SunEdison Sinks as Appaloosa Seeks Detail on TerraForm Deals

  • Hedge fund disclosed 9.5 percent stake in TerraForm on Dec. 2
  • Letter seeks all documents related to transactions, shakeup

SunEdison Inc. sank the most in a month after Appaloosa Management LP, a hedge fund run by billionaire David Tepper, sought documents from TerraForm Power Inc. on a recent management shakeup there and on acquisitions its parent company recently renegotiated.

Appaloosa said on Dec. 2 that it acquired a 9.5 percent stake in TerraForm, a holding company formed by SunEdison to own and operate power plants. It accused TerraForm’s management of acting more in the interest of SunEdison than its own shareholders in deals between the companies.

SunEdison shares fell 21 percent to $5.31 at the close in New York, the most since Nov. 17. TerraForm Power slipped 0.5 percent to $12.39.

SunEdison has been on a roller-coaster ride since July, when Chief Executive Officer Ahmad Chatila announced plans to buy residential solar installer Vivint Solar Inc. and sell shares in a second holding company, TerraForm Global Inc. In a letter to TerraForm management, Appaloosa asked for all documents related to their transactions and management changes, according to a regulatory filing Tuesday.

Tepper’s engagement with TerraForm management should benefit its shareholders by pressuring SunEdison to deal more fairly, said Michael Morosi, an analyst at Avondale Partners LLC.

“For a long time SunEdison was doing good for SunEdison and not for TerraForm,” Morosi said in an interview by phone. “Tepper’s involvement will make it tougher for SunEdison to use TerraForm any way it wants.”

TerraForm was created by SunEdison to own and operate solar and wind farms as they’re completed, and first sold shares to the public in July 2014.

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