TerraForm Power, Inc. (Nasdaq:TERP) (“TerraForm Power”), an owner
and operator of clean energy power plants, and Brookfield Asset
Management Inc. (NYSE:BAM) (TSX:BAM.A) (EURONEXT AMSTERDAM:BAMA)
(“Brookfield”), a leading global alternative asset manager, today
announced that they have entered into a definitive agreement under
which Brookfield will assume the role of TerraForm Power’s sponsor
and Brookfield will become the controlling shareholder.
“With the successful completion of the Board’s strategic
alternatives process, the TerraForm Power Board and management team
are confident that Brookfield’s sponsorship will enable our company
to deliver cash to shareholders while strengthening our operations
for future value creation,” said Peter Blackmore, Chairman and
Interim Chief Executive Officer of TerraForm Power. “This agreement
with Brookfield is the culmination of our efforts to separate our
operations from SunEdison and to position TerraForm Power for
future success. With the support of Brookfield as TerraForm Power’s
sponsor, we will gain additional resources to continue to expand
our portfolio and increase cash flow on a per share basis. We look
forward to working with the talented Brookfield team to achieve a
smooth transition.”
“We are pleased to increase our significant investment in
TerraForm Power and to contribute our operating expertise in the
sector to position the company for growth,” said Sachin Shah,
Senior Managing Partner of Brookfield. “We are confident that our
significant renewable power operating experience, financial
resources and global institutional relationships will provide
TerraForm Power with strong financial flexibility and an attractive
pipeline for growth moving forward. We look forward to
participating alongside all shareholders in capturing future upside
and helping the business to achieve its full potential over
time.”
“SunEdison is supporting this transaction, which it believes
maximizes potential proceeds for the estate and aligns Brookfield
with the interests of TerraForm Power in the future to create
value,” said John Dubel, Chief Executive Officer and Chief
Restructuring Officer of SunEdison Inc. (“SunEdison”).
The transaction has been approved by the Board of Directors of
TerraForm Power by all directors voting upon the recommendation of
the Corporate Governance and Conflicts Committee of TerraForm Power
and has also been approved by the Board of Directors of Brookfield.
The transaction also has the support of SunEdison.
Transaction Details
Key terms of the agreement:
- 51.0% Brookfield ownership in TerraForm Power post-closing
- $11.46 price per Class A share (derived from a pre-SunEdison
settlement price of $12.00 per share), with option for shareholders
to elect to receive shares as described below
- ~3,500 MW Right of First Offer (“ROFO”) portfolio provided by
Brookfield to TerraForm Power, representing ~1,200 MW of operating
wind plants and ~2,300 MW of development-stage wind and solar
projects in North America and Western Europe
- $500 million sponsor equity line offered by Brookfield to
support future growth for TerraForm Power
- $1.7 billion implied total equity value
- $6.6 billion implied total enterprise value
For each Class A share, TerraForm Power shareholders (excluding
Brookfield) will be entitled to:
$1.94 per share in the
form of a special dividend |
|
|
And either |
|
|
$9.52 per share in
additional cash |
OR |
1 share
in TerraForm Power post-closing |
$11.46 per share cash
consideration and 0 shares |
|
$1.94 per
share in cash and 1 share |
This structure is subject to proration, meaning that
shareholders that elect cash may still retain a portion of their
shares, and conversely, shareholders that elect to retain their
shares may still receive a portion of their consideration in
cash.
Assuming full proration, Class A shareholders would be entitled
to:
$1.94 per share in the form of a special dividend $4.50 per
share in additional cash consideration for Class A shareholders
(excluding Brookfield)$6.44 per share total cash consideration and
0.53 shares in TerraForm Power post-closing
Post transaction closing, non-Brookfield shareholders, will hold
49.0% ownership in TerraForm Power.
