- TerraForm yieldcos rely on bankrupt SunEdison to file reports
- Yieldcos have 90 days to file reports or face accelerated debt
SunEdison Inc.’s collapse continues to haunt the clean-energy giant’s publicly traded yieldco units.
Bondholders of TerraForm Global Inc. and TerraForm Power Inc. slapped them with notices of default on three bonds for failing to file their 2015 annual report on time, according to filings Thursday with the U.S. Securities and Exchange Commission. The two companies have previously said the delays are due in part to SunEdison, which provides systems needed to complete the reports.
The default notices were received May 31, and to cure them the two TerraForm companies have 90 days -- or until Aug. 29 -- to submit the reports, according to the filings. Failure to do so means the trustees or the holders of at least 25 percent of the respective notes may demand to accelerate payment on the notes, TerraForm Global and TerraForm Power said in the filings. That would mean that the unpaid principal and accrued interest on the outstanding notes could become immediately due.
Risk of Cross-Defaults
“What the bondholders are saying: ‘you have 90 days to resolve this. We want a seat at the table or we will accelerate the debt,’” said John Sirico, an analyst at Covenant Review LLC. “If they accelerate the bonds, it will likely give rise to cross-defaults to other debt in the capital structure, which 99 times out of 100 will lead the company to bankruptcy.”
A spokesman for the two TerraForm companies declined to comment.
TerraForm Global said it has $760.4 million of principal remaining on its 9.75 percent senior notes, due in 2022. TerraForm Power said it has $950 million of principal remaining on its 5.875 percent senior notes, due in 2023, and $300 million of principal remaining on its 6.125 percent senior notes due in 2025.
SunEdison also has failed to file its 2015 report, and in March blamed “deficient information technology controls” from a new reporting system for the delays. SunEdison filed for bankruptcy protection in April.
TerraForm Power was facing another deadline related to the delayed report, on a separate debt, a revolving credit facility. The company was supposed to file its 2015 annual report by May 28 or this debt also would have been at risk of a potential technical default.
According to TerraForm Power’s filing Thursday, that deadline was extended, to the earlier of either March 30 of next year, or 10 business days before it faces default on its 2023 notes for failing to submit is 2015 report. The company also now has until June 30 to file its delinquent first-quarter financial report.
In the Thursday filings, both TerraForm yieldcos said they had delegated to independent conflicts committees “the exclusive power” to manage their interactions involving SunEdison.