Dive Brief:
-
The boards of directors of both TerraForm Power and TerraForm Global, the investment vehicles of bankrupt SunEdison, have initiated sales processes for the companies.
-
TerraForm Power has 2,987 MW of renewable energy capacity of which 2,634 MW is in the U.S. TerraForm Global has 917 MW of renewable energy assets with 307 MW in Brazil, 299 MW in India, and 167 MW in China.
- Both companies said there were open to operation as independent companies or to finding a new sponsor to fill the role SunEdison played in bringing new projects to fill the units’ portfolio.
Dive Insight:
Yieldcos are a way to attract yield-hungry investors and to provide a source of relatively cheap capital for developers looking for new renewable energy projects. Until they became too debt heavy, they were an essential part of many renewable energy companies' growth strategies.
At least eight yieldcos came to market before the it started to collapse.
In July SunEdision said it would sell its TerraForm Global yieldco. Then in August it said it would sell it TerraForm Power yieldco.
The yieldcos were not part of SunEdison's bankruptcy in April. And, at the time, the companies said they had sufficient cash flow to operate. Since SunEdison’s bankruptcy, however, the companies have faced several problems.
In August, for instance, SunEdison said that because of its bankruptcy filing, it would stop making interest payments on behalf of the yieldcos.
The yieldcos said they would contest the decision.
In statements for both TerraForm Global and TerraForm Power, Jack Stark, chairman of the corporate governance and conflicts committee, said “We believe it is in the best interests of TerraForm Global [and Power] and SunEdison for there to be a prompt settlement of all intercompany claims and defenses to facilitate the strategic review process. We are committed to negotiate actively with SunEdison to resolve intercompany matters consensually on arm's-length terms as soon as possible, although we stand ready to enforce our rights in litigation if necessary."