SunEdison Cuts Price for Vivint Deal After Shares Plunge

  • Companies agree to reduce cash by $2 a share, increase stock
  • Blackstone commits $250 million in credit to help SunEdison

SunEdison Inc., the worst-performing solar company this year, is revising the terms of its much-criticized deal to acquire Vivint Solar Inc., reducing the initial $2.2 billion price by at least 25 percent.

The company agreed in July to pay $16.50 a share for Vivint, a developer of rooftop solar systems. Under new terms announced Wednesday, it will pay about $12.35 a share in cash, stock and convertible notes, according to Mahesh Sanganeria, an analyst with RBC Capital Markets.

The Vivint deal capped a multi-billion-dollar SunEdison buying spree this year. Rising debt and wider-than-expected losses in the second and third quarter prompted investors to question whether the company would be able to continue funding its global expansion plan.

“This pending acquisition of residential solar assets was the proverbial straw that broke the camel’s back starting in July -– pushing shareholder protection concerns, liquidity challenges, and exposure to residential asset class fears over the edge,” Patrick Jobin, an analyst at Credit Suisse Group AG, said in a research note Wednesday.

New Terms

SunEdison climbed 15 percent to $3.96 at the close in New York. Vivint rose 15 percent to $9.68.

SunEdison is lowering the cash amount it will pay for Vivint by $2, to $7.98 a share. The company said in July it would also pay $3.30 a share in convertible notes; that amount is unchanged but they will now mature in four years instead of five.

Under the initial deal, SunEdison agreed to pay $3.31 in its stock for each Vivint share, and on Wednesday it said that would increase by 75 cents.

SunEdison has lost 80 percent of its market value this year, the most on the Bloomberg Intelligence Global Large Solar Energy index of 20 companies. The volatile share price led other analysts to come up with different values for the acquisition. Jobin said the new terms make the Vivint deal worth about $1.4 billion, a 36 percent decline from the July price.

As part of the new terms, Blackstone Group LP, which owns 77 percent of Vivint, agreed to provide SunEdison a $250 million credit facility. 

SunEdison also will borrow $300 million from Goldman Sachs Group Inc., Barclays Plc, Citigroup Inc., and UBS Securities LLC.

Deal Criticized

The deal generated criticism from investors including billionaire hedge fund manager David Tepper, who said that Vivint’s residential systems were a poor fit with the large, utility scale wind and solar farms that make up most of SunEdison’s business. His Appaloosa Management LP holds a 9.5 percent stake in TerraForm Power Inc., a company controlled by SunEdison that will buy Vivint’s portfolio of operating power plants.

That portion of the transaction is also being amended. TerraForm will now pay $799 million for Vivint’s portfolio of 470 megawatts of rooftop systems, instead of $922 million for 523 megawatts.

“This is exactly what needed to happen,” Michael Morosi, an analyst at Avondale Partners LLC, said in an e-mail. “This is the first truly shareholder-friendly move TerraForm has made.”

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