov.
The Companys stockholders will
also be able to obtain, without
charge, a copy of the proxy
statement and other relevant
documents (when available) by
directing a request by mail or
telephone to TerraForm Power,
Inc., 7550 Wisconsin Avenue, 9th
Floor, Bethesda, Maryland 20814:
(240) 762-7700, or from the
Companys website,
https://www.terraformpower.com/.
to be solicitation material in
respect of the proposed
Transactions. In connection with
the proposed Transactions,
Brookfield and the Company intend
to file relevant materials with
the SEC, including the Companys
proxy statement on Schedule 14A.
STOCKHOLDERS OF THE COMPANY ARE
URGED TO READ ALL RELEVANT
DOCUMENTS FILED WITH THE SEC,
INCLUDING THE COMPANYS PROXY
STATEMENT, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION
ABOUT THE PROPOSED TRANSACTIONS.
Investors and security holders
will be able to obtain the
documents free of charge at the
SECs website, http://www.sec.gov.
The Companys stockholders will
also be able to obtain, without
charge, a copy of the proxy
statement and other relevant
documents (when available) by
directing a request by mail or
telephone to TerraForm Power,
Inc., 7550 Wisconsin Avenue, 9th
Floor, Bethesda, Maryland 20814:
(240) 762-7700, or from the
Companys website,
https://www.terraformpower.com/.
PARTICIPANTS IN SOLICITATION
The Company and its directors and
executive officers may be deemed
to be participants in the
solicitation of proxies from the
holders of the Companys common
stock in respect of the proposed
Transactions. Information about
the directors and executive
officers of the Company and the
interests of such individuals
will be set forth in the proxy
statement for the Transactions,
which will be filed with the SEC.
You may obtain free copies of the
proxy statement as described in
the preceding paragraph, when it
is available.
executive officers may be deemed
to be participants in the
solicitation of proxies from the
holders of the Companys common
stock in respect of the proposed
Transactions. Information about
the directors and executive
officers of the Company and the
interests of such individuals
will be set forth in the proxy
statement for the Transactions,
which will be filed with the SEC.
You may obtain free copies of the
proxy statement as described in
the preceding paragraph, when it
is available.
|
Item 9.01
|
Financial Statements and
Exhibits. |
(d) Exhibits.
|
Exhibit No.
|
Description
|
|
2.1
|
Merger and Sponsorship
Transaction Agreement, dated as of March 6, 2017, by and among TerraForm Power, Inc., Orion US Holdings 1 L.P. and BRE TERP Holdings Inc. |
|
2.2
|
Settlement Agreement, dated
as of March 6, 2017, by and among TerraForm Power, Inc., TerraForm Power, LLC, TerraForm Power Operating, LLC, SunEdison Inc. and the other parties named therein. |
|
2.3
|
Voting and Support
Agreement, dated as of March 6, 2017, by and among Orion US Holdings 1 L.P., BRE TERP Holdings Inc., SunEdison, Inc., SunEdison Holdings Corporation, SUNE ML1, LLC and TerraForm Power, Inc. |
|
99.1
|
Press release, dated March
7, 2017. |
|
99.2
|
Investor Presentation,
dated March 7, 2017. |
About TERRAFORM POWER, INC. (NASDAQ:TERP)
TerraForm Power, Inc. is a diversified owner of clean power generation assets in developed markets. This includes solar and wind assets located in the United States, Canada, the United Kingdom and Chile. The Company’s 2,967 megawatts renewable energy portfolio enables power production around the clock. TERRAFORM POWER, INC. (NASDAQ:TERP) Recent Trading Information
TERRAFORM POWER, INC. (NASDAQ:TERP) closed its last trading session up +0.69 at 12.28 with 737,335 shares trading hands.
