SunEdison Yieldco Hit With Default Notice Over Late Financials

  • TerraForm Global has yet to file its 2015 annual report
  • Yieldco has 90 days to comply with bondholders’ demand

A unit of TerraForm Global Inc. has 90 days to issue its delinquent annual report or it could face demands to pay off hundreds of millions in debt six years early, partly because bankrupt parent SunEdison Inc. hasn’t filed its own financial statement.

Holders of bonds issued by TerraForm Global Operating LLC sent a notice of default on the yieldco’s 9.75 percent senior notes due in 2022, according to a statement Wednesday from their law firm, Willkie Farr & Gallagher. The group represents more than 25 percent of aggregate principal of the notes, according to the firm, which said failure to remedy the problem in 90 days would constitute an “event of default.”

If that happens, bondholders could demand payment in full, said Julia Winters, a bankruptcy analyst at Bloomberg Intelligence. There’s $760.4 million outstanding on the issue, according to data compiled by Bloomberg.

“The notice is starting the clock,” she said. “It can be a way for the lenders to open a dialogue for how the default will be cured. They have the power to grant a forbearance.”

‘Remain Committed’

The bondholders “remain committed to continuing an open dialogue and working productively with the company toward a resolution in the interests of all stakeholders,” according to Willkie’s statement.

A representative for Bethesda, Maryland-based TerraForm Global didn’t immediately respond to requests for comment on the notice.

TerraForm Global is a publicly traded holding company founded and controlled by SunEdison to own operating wind and solar farms. The yieldco has yet to submit its annual report because, in part, it needs help from its parent, which sought bankruptcy protection last month and also hasn’t filed its 2015 report. 

In March, SunEdison cited “deficient information technology controls” as one reason it hadn’t filed its annual report. Thursday, the company said it would also delay filing its first-quarter report.

TerraForm Global this week announced that lenders on its revolving credit facility gave it more time to file its report. The company said it had 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 -- the 2022 senior notes -- whichever comes first.

“It’s up to the creditors right now to decide how much leeway to offer,” said Michael Morosi, an analyst at Avondale Partners LLC.

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