Brookfield in exclusive talks to buy Sun Edison’s yield cos
Deal for power companies could be worth as much as $2.46 billion
Brookfield Asset Man-TORONTO agement Inc., Canada’s largest alternative asset manager, has entered into exclusive talks to buy bankrupt Sun Edison Inc.’s two yield cos, valuing the power companies at as much as US$2.46 billion.
Toronto-based Brookfield offered US$12 a share for Terra-Form Power Inc., conditional on acquiring more than half of sister company Terra-Form Global Inc., according to a regulatory filing Monday. That’s lower than Terra-Form Power’s closing price Friday of US$12.17.
Brookfield offered as much as US$4.35 a share for all of Terra-Form Global, or US$4.25 to acquire 50.1 per cent of Terra-Form Global and replace Sun-Edison as its financial sponsor, according to a statement. The shares closed Friday at US$4. A spokesman for the Terra-Form companies declined to comment Monday and a spokesman for Sun-Edison didn’t immediately return a call.
Sun-Edison formed the two yield-cos 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. Terra-Form Power and Terra-Form 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 Sun-Edison’s creditors and other buyers assess the company’s value.
“The distribution of outcomes is certainly starting to narrow,” Mi- chael Morosi, an analyst at Avondale Partners in Nashville, said in an interview Monday. “At this point, the best assumption is that Brookfield walks away with both of these assets.”
The yield-cos said the exclusive talks would continue until Feb. 21 for Terra-Form Power and March 6 for Terra-Form Global, and there are no assurances a deal would be completed. Brookfield is the largest shareholder of Terra-Form Power, according to data compiled by Bloomberg.
The Bethesda, Md.-based yield-cos said they had also entered into a memorandum of understanding with Sun-Edison to resolve their complex legal relationship. Under the terms of the agreement, Sun-E- dison would receive considerations equal to 25 per cent of the total paid for Terra-Form Global and 36.9 per cent of Terra-Form 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 Terra-Form Power, Brookfield was the most vocal. It first disclosed its interest in Terra-Form 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 Black-Rock Inc., D.E. Shaw & Co. and Golden Concord Holdings Ltd.