Both of bankrupt renewables company SunEdison’s yieldcos, TerraForm Power and TerraForm Global, are considering mergers or sales of their entire businesses. Although the yieldcos were not part of their sponsor’s Chapter 11 bankruptcy filing, SunEdison’s financial woes have weighed heavily on the subsidiaries’ operations.
“Our board and management team have been working to preserve and protect stockholder value and, after careful review, we have decided that exploring all possible alternatives to maximize that value is in the best interests of all our stockholders,” said Peter Blackmore, interim CEO of both yieldcos. In two separate press releases, he added that each sister company has a “diverse portfolio of assets and record of strong operating performance,” thus offering “a unique opportunity for a broad range of potential acquirers and investors.”
In addition to selling all of the yieldcos’ equity interests, the companies would also consider transactions involving new sponsors, which could buy out SunEdison’s existing sponsorship deals. Furthermore, the yieldcos are taking steps to operate as independent operating companies without sponsors, “if that should become necessary in the short or long term,” according to Blackmore.
Because SunEdison is operating under Chapter 11 bankruptcy protection, many decisions made by SunEdison – such as how to vote its shares in the yieldcos to approve potential mergers or acquisitions – may require the approval of the U.S. Bankruptcy Court for the Southern District of New York.
Blackmore stated, “We have been working closely with SunEdison on disposition alternatives so far and regard a collaborative exploration of strategic alternatives to be in the best interests” of all parties involved. The yieldcos are also working with SunEdison to consensually resolve intercompany claims, but Jack Stark, the chairman of the corporate governance and conflicts committee, said, “[W]e stand ready to enforce our rights in litigation if necessary.”