TerraForm Global Makes Information Available Concerning Claims Against SunEdison
September 25 2016 - 8:00PM
TerraForm Global, Inc. (Nasdaq:GLBL) and TerraForm Global, LLC
(together, “TerraForm Global” or the “Company”), a global owner and
operator of clean energy power plants, today announced that it has
made available to certain representatives and creditors of
SunEdison, Inc. and its debtor subsidiaries (“SunEdison”)
information about the Company’s claims and defenses against
SunEdison and has filed its initial proof of claim in SunEdison’s
Chapter 11 bankruptcy case. The Company is making the following
information available to all stakeholders of the Company in order
to encourage stakeholder input as to the terms of a potential
settlement.
TerraForm Global previously announced that it would have to file
its proofs of claim in the SunEdison bankruptcy and that it
intended to begin settlement discussions to resolve claims
consensually, in part to facilitate the exploration of strategic
alternatives for TerraForm Global. Such settlement discussions have
now commenced. As part of these discussions, TerraForm Global has
notified SunEdison and certain of SunEdison’s creditors of its
positions that:
- SunEdison’s failure to perform under the integrated sponsorship
arrangement put in place at the time of TerraForm Global’s initial
public offering constitutes a material breach and, if not remedied,
excuses TerraForm Global from payment or performance of its
contractual obligations under the sponsorship arrangement.
- Absent remedy of all material sponsorship defaults, TerraForm
Global is not obligated to exchange SunEdison’s sponsor promote (in
the form of ‘B Units’ of TerraForm Global LLC and ‘B Shares’ of
TerraForm Global, Inc.) for class A common stock of TerraForm
Global. SunEdison or any subsequent holder of B Units and B Shares
is subject to the terms and conditions of the B Units and B Shares,
as well as TerraForm Global’s rights and defenses arising from any
failure to remedy SunEdison’s defaulted sponsorship.
- As a result of its defaults, SunEdison has not met the
conditions necessary to receive distributions on the B Units due to
the limitation on sponsor distributions in the TerraForm Global LLC
Agreement, which subordinates sponsor distributions to
distributions for the benefit of public stockholders. The current
arrearage due to the A Units is expected to be approximately $124.4
million following the end of 2016, and is expected to increase by
approximately $31 million for each quarter thereafter until
distributions for the benefit of public stockholders are resumed.
After distributions are resumed, the A units must receive at least
the Minimum Quarterly Distribution (MQD) (27.5 cents per quarter)
before B distributions can commence, and any shortfall to the MQD
becomes an arrearage that must be paid before a B distribution can
occur. The subordination period will last until the A units have
received the MQD for three non-overlapping periods of four
consecutive quarters.
- Transfer of the B Shares of TerraForm Global, Inc. is
prohibited by its corporate charter during or after SunEdison’s
bankruptcy.
- Transfers of certain B Units and IDRs of TerraForm Global, LLC
are subject to limitations under the TerraForm Global LLC
Agreement, and the Company is assessing the application of these
limitations during and after SunEdison’s bankruptcy.
- As set forth in its proof of claim filed in the SunEdison
bankruptcy, TerraForm Global has claims against SunEdison that are
estimated to be in excess of $2.0 billion. The claims include,
without limitation, claims for damages relating to breach of
SunEdison's obligations under the sponsorship arrangement and other
agreements; contribution and indemnification claims arising from
litigation; claims relating to SunEdison’s breach of fiduciary,
agency and other duties; and claims for interference with and the
disruption of the business of TerraForm Global and its
subsidiaries, including the loss of business opportunities, loss of
business records, failure to provide timely audited financials, and
the increased cost of financing and commercial arrangements.
Many of these claims are contingent or unliquidated; estimated
amounts may change substantially as circumstances develop and
damages are determined.
- TerraForm Global will supplement its initial proof of claim on
or before October 7 with project-level claims, pursuant to a
court-ordered stipulation between TerraForm Global and SunEdison.
Project level claims are in addition to the corporate-level claims
described above.
- In the event of a rejection of SunEdison’s sponsorship
arrangement, TerraForm Global will have additional claims for
rejection damages. Certain of these claims may overlap with other
corporate-level and project-level claims.