As part of the transaction, Brookfield and TerraForm Power will
enter into a Master Services Agreement whereby Brookfield will
provide strategic services and long-term investment advisory
services. In return, Brookfield will receive an annual management
fee as well as a management incentive fee and incentive
distribution rights aligning Brookfield’s incentives with TerraForm
Power’s public shareholders.
The Merger Agreement entitles Brookfield to receive additional
Class A Shares from TerraForm Power based upon the costs to
TerraForm Power of resolving certain pending Company litigation
matters, whether resolved before or after closing of the
Merger.
Brookfield Asset Management: Uniquely positioned to
serve as Sponsor of TerraForm Power
Brookfield’s sponsorship is expected to position TerraForm Power
as a premier wind and solar energy company focused on North America
and Western Europe, consistent with Brookfield’s history of
delivering strong total shareholder returns for its other public
vehicles. As TerraForm Power’s new sponsor, Brookfield expects to
deleverage TerraForm Power with the goal of achieving investment
grade credit ratings in the medium to long term. With the support
of Brookfield, TerraForm Power will be well positioned for growth
with access to one of the largest ROFO pipelines in the sector.
Following this transaction, Brookfield and TerraForm Power will be
both economically and structurally aligned.
Brookfield Asset Management has approximately $250 billion in
assets under management, and an established track record of
sponsorship across its business groups. Brookfield possesses the
unique ability to provide the strategic management, operating,
investing, funding and related services required of a long-term
sponsor. Brookfield also has substantial financial resources and
relationships with global institutions that are expected to
increase TerraForm Power’s financial flexibility, and provide
improved access to capital.
One of Brookfield’s core operational capabilities is in
renewable power, in which it owns, operates and develops over
17,000 megawatts of assets, representing $30 billion in power
assets, across eight countries, with over 2,000 operating employees
with expertise in asset-level operations and maintenance, power
marketing and sales and development, health, safety, security and
the environment, stakeholder relations and regulatory
oversight.
TerraForm Power’s Settlement Agreement with
SunEdison
As part of its strategic alternatives process, TerraForm Power
also announced that it has entered into a settlement agreement with
SunEdison in connection with the Chapter 11 bankruptcy case of
SunEdison (the “SunEdison Bankruptcy”). This agreement is subject
to the approval of the U.S. bankruptcy court overseeing the
SunEdison Bankruptcy.
The settlement agreement contains certain terms to resolve the
legal relationship between TerraForm Power and SunEdison,
including, among other things, an allocation of ownership in
TerraForm Power prior to the transaction and, with certain
exceptions, the full mutual release of all claims of SunEdison and
its affiliated debtors and non-debtors. All Class B Shares of
TerraForm Power and Class B Units of TerraForm Power LLC held by
SunEdison will be exchanged for Class A Shares immediately prior to
completion of the transaction. The settlement then increases
SunEdison’s ownership of TERP to 36.9% by issuing approximately 6.6
million incremental shares to SunEdison immediately prior to
completion of the transaction, reflecting the settlement of
intercompany claims, cancellation of incentive distribution rights
and other factors considered by TerraForm Power’s Board. In
addition, SunEdison will have the option, in certain circumstances
following a termination of the Merger Agreement, to convert its
Class B Shares into an amount of Class A Shares representing 36.9%
of the total Class A Shares.
The TerraForm Power Board of Directors approved the settlement
agreement upon the recommendation of the Corporate Governance and
Conflicts Committee, each member of which is independent and does
not also serve on the Board of Directors of TerraForm Global. The
settlements of the intercompany claims are also subject to the
approval of the U.S. bankruptcy court overseeing the SunEdison
Bankruptcy.
Additional information about the settlement agreement can be
found in the Current Report on Form 8-K that TerraForm Power filed
with the Securities and Exchange Commission today. A copy of the
filing is available on the Investors page of TerraForm Power’s
website at http://www.terraformpower.com.
