Canada's Brookfield agrees deals for TerraForm yieldcos

As time expired on its exclusive negotiating window, Canada's Brookfield Renewable Partners (BRP) clinched deals that will see it take control of the two TerraForm yieldcos that were spun out of bankrupt US development giant SunEdison.

BRP will instantly become a major international wind and solar player following agreements to boost its stake to 51% in TerraForm Power and to outright acquire the smaller TerraForm Global, which between them own about 4GW of contracted renewables around the globe.

The deals underscore the growing prominence of Canadian renewables companies on the global stage.

Already a major owner of TerraForm Power, BRP, part of Toronto-based Brookfield Asset Management, will become the controlling shareholder by buying additional shares for $11.46, valuing the yieldco's equity at around $1.7bn. Brookfield will become TerraForm Power's sponsor company, regularly selling it completed renewables projects. 

Brookfield will extend a $500m equity line to support acquisitions and growth by TerraForm Power, while offering the yieldco the right of first offer (ROFO) on a 3.5GW pipeline of projects, including 1.2GW of operating wind capacity and 2.3GW of development-stage wind and solar projects in North America and Western Europe.

TerraForm Power – set up by fallen renewables star SunEdison as a repository for its largely domestic US assets – is expected to continue as a Nasdaq-listed entity following the deal.

BRP has been pursuing TerraForm Power since last summer, ultimately outmanoeuvring other interested bidders like D.E. Shaw to gain control.

In a separate deal, BRP will outright acquire separately listed TerraForm Global – SunEdison’s second yieldco devoted to emerging market assets – for $787m in cash while taking on $455m of debt.

The deals, expected to close in the second half of 2017, will be transformative for Brookfield, which is currently dominated by hydropower assets. BRP currently owns 10.7GW of renewables capacity across North and South America and Europe, nearly 90% of it hydro – albeit with a fast-growing wind portfolio.

SunEdison yieldcos negotiating buyouts with Canada's Brookfield

Read more

The deals represent a big step forward in SunEdison's ongoing bankruptcy proceedings, with the yieldcos announcing they have reached an agreement with their bankrupt parent over legal action they launched against it, subject to certain conditions being met.

SunEdison continues to wind down its business in bankruptcy court, having recently sold several large pipelines of projects to NRG Energy and a new unit of Actis.

Shares of TerraForm Power rose nearly 6% in early trading Tuesday on the news, to $12.25, while shares of TerraForm Global jumped nearly 16% to $4.93. Meanwhile shares of SunEdison, now a penny stock, surged nearly 20%.