- Certain claims of TerraForm Global are entitled to
administrative priority. In addition, any future breaches of
control person, fiduciary, agency or custodial duties by SunEdison
or its stakeholders may result in additional administrative claims.
No bar date has been set for administrative claims in the SunEdison
bankruptcy.
- Certain claims of TerraForm Global will give rise to recoupment
or other defenses to actions to enforce SunEdison rights as
sponsor, during or after the SunEdison bankruptcy.
“TerraForm Global has lost a large part of its enterprise value
as a result of SunEdison’s catastrophic breach of its sponsorship
and legal duties,” said Jack Stark, Chairman of the Company’s
Corporate Governance and Conflicts Committee. “We are prepared to
enforce our rights and defenses in litigation if necessary, whether
in bankruptcy court or elsewhere. However, we also recognize that
resolving our relationship with SunEdison in the courts would be
complicated and expensive. A settlement is overwhelmingly in the
interests of both sides. We have met with SunEdison to start
settlement discussions in the hope that we can resolve these
matters on a schedule that allows the collaborative exploration of
strategic alternatives for TerraForm Global in the best interests
of all stockholders.”
The foregoing are positions of TerraForm Global and may be
disputed. No assurances can be made as to the outcome of any
litigation or settlement discussions. In addition, recoveries in
the SunEdison bankruptcy cannot be predicted at this time and could
be insubstantial as a percentage of the face amount of creditor
claims.
TerraForm Global noted that its publicly traded sister company,
TerraForm Power, Inc. (Nasdaq:TERP), also has announced that it has
filed its proof of claim in SunEdison’s Chapter 11 bankruptcy case
and has commenced discussions with SunEdison and/or its
stakeholders to settle similar intercompany claims and
defenses.
About TerraForm Global
TerraForm Global is a renewable energy company that is changing
how energy is generated, distributed and owned. TerraForm Global
creates value for its investors by owning and operating clean
energy power plants in high-growth emerging markets. For more
information about TerraForm Global, please visit:
www.terraformglobal.com.
Cautionary Note Regarding Forward-Looking
Statements
This communication contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements can be identified by the fact that they do not relate
strictly to historical or current facts. These statements involve
estimates, expectations, projections, goals, assumptions, known and
unknown risks, and uncertainties and typically include words or
variations of words such as “expect,” “anticipate,” “believe,”
“intend,” “plan,” “seek,” “estimate,” “predict,” “project,” “goal,”
“guidance,” “outlook,” “objective,” “forecast,” “target,”
“potential,” “continue,” “would,” “will,” “should,” “could,” or
“may” or other comparable terms and phrases.
They include, without limitation, statements relating to the
settlement of intercompany claims and defenses; the integration of
the sponsor agreements; the amount and nature of claims of
the Company against SunEdison; defenses of the Company
against SunEdison’s 118 actions; the future assertion by the
Company of additional claims against SunEdison; the subordination
of B Units held by SunEdison; and restrictions upon the transfer of
B Units or exchange of B Units into class A common stock. These
forward-looking statements are based on current expectations as of
the date of this press release and are subject to known and unknown
risks and uncertainties that could cause actual results to differ
materially from those expressed or implied by such statements,
including but not limited to: whether the Company and SunEdison
and/or its stakeholders are able to reach an acceptable settlement
of any intercompany claims and defenses and the terms of any such
settlement; the outcome of litigation, if any, regarding the
Company’s claims and defenses; as well as additional factors we
have described in other filings with the Securities and Exchange
Commission.
The risks included above are not exhaustive. Other factors that
could adversely affect our business and prospects are described in
the filings made by us with the Securities and Exchange Commission.
The Company undertakes no obligation to publicly update or revise
any forward-looking statement as a result of new information,
future events or otherwise, except as otherwise required by
law.
Contacts:
Investors:
Brett Prior
TerraForm Global
bprior@terraform.com
(650) 889-8628
Media:
Meaghan Repko / Michael Freitag / Nicholas Leasure
Joele Frank, Wilkinson Brimmer Katcher
media@terraform.com
(212) 355-4449
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