Timing to Close and Approvals
The transaction is expected to be completed in the second half
of 2017 and is subject to certain closing conditions, including
shareholder approval by the majority of Class A shareholders
(excluding SunEdison, Brookfield, their respective affiliates and
any persons with whom they comprise a “group” for securities law
purposes), regulatory approvals, and the approval of the U.S.
bankruptcy court overseeing the SunEdison Chapter 11 case,
including the Court’s approval of the settlement agreement between
TerraForm Power and SunEdison and the Court’s approval of
SunEdison’s vote in favor of the sponsorship transaction. The
completion of this transaction is independent of and not subject to
the completion of Brookfield’s transaction with TerraForm Global,
Inc., also announced today.
Advisors
Morgan Stanley, Centerview Partners and AlixPartners acted as
financial advisors to TerraForm Power on this transaction. Sullivan
& Cromwell LLP and Sidley Austin LLP acted as legal counsel for
TerraForm Power. Greenberg Traurig LLP and Hughes Hubbard &
Reed LLP acted as legal counsel for the independent directors and
the Corporate Governance and Conflicts Committee.
Cravath, Swaine & Moore LLP acted as legal advisors to
Brookfield.
Rothschild and Ankura Consulting acted as financial advisors to
SunEdison. Skadden Arps acted as legal counsel for SunEdison. For
certain of SunEdison’s second lien creditor constituents, J.P.
Morgan Securities LLC and Houlihan Lokey acted as financial
advisors, and Akin Gump acted as legal counsel.
Investor Conference Call
Brookfield and TerraForm Power will host a conference call to
discuss the transaction. Details below:
Date: |
Tuesday, March 7,
2017 |
Time: |
8:30 am ET |
US / Canada toll-free
#: |
(844) 464-3938 |
International #: |
(765) 507-2638 |
Conference call
code: |
83463618 |
Webcast: |
http://edge.media-server.com/m/p/gcrpa4fu |
The webcast will also be available on TerraForm Power's investor
relations website: www.terraformpower.com.
A replay of the webcast will be available for those unable to
attend the live webcast.
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.
About Brookfield Asset Management
Brookfield Asset Management Inc. is a leading global alternative
asset manager with approximately $250 billion in assets under
management. The company has more than a 100-year history of owning
and operating assets with a focus on property, renewable power,
infrastructure and private equity. Brookfield offers a range of
public and private investment products and services, and is
co-listed on the New York, Toronto and Euronext stock exchanges
under the symbol BAM, BAM.A and BAMA, respectively. For more
information, please visit our website at www.brookfield.com.
TerraForm Power: 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. All statements that address
operating performance, events, or developments that the Company or
Brookfield expect or anticipate will occur in the future are
forward-looking statements. They may include estimates of
financial metrics such as expected adjusted earnings before
interest, taxes, depreciation and amortization, cash available for
distribution, earnings, revenues, capital expenditures, liquidity,
capital structure, future growth, financing arrangement and other
financial performance items (including future dividends per share),
descriptions of management’s plans or objectives for future
operations, products, or services, or descriptions of assumptions
underlying any of the above. Forward-looking statements are
based on the Company’s current expectations or predictions of
future conditions, events, or results and speak only as of the date
they are made. Although the Company and Brookfield believe
their respective expectations and assumptions are reasonable, they
can give no assurance that these expectations and assumptions will
prove to have been correct and actual results may vary
materially.
