SunEdison’s Corporate Offsprings in Quest of a New Plan for Their Assets

by San Antonio Attorney

SunEdison plans to sell its corporate offsprings, TerraForm Global and TerraForm Power. The sister companies, called as “yieldcos”, will be sold as part of the solar company’s strategic alternatives, SunEdison announced.

The two companies are also planning to replace SunEdison with a new backer, through discussing new funding deals or by taking over the current sponsorship agreements with SunEdison.

Yieldcos are subsidiaries that are traded publicly possessing assets of renewable energy, which include assets purchased from their sponsors or parents.

There are certain strategic alternatives that may require the yieldcos to get the approval of stockholders, while other strategies need the permission of bankruptcy court, the company said.

When SunEdison filed for bankruptcy in April, the two companies were not included and they said they had adequate liquidity to continue operating and that their assets were unavailable to fulfill the claims of their sponsor’s creditors.

But ever since SunEdison declared bankruptcy, the yieldcos have encountered many problems.

According to the two companies, the bankruptcy of SunEdison will affect their ability to obtain financial support for certain projects.

Earlier, SunEdison announced it is planning to sell its stake in TerraForm Global, which owns renewable energy holdings mainly abroad.

TerraForm Power took on a shareholders rights program to avert the sale of Class A shares following the announcement of Appaloosa and Brookfield Asset Management that they intend to jointly bid for the stake of SunEdison in TerraForm Power.

In August, SunEdison announced it will discontinue making interest payments for the yieldcos because of its bankruptcy case.  TerraForm Power and TerraForm Global found that decision unacceptable and said they would object to the plan.

Both yieldcos have yet to submit their 2015 annual earnings statement and 2016 first-quarter report following their identification of “material weaknesses” within the company over fiscal reporting caused by SunEdison.

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