‘Assumption is ... Brookfield walks away with both’

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 two-year 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 for 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 memorandum of understanding with SunEdison to resolve their complex legal relationship. 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.