TerraForm Power Makes Information Available Concerning Claims Against SunEdison
September 25 2016 - 8:00PM
Meets with SunEdison to Start Settlement
DiscussionsFiles Initial Proof of Claim in SunEdison Bankruptcy
TerraForm Power, Inc. (Nasdaq:TERP) and TerraForm Power, LLC
(together, “TerraForm Power” or the “Company”), an 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 Power 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 Power. Such settlement discussions have
now commenced. As part of these discussions, TerraForm Power 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 Power’s initial
public offering constitutes a material breach and, if not remedied,
excuses TerraForm Power from payment or performance of its
contractual obligations under the sponsorship arrangement.
- Absent remedy of all material sponsorship defaults, TerraForm
Power is not obligated to exchange SunEdison’s sponsor promote (in
the form of ‘B Units’ of TerraForm Power LLC and ‘B Shares’ of
TerraForm Power, Inc.) for class A common stock of TerraForm Power.
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 Power’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 Power 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 $103.3
million following the end of 2016, and is expected to increase by
approximately $21 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) (22.6 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 Power, Inc. is prohibited
by its corporate charter during or after SunEdison’s
bankruptcy.
- Transfers of certain B Units and IDRs of TerraForm Power, LLC
are subject to limitations under the TerraForm Power 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 Power has claims against SunEdison that are
estimated to be in excess of $1.0 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 Power 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 Power will supplement its initial proof of claim on
or before October 7 with project-level claims, pursuant to a
court-ordered stipulation between TerraForm Power 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 Power 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 Power 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 Power will give rise to recoupment
or other defenses to actions to enforce SunEdison rights as
sponsor, during or after the SunEdison bankruptcy.
“TerraForm Power 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 Power in the best interests of
all stockholders.”
The foregoing are positions of TerraForm Power 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 Power noted that its publicly traded sister company,
TerraForm Global, Inc. (Nasdaq:GLBL), 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 Power
TerraForm Power is a renewable energy company that is changing
how energy is generated, distributed and owned. TerraForm Power
creates value for its investors by owning and operating clean
energy power plants. For more information about TerraForm Power,
please visit: www.terraformpower.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 Power
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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