- TerraForm Power has until May 28 to submit 2015 annual report
- TerraForm Power won't file its first-quarter report on time
SunEdison Inc.’s two publicly traded TerraForm yieldco holding companies arranged more time to file their delinquent 2015 annual reports, letting them avoid potential technical default on some credit facilities.
TerraForm Power Inc. has until May 28, under a deal approved by the lenders for its $725 million revolving credit facility, according to a filing Tuesday. TerraForm Global Inc. may have as long as 10 months, in exchange for reducing the size of its own revolving credit line to $350 million from $485 million, according to a separate filing.
TerraForm Power will also be late with its first-quarter report, it said in a filing Wednesday. It said it had identified “material weaknesses in internal controls over financial reporting,” including the valuation of costs of projects acquired from SunEdison and processing accounts payable and general and administrative expenses.
“We expect that it will be necessary for the company to implement additional controls and procedures and take other remedial actions before we finalize our financial statements and other disclosures for year-end 2015,” TerraForm Power said in the Wednesday filing.
The two yieldcos have yet to submit the annual reports in part because they need assistance from their bankrupt parent SunEdison, which also hasn’t filed its reports. That means TerraForm Power and TerraForm Global were at risk of technical default on the credit lines, which require timely submissions of the annual reports. Had that occurred, they may have been barred from accessing the credit lines.
“In other words, any commitments that are currently undrawn cannot be accessed until or unless they file their financials,” said John Sirico, a loan analyst at Covenant Review LLC, a credit research firm that reviews high-yield bonds and leveraged loans.
TerraForm Global didn’t provide a specific new deadline in the filing. Instead it has until either March 30, 2017, or 10 business days before “failure to deliver such financial statements would constitute an event of default” for another debt, senior notes due 2022, whichever comes first.
“Banks don’t want to be in a position where their default date goes beyond that of the bonds,” Swami Venkataraman, an analyst at Moody’s Investors Service, said in an e-mail Wednesday.
SunEdison sought bankruptcy protection April 21. The company in March cited “deficient information technology controls” as part of the reason it had not filed its 2015 annual report.
TerraForm Power said in March that its 10-K annual report would be delayed, in part because it relies on SunEdison, and “if there are control deficiencies at SunEdison, including with respect to the systems we utilize, it is necessary for us to assess whether those deficiencies could affect our financial reporting.”