Skip to main content

Workers install a solar panel at a SunEdison project near Portland, Ont. in 2014.Dave Chan/The Globe and Mail

Brookfield Asset Management Inc., Canada's largest alternative asset manager, has entered into an exclusive agreement to buy bankrupt SunEdison Inc.'s two yieldcos, valuing the power companies at as much as $2.46-billion.

Toronto-based Brookfield offered $12 a share for TerraForm Power Inc., conditional 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 $12.17.

Brookfield offered as much as $4.35 a share for all of TerraForm Global, or $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 $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 LLC, said in an interview Monday. "At this point, the best assumption is that Brookfield walks away with both of these assets."

TerraForm Global gained 9.4 per cent to $4.38 at 10:32 a.m. in New York. TerraForm Power slipped 3 per cent to $11.80.

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.

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.

"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.

TerraForm Power attracted much more public interest than its sister yieldco. TerraForm Power owns operating wind and solar farms in developed countries, while TerraForm Global owns assets in emerging countries.

TerraForm Power owns almost 3,000 megawatts of wind and solar farms in OECD countries, including the United States, Canada and Britain. TerraForm Global has about 917 megawatts of assets in Brazil, China, India, Malaysia, South Africa, Thailand and Uruguay.

TerraForm Power said in December that it had a $1-billion claim against SunEdison, while TerraForm Global said that month that its unsecured claims against its parent exceed $2-billion.

Brookfield disclosed this month that it had floated four proposals, including an all-cash purchase of TerraForm Power at $11.50 per share. It also offered an all-cash offer for both yieldcos for an incremental cash consideration of $1 per share.

"There are multiple offers on the table," Mr. Morosi said. "There's still a sense that there could be upside, especially for Global. I think TerraForm Power sells in the $11.50 to $12.50 range."

Report an editorial error

Report a technical issue

Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 4:00pm EDT.

SymbolName% changeLast
AES-N
The Aes Corp
+3.94%17.93
BAM-N
Brookfield Asset Management Ltd
+0.53%42.02
BAM-T
Brookfield Asset Management Ltd
+0.34%56.9

Interact with The Globe