By their nature, forward-looking statements are subject to risks
and uncertainties that could cause actual results to differ
materially from those suggested by the forward-looking
statements. Factors that might cause such differences
include, but are not limited to, the expected timing and likelihood
of completion of the Transactions, including the timing, receipt
and terms and conditions of any required governmental approvals of
the Merger or the other Transactions that could cause the parties
to abandon the transaction; the occurrence of any event, change or
other circumstances that could give rise to the termination of the
Transaction Agreement; the risk of failure by the Bankruptcy Court
to confirm the Settlement Agreement, the Voting and Support
Agreement and any other agreement entered into in connection with
the Merger or the Transactions to which SunEdison or any other
debtor will be a party; the risk of failure of the holders of a
majority of the outstanding Shares to adopt the Transaction
Agreement and to obtain the requisite stockholder approvals; the
risk that the parties may not be able to satisfy the conditions to
the Transactions in a timely manner or at all; risks related to
disruption of management time from ongoing business operations due
to the Transactions; the risk that any announcements relating to
the Transactions could have adverse effects on the market price of
the Company’s common stock; the risk that the Transactions and
their announcement could have an adverse effect on the Company’s
ability to retain and hire key personnel and maintain relationships
with its suppliers and customers and on its operating results and
businesses generally; the Company’s relationship with SunEdison,
including SunEdison’s bankruptcy filings; risks related to events
of default and potential events of default arising under
project-level financings and other agreements due to various
factors; risks related to the Company’s failure to satisfy
continued listing requirements of NASDAQ; the Company’s ability to
sell projects at attractive prices as well as to integrate the
projects the Company acquires from third parties or otherwise
realize the anticipated benefits from such acquisitions, including
through refinancing or future sales; actions of third parties,
including but not limited to the failure of SunEdison to fulfill
its obligations and the actions of the Company’s bondholders and
other creditors; price fluctuations, termination provisions and
buyout provisions in offtake agreements; delays or unexpected costs
during the completion of projects the Company intends to acquire;
regulatory requirements and incentives for production of renewable
power; operating and financial restrictions under agreements
governing indebtedness; the condition of the debt and equity
capital markets and the Company’s ability to borrow additional
funds and access capital markets; the impact of foreign exchange
rate fluctuations; the Company’s ability to compete against
traditional and renewable energy companies; hazards customary to
the power production industry and power generation operations, such
as unusual weather conditions and outages or other curtailment of
the Company’s power plants; departure of some or all of SunEdison’s
employees, particularly key employees and operations and
maintenance or asset management personnel that the Company
significantly relies upon; pending and future litigation; and the
Company’s ability to operate the Company’s business efficiently,
including to manage the transition from SunEdison information
technology, technical, accounting and generation monitoring
systems, to manage and complete governmental filings on a timely
basis, and to manage the Company’s capital expenditures. Many
of these factors are beyond the Company or Brookfield’s
control.
The Company and Brookfield disclaim any obligation to update or
revise any forward-looking statement to reflect changes in
underlying assumptions, factors, or expectations, new information,
data, or methods, future events, or other changes, except as
required by law. The foregoing list of factors that might
cause results to differ materially from those contemplated in the
forward-looking statements should be considered in connection with
information regarding risks and uncertainties which are described
in the Company’s Form 10-K for the 2015 fiscal year and Forms 10-Q
for the first, second and third quarters of 2016, as well as
additional factors it may describe from time to time in other
filings with the SEC or incorporated herein. You should
understand that it is not possible to predict or identify all such
factors and, consequently, you should not consider any such list to
be a complete set of all potential risks or uncertainties.
TerraForm Power: Additional Information and Where to
Find It
This communication may be deemed to be solicitation material in
respect of the proposed transactions described herein. In
connection with the proposed transactions, Brookfield and the
Company intend to file relevant materials with the SEC, including
the Company’s proxy statement on Schedule 14A. STOCKHOLDERS
OF THE COMPANY ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH
THE SEC, INCLUDING THE COMPANY’S PROXY STATEMENT, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTIONS. Investors and security holders will be able to
obtain the documents free of charge at the SEC’s website,
http://www.sec.gov. The Company’s stockholders will also be
able to obtain, without charge, a copy of the proxy statement and
other relevant documents (when available) by directing a request by
mail or telephone to TerraForm Power, Inc., 7550 Wisconsin Avenue,
9th Floor, Bethesda, Maryland 20814: (240) 762-7700, or from the
Company’s website, https://www.terraformpower.com/. The
Company and its directors and executive officers may be deemed to
be participants in the solicitation of proxies from the holders of
the Company’s common stock in respect of the proposed
transactions. Information about the directors and executive
officers of the Company and the interests of such individuals will
be set forth in the proxy statement for the transactions, which
will be filed with the SEC. You may obtain free copies of the
proxy statement as described above, when it is available.
