Brookfield Said to Shun Auction for SunEdison’s TerraForm Power

  • Canadian firm said to be concerned about rules in the process
  • Wind and solar business was formed by now-bankrupt SunEdison

Brookfield Asset Management Inc., which had teamed with Appaloosa Management to bid for TerraForm Power Inc., isn’t planning to participate in an auction for the company due to concerns over the process, according to people familiar with the matter.

Brookfield is concerned about rules that would require it to relinquish voting rights and give up the ability to trade its shares if it were to take part in the auction, said the people, who asked not to be named because the discussions are private.

The Toronto-based firm is also put off because the process doesn’t give it the right as a large shareholder to match or trump bids made for the company, one of the people said. Brookfield remains interested in acquiring TerraForm Power, the wind-and-solar business formed by the bankrupt SunEdison Inc., and won’t tender its shares if the company is sold to another bidder, the person said.

Representatives for TerraForm Power and Brookfield declined to comment. A representative for SunEdison wasn’t immediately available for comment.

Brookfield is the biggest holder of TerraForm Power’s Class A shares, with a 12 percent ownership, according to data compiled by Bloomberg.

TerraForm Power kicked off a sales process after an attempt by Brookfield to take control the company, the people said. Brookfield and David Tepper’s Appaloosa Management joined forces in July to bid for SunEdison’s stake, spurring TerraForm to announce a poison pill that would prevent buyers from gaining a controlling stake while undervaluing the rest of the company.

Combined, Brookfield and Appaloosa hold 22 percent of the company’s Class A shares, according to data compiled by Bloomberg.

The TerraForm Power auction that started this month calls for bidders to submit offers for either the entire company or the Class B shares held by SunEdison, or to devise a way to be a new equity sponsor for the company, said one of the people with knowledge of the process.

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

SunEdison, the clean-energy giant, filed the year’s biggest bankruptcy in April with $16.1 billion of liabilities.

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