Canada's Brookfield lays out proposal to buy SunEdison's TerraForm Power

Canada’s Brookfield Asset Management has laid out several proposals for taking control of SunEdison’s TerraForm Power, offering to buy the yieldco outright in a deal worth $1.6bn or to take a smaller controlling share and become its sponsor.

Toronto-listed Brookfield – Canada’s largest alternative asset manager, and a major owner of renewables – says it would add $1.00 per share to its offer if it is also allowed to buy sister yieldco TerraForm Global, whose assets are largely based in developing countries like China and Brazil.

Brookfield’s buyout offer of $11.50 per share for TerraForrm Power alone is less than the company’s closing share price of $13.44 on Tuesday, leading the yieldco's shares to drop nearly 5% in early trading Wednesday morning, to around $12.70. That suggests investors may see a joint TerraForm Power and Global deal as the most likely outcome.

Brookfield also said it would be willing to buy a smaller majority stake and replace SunEdison as the sponsor company of TerraForm Power and/or TerraForm Global, a role that involves developing renewables projects to be regularly “dropped down” – or sold – to the yieldco.

Brookfield has long expressed interest in buying TerraForm Power, and is currently the yieldco's largest shareholder, with a roughly 12% stake, according to Thomson Reuters figures.

For all its troubles in the wake of SunEdison’s 2016 bankruptcy, TerraForm Power remains one of the largest owners of US wind and solar assets, with nearly 3GW of operating capacity on its books as of last October.

TerraForm Power has also owned a smaller number of projects in the UK, Canada and Chile, although last week it agreed to sell nearly all of its UK assets to Middle East investment bank EFG Hermes, in a $580m deal that will improve the yieldco’s liquidity but shrink its operating portfolio.

Several other major investors are known to have been interested in buying TerraForm Power, including US hedge fund D.E. Shaw, which backs the developer Deepwater Wind among other US renewables assets.