SunEdison, TerraForm Power Advance Settlement Talks
DOW JONES & COMPANY, INC. 2:40 PM ET 11/8/2016
Symbol Last Price Change | TERP | 11.855 | -0.075 (-0.63%) | | GLBL | 3.8 | +0.05 (+1.33%) | | QUOTES AS OF 02:40:50 PM ET 11/08/2016 |
TerraForm Power Inc. (TERP), one of the so-called "yieldcos" that helped fuel SunEdison Inc.'s boom, says it is moving closer to settling a morass of disputes stemming from complex ties to its parent's legal and financial woes.
TerraForm Power (TERP) said In a presentation to investors it has circulated a draft of a proposed settlement to SunEdison as well as other key players in the bankruptcy and is seeking creditors' support for the deal.
The presentation, announced Tuesday in a filing with the Securities and Exchange Commission, says negotiations are ongoing and no decisions have been made. TerraForm Power's(TERP) sister company, TerraForm Global Inc.(GLBL), hasn't made a similar announcement.
The settlement, which would require bankruptcy court approval, could help resolve about $1 billion in claims that TerraForm Power(TERP) says it is owed for damage to its business; failure by SunEdison to provide timely audited financial reports; breaches of corporate legal duties; and other alleged wrongdoing. Court papers show the two yieldcos are unlikely to be able to collect fully on their claims, which total more than $3 billion, because of the mountain of other debt SunEdison is attempting to repay.
The settlement would also provide all stockholders "a ratable recovery, except for pre-agreed modifications," according to the presentation. TerraForm Power(TERP) says it believes a settlement is in everyone's best interest, though it is open to dropping the deal and litigating the disputes if necessary.
SunEdison filed for chapter 11 in April faced with investigations by the SEC and Justice Department concerning its cash levels and dealings with the yieldcos, among other things. The yieldco structure was created to aid the financing of big energy projects but little thought went into what would happen if the development company, SunEdison, ran into trouble while the asset-owning companies like the TerraForm companies continued to thrive.
TerraForm Power (TERP) and TerraForm Global(GLBL) are publicly traded offshoots of SunEdison that bought its renewable energy projects and fed cash to SunEdison's investors. Potentially the biggest hot spots in SunEdison's bankruptcy, the two moved to assert their status as separate companies immediately after SunEdison sought chapter 11 protection earlier this year. The yieldcos haven't filed for bankruptcy.
Since filing for bankruptcy, SunEdison has been selling off smaller pieces of its business, but says it is still determining the right path forward for handling the complex web of connections that link it to the TerraForm companies. SunEdison says it is exploring a number of options, including a sale of its controlling stakes in the yieldcos, but hasn't yet named lead bidders. A spokesman for SunEdison declined to comment Tuesday.
In court papers filed Monday, SunEdison's unsecured creditors asked U.S. Bankruptcy Judge Stuart Bernstein for permission to sue the yieldcos in the company's stead. They must convince a judge the company hasn't adequately pursued those lawsuits, they have a reasonable chance of success at trial and the cost of the litigation won't outweigh the benefits. The creditors say the total liabilities are in the hundreds of millions of dollars.
Unsecured creditors have asked for similar authority to go after SunEdison's current and former leaders. A hearing on the matter is scheduled for Dec. 6 in Manhattan.
Other players include David Tepper'sAppaloosa Management LP, a major TerraForm Power(TERP) investor, which has accused SunEdison of pressuring its yieldcos to overpay for assets and said the setup has "obvious conflicts."
Peg Brickley contributed to this article.
Write to Tom Corrigan at tom.corrigan@wsj.com
(END) Dow Jones Newswires 11-08-161440ET |