Brookfield: Cautionary Note Regarding Forward-Looking
Statements
This communication contains "forward-looking information" within
the meaning of Canadian provincial securities laws and
"forward-looking statements" within the meaning of Section 27A of
the U.S. Securities Act of 1933, as amended, Section 21E of the
U.S. Securities Exchange Act of 1934, as amended, "safe harbor"
provisions of the United States Private Securities Litigation
Reform Act of 1995 and in any applicable Canadian securities
regulations. Forward-looking statements include statements that are
predictive in nature, depend upon or refer to future events or
conditions, include statements regarding the operations, business,
financial condition, expected financial results, performance,
prospects, opportunities, priorities, targets, goals, ongoing
objectives, strategies and outlook of Brookfield and its
subsidiaries and include words such as "expects," "anticipates,"
"plans," "believes," "estimates," "seeks," "intends," "targets,"
"projects," "forecasts" or negative versions thereof and other
similar expressions, or future or conditional verbs such as "may,"
"will," "should," "would" and "could.“
Forward-looking statements contained herein include statements
with respect to the transaction with TerraForm Power and our
expectations for this entity; the anticipated benefits of the
sponsorship transaction; and other statements with respect to our
beliefs, outlooks, plans, expectations and intentions. Although
Brookfield Asset Management believes that TerraForm Power’s
anticipated future results, performance or achievements expressed
or implied by the forward-looking statements and information are
based upon reasonable assumptions and expectations, the reader
should not place undue reliance on forward-looking statements and
information as such statements and information involve known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the company to
differ materially from anticipated future results, performance or
achievement expressed or implied by such forward-looking statements
and information.
Factors that could cause actual results to differ
materially from those contemplated or implied by forward-looking
statements include, but are not limited to: the impact or
unanticipated impact of general economic, political and market
factors in the countries in which we do business; the behavior of
financial markets, including fluctuations in interest and foreign
exchange rates and our ability to access the capital markets and
credit markets; the ability to complete and effectively integrate
acquisitions into existing operations and the ability to attain
expected benefits; the threat of litigation, whether with respect
to this transaction, TerraForm Power or otherwise; changes in
accounting policies and methods used to report financial condition
(including uncertainties associated with critical accounting
assumptions and estimates); the effect of applying future
accounting changes; business competition; operational and
reputational risks; technological change; changes in government
regulation and legislation within the countries in which we operate
or which TerraForm Power operates; governmental investigations;
changes in tax laws; ability to collect amounts owed; catastrophic
events, such as earthquakes and hurricanes; the possible impact of
international conflicts and other developments including terrorist
acts and cyber terrorism; and other risks and factors detailed from
time to time in our documents filed with the securities regulators
in Canada and the United States.
We caution that the foregoing list of important factors that may
affect future results is not exhaustive. When relying on our
forward-looking statements to make decisions with respect to
Brookfield Asset Management or TerraForm Power, investors and
others should carefully consider the foregoing factors and other
uncertainties and potential events. Except as required by law,
Brookfield undertakes no obligation to publicly update or revise
any forward-looking statements or information, whether written or
oral, that may be as a result of new information, future events or
otherwise.
This does not constitute an offer of any Brookfield fund.
Contacts
Investors for TerraForm Power:
Brett Prior
Head of Investor Relations
investors@terraform.com
(650) 889-8628
Media for TerraForm Power:
Meaghan Repko / Joseph Sala
Joele Frank, Wilkinson Brimmer Katcher
media@terraform.com
(212) 355-4449
For Brookfield:
Claire Holland
Vice President, Communications
claire.holland@brookfield.com
(416) 369-8236