SunEdison Said to Map Restructuring Plan With TerraForm Stake

  • Bankrupt solar and wind giant would hold on to TerraForm Power
  • Keeping shares of yieldco could secure post-Chapter 11 growth

Almost six months after filing the biggest U.S. bankruptcy of 2016, SunEdison Inc. is taking steps to work out a reorganization plan without liquidating a prize asset: its controlling stake in TerraForm Power Inc. according to people familiar with the matter.

TerraForm Power, a so-called yieldco that owns solar and wind projects developed by its parent, has begun talks with SunEdison’s creditors to start the process of evaluating the TerraForm assets, said one of the people, who asked not to be named because the discussions are private. Under such a reorganization, SunEdison could keep its shares in the yieldco and restructure around it, the people said.

This latest stage in the bankruptcy follows months in which SunEdison marketed solar and wind projects around the world without declaring outright whether it would emerge from Chapter 11 as a going concern or liquidate altogether. The company in July said it had extended a deadline to present lenders with a plan -- without specifying a new date. 

SunEdison said it would hold an auction for its Class B voting shares. TerraForm Power and sister yieldco TerraForm Global Inc. have both since said they were looking for buyers. A reorganization could allow SunEdison to continue owning non-bankrupt TerraForm Power and avoid liquidation.

This alternative would allow SunEdison to hold onto TerraForm Power after exiting Chapter 11 and to benefit from its growth, the people said. SunEdison could also decide whether to sell its stake after evaluating bids from potential buyers, according to the people.

Spokesmen for SunEdison and TerraForm Power both declined to comment.

Maryland Heights, Missouri-based SunEdison filed for bankruptcy in April with $16.1 billion of liabilities. In July, a SunEdison adviser said the company’s assets in bankruptcy were worth $1 billion to $1.5 billion, more than a June projection of $850 million. Rothschild Inc., a SunEdison adviser, attributed the increase to the yieldcos’ rising shares and to bids for the parent’s solar and wind farms. 

Since June, TerraForm Power stock has almost doubled, closing at $14.19 Wednesday, from a 2016 low of $7.44. As of Wednesday, it had a market value of almost $2 billion, according to data compiled by Bloomberg.

Asset Sale

In September, the yieldcos announced they were selling assets. Bidders have the options to make an offer for all of the assets, for SunEdison’s Class B shares in TerraForm Power, or to devise a way to be a new equity sponsor for TerraForm Power, people said at the time.

A number of potential buyers including BlackRock Inc., the world’s biggest asset manager, and Golden Concord Holdings Ltd., a Chinese clean-energy group, have expressed interest in the company.

Canada’s biggest alternative-asset manager, Brookfield Asset Management Inc., and billionaire David Tepper’s hedge fund Appaloosa Management LP said they were planning a joint offer. However, Brookfield decided last week not to participate in an auction citing concerns about the process, but remains interested in the assets, people said at the time.

Bethesda, Maryland-based TerraForm Power owns about 3 gigawatts of power plants in the U.S., Canada, Chile and the U.K. SunEdison’s Class B stake gives it about 84 percent of the yieldco’s voting rights and about 35 percent of the total shares outstanding, according to a July 26 regulatory filing. 

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