TerraForm Power Said to Plan September Share Auction

  • Sale follows Brookfield-Appaloosa interest in Class B shares
  • Terms may give TerraForm effective veto over potential buyer

TerraForm Power Inc., the wind-and-solar company formed by the bankrupt SunEdison Inc., is setting up a formal auction to sell itself after Brookfield Asset Management Inc. attempted to take control of the company, according to two people with knowledge of the matter. 

TerraForm plans to launch the auction in September, said the people, who asked not to be named because the preparations are confidential. SunEdison is cooperating with TerraForm on the sales process, which will be run separately from the one SunEdison is planning for its other wind and solar assets, the people said.

SunEdison, the clean-energy giant that filed the year’s biggest bankruptcy in April with $16.1 billion of liabilities, had said it was looking to sell its Class B stake in TerraForm. TerraForm’s board has the right to approve any buyer for SunEdison’s shares, according to one of the people.

Brookfield Interest

The auction follows a purchase proposal by Brookfield that might have hurt the rest of TerraForm’s public shareholders, one of the people said. Brookfield and Appaloosa Management LP joined forces earlier this month to bid for SunEdison’s stake, spurring TerraForm to announce a so-called poison pill that would prevent buyers from gaining a controlling stake while undervaluing the rest of the company.

Brookfield and Appaloosa remain interested in acquiring control of TerraForm Power, one person said. The two suitors had reached out to SunEdison about buying its Class B shares in TerraForm Power for a premium, but were unable to make progress with the bankrupt company, the people said. The potential buyers had proposed that SunEdison run an auction while granting them stalking-horse status, one of the people said. The two investors hold about 22 percent in standard Class A shares.

Representatives for SunEdison, TerraForm and Brookfield declined to comment and an official at Appaloosa didn’t respond to inquiries seeking comment. SunEdison said in a July 25 statement it will work “collaboratively” with TerraForm Power and sister company TerraForm Global Inc. on ways to create value with the Class B shares in both companies “through a jointly managed sales process.”

SunEdison Class B shares in TerraForm Power give it approximately 84 percent of the voting rights while holding only about 35 percent of the total shares outstanding, according to a July 26 regulatory filing.