SunEdison Asset Transfer Barred in Fight Over Spurned Deal

  • Holders of Latin American power company sued earlier this week
  • SunEdison killed deal to purchase company in October

SunEdison Inc. was temporarily blocked from transferring assets while shareholders of a Latin American power company seek more than $150 million in damages in connection with a spurned takeover bid.

New York State Supreme Court Justice Charles Ramos on Thursday granted the request from Latin America Power BVinvestors to block any asset transfer pending a Feb. 25 hearing on whether the hold should continue throughout arbitration of the dispute. Ramos’s order, which also applies to TerraForm Power Inc., a company SunEdison owns and controls, excludes assets needed for the companies to do business.

SunEdison, the world’s largest renewable-energy company, was restrained from “concealing, transferring or removing its assets” that might be needed to satisfy debts if the shareholders win their case. The investors are suing over SunEdison’s decision in October to walk away from a deal to buy Latin America Power, a Santiago-based operator of hydroelectric and wind-energy plants.

The shareholders say a court order is necessary while they pursue a claim in arbitration against Maryland Heights, Missouri-based SunEdison, because the company may be insolvent by the time the case is decided.

Shares Fall

SunEdison shares fell 14 percent to $2.04 at 4:15 p.m. in New York. They have dropped 90 percent over the past year.

“We are very pleased with Justice Ramos’s decision to grant our temporary restraining order and we look forward to continuing to pursue our claims in arbitration,” said Tai-Heng Cheng, a partner with Quinn Emanuel Urquhart & Sullivan LLP representing the Latin America Power investors.

In May, SunEdison agreed to buy Latin America Power from Brazil’s BTG Pactual Asset Management and its partners. At the time, Latin America Power had 119 megawatts of operating hydroelectric and wind-energy plants in Peru and Chile and was building another 214 megawatts of wind and hydroelectric projects in Chile. SunEdison canceledthe deal less than five months later, contending that the sellers failed to satisfy certain conditions.

Buying Frenzy

The cancellation came after SunEdison spent the first half of 2015 on a multi continent buying frenzy. The company reduced spending by mid year after its market value began tumbling.

“We appreciate the constructive hearing and the judge’s thoughtful approach, confirming that we can continue to conduct our business without undue interference,” SunEdison said in a statement. “This includes the transfer of assets for fair consideration in the ordinary course of business, which conforms to the existing policies of both companies.”

In January, SunEdison was sued by billionaire David Tepper’s Appaloosa Management LP over the renewable-energy developer’s planned $1.9 billion acquisition of Vivint Solar Inc. SunEdison had planned to flip Vivint’s assets to TerraForm Power Inc. Appaloosa, which owns a 9.5 percent stake in TerraForm, said the deal was “fundamentally unfair” to TerraForm’s investors.

The case is BTG Pactual Brazil Infrastructure Fund II v. SunEdison Inc., 650676/2016, New York State Supreme Court, New York County (Manhattan).

Related ticker: SUNE US (SunEdison Inc.)

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