• Acquisition comes as parent faces potential bankruptcy
  • TerraForm last week sued SunEdison over alleged misuse of cash

TerraForm Global Inc., a holding company founded and controlled by clean-energy developer SunEdison Inc., did something Friday its parent has struggled to do recently: complete an acquisition.

TerraForm Global bought the 26.4-megawatt Alto Cielo solar farm in Uruguay from Spanish developer Solarpack Corp. Tecnologica SL, it said in a filing Friday, after the close of regular trading in New York. It paid $35.4 million for the power plant, which began operations last month.

The acquisition comes as TerraForm Global seeks to avoid being swept into potential insolvency proceedings of its parent. SunEdison is swimming in debt and is facing possible technical defaults on at least $1.4 billion in loans and credit facilities because it has yet to file its 2015 annual report. TerraForm Global warned in a March 29 filing that “there is a substantial risk that SunEdison will soon seek bankruptcy protection.”

TerraForm Global is taking steps to create some distance from its parent. In a lawsuit filed April 3 in Delaware, it alleged that SunEdison had misused $231 million that had been earmarked for completing solar farms in India. Instead, according to the suit, SunEdison used the funds to repay a loan and “prop up its flagging liquidity position.” 

Buying Binge

SunEdison amassed $11.7 billion in debt, as of Sept. 30, after an acquisition spree that included deals on every continent but Antarctica. That’s come to a halt in recent months, notably with its $1.9 billion acquisition of Vivint Solar Inc. being canceled by the target last month. Vivint is now suing SunEdison.

TerraForm Global and its sister company TerraForm Power Inc. are known as yieldcos, formed by SunEdison to buy and own power plants. That means they own portfolios of assets that generate revenue, which may help them if their parent does seek protection from creditors.

“At the yieldcos, at some point they need to get into self-preservation,” Swami Venkataraman, an analyst with Moody’s Investors Service, said in an interview April 4 after TerraForm filed its lawsuit against SunEdison.

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