Photographer: Anne Cusack/LA Times via Getty Images

Tepper Seeks Fast-Track Trial in $1.9 Billion Solar Fight

  • Lawsuit is with SunEdison, world’s top clean-energy developer
  • Judge's remarks appear to `open the door' for Appaloosa chief

David Tepper’s Appaloosa Management LP said it will ask a judge to set an expedited trial in Delaware in its dispute with SunEdison Inc. over the utility’s $1.9 billion planned acquisition of residential solar-power provider Vivint Solar Inc.

Officials of Appaloosa said in an e-mail Monday they intend to take Delaware Chancery Court Judge Andre Bouchard up on his offer to accelerate the case after he rebuffed Tepper’s bid to block a key component of SunEdison’s deal. 

The hedge fund wants to press ahead with claims that SunEdison, the world’s biggest clean-energy developer, is unfairly forcing its TerraForm Power Inc. holding company unit to load up on debt to spend about $800 million on Vivint’s assets. Appaloosa bought an almost 10 percent stake in TerraForm late last year.

“Appaloosa believes that an expedited trial is in the best interests of TerraForm and its stockholders,” fund officials said in an e-mailed statement Monday. Ben Harborne, a SunEdison spokesman, declined to comment on Tepper’s request.

‘Inherently Suspect’

SunEdison, of Maryland Heights, Missouri, spent billions of dollars last year acquiring developers and power projects around the world. Now it’s spending more to convert in-progress wind and solar farms into electricity-generating assets that can either be sold off or retained for their long-term revenue streams. Tepper’s challenge was seen as the last significant threat to the Vivint deal.

Tepper contends that SunEdison ousted TerraForm directors who didn’t want the holding company to have to play a key role in the Vivint deal, and doesn’t have TerraForm investors’ best interests at heart in the transaction.

Despite turning down Tepper’s request to block the sale of the Vivint assets, Bouchard warned SunEdison last week that the hedge fund raised legitimate questions about the deal’s fairness. The judge said that the process used by SunEdison to win the TerraForm board’s approval of the transaction appeared “inherently suspect” and that the removal of objecting directors was a “troubling aspect” of the case.

Bouchard’s comments “seemed to open the door for Tepper,” said Michael Morosi, an analyst at Avondale Partners LLC. The return of uncertainty is creating “overhang” for SunEdison’s stock, he said.

SunEdison shares fell 12.3 percent to $1.98 at 4:37 p.m. in New York. TerraForm rose 11.3 percent to $9.64, and Vivint was little changed at $7.89.

Destination: Delaware

Delaware corporate law takes a dim view of a controlling shareholder interfering with the independence of a special committee charged with protecting minority investors in a deal, said Larry Hamermesh, a Widener University law professor who teaches about corporate governance.

“Judges have come down hard on controlling shareholders who have overreached when it comes to special committees,” Hamermesh said.

As the corporate home to more than half of the U.S.’s publicly traded companies and 63 percent of Fortune 500 firms, Delaware had more than 1 million legal entities incorporated in the 900,000-resident state as of 2012. The chancery court has become the prime forum for resolving those companies’ corporate disputes. Chancery court decisions go directly to the state Supreme Court for review.

Since it offers only non-jury trials, the court can provide quicker hearings than regular courts, sometimes having cases heard and decided in a matter of weeks or months rather than years.

“The whole story hasn’t played out yet,” Angelo Zino, an analyst at S&P Global Market Intelligence, said in an interview Monday. “The transaction probably still closes. The best situation for David Tepper is probably that SunEdison finds a buyer for the Vivint Solar assets.”

The Delaware case is Appaloosa Investment Limited Partnership I v. SunEdison Inc., CA No. 11898, Delaware Chancery Court (Wilmington).

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