Brookfield in exclusive Terra Form talks
TORONTO• Brookfield Asset Management Inc., Canada’s largest alternative asset manager, has entered into exclusive talks to buy bankrupt SunEdison Inc.’s two yieldcos, valuing the power companies at as much as US$2.46 billion.
Toronto- based Brookfield offered US$ 12 a share for TerraForm Power Inc., con- ditional on acquiring more than half of sister company TerraForm Global Inc., according to a regulatory filing Monday. That’s lower than TerraForm Power’s closing price Friday of US$12.17.
Brookfield offered as much as US$4.35 a share for all of TerraForm Global, or US$ 4.25 to acquire 50.1 per cent of TerraForm Global and replace SunEdison as its financial sponsor, according to a statement.
The shares closed Friday at US$ 4. A spokesman for the TerraForm companies declined to comment Monday and a spokesman for SunEdison didn’t immediately return a call.
SunEdison formed the two yieldcos as part of an expansion effort that made it the biggest clean- energy company in the world, with assets spread across six continents.
The t wo- y e ar buying binge left it overextended and in April it filed the biggest U. S. bankruptcy of 2016. TerraForm Power and TerraForm Global were designed to buy and own its completed power plants, and their portfolios of wind and solar farms are among the most coveted assets as SunEdison’s creditors and other buyers assess the company’s value.
“The distribution of outcomes is certainly starting to narrow,” Michael Morosi, an analyst at Avondale Partners in Nashville, Tenn., said in an interview Monday.
“At this point, the best assumption is that Brookfield walks away with both of these assets.”
The yieldcos said the exclusive talks would continue until Feb. 21 for TerraForm Power and March 6 f or TerraForm Global, and there are no assurances a deal would be completed. Brookfield is the largest shareholder of TerraForm Power, according to data compiled by Bloomberg.
The Bethesda, Md.- based yieldcos said they had also entered into a memoran- dum of understanding with SunEdison to resolve their complex l egal r el ationship. Under the terms of the agreement, SunEdison would receive considerations equal to 25 per cent of the total paid for TerraForm Global and 36.9 per cent of TerraForm Power.
“Brookfield doesn’t come as a surprise,” Daniel Shurey, an analyst at Bloomberg New Energy Finance in New York, said Monday by instant message. “It is a global asset manager with significant power generation experience and like many Canadian investors, with a huge interest in the U. S. renewable energy markets.”
Of the potential buyers for TerraForm Power, Brookfield was the most vocal. It first disclosed its interest in TerraForm Power in June, prompting Morosi to describe it then as the yieldco’s potential “white knight.” Other companies that have expressed interest included AES Corp., funds managed by BlackRock Inc., D.E. Shaw & Co. and Golden Concord Holdings Ltd.
“Brookfield is among the best- positioned for these types of complex restructuring situations,” Andrew Kuske, a Toronto-based analyst at Credit Suisse Group AG, said in a research note Monday.