Brookfield in talks to buy TerraForm Power

Brookfield Asset Management is exploring the possibility of buying one or both of SunEdison's yieldcos, TerraForm Power and TerraForm Global, according to regulatory filings.

Brookfield reported to the Securities and Exchange Commission it met with members of TerraForm Global's board of directors to discuss two possible transactions for the TerraForm companies.

One transaction mentioned in the filing is for Brookfield, Canada's largest asset manager, to purchase all outstanding Class A and Class B shares from the TerraForm companies. The companies would remain publicly listed. The other possibility is for Brookfield to buy the TerraForm companies outright for cash.

Brookfield said nothing was agreed at the meeting, and no specific prices were discussed.

TerraForm Power, a renewable energy company with close to 3GW of generating capacity in North America, has attracted attention from a number of potential buyers including BlackRock and DE Shaw & Co.

TerraForm Global, with close to 1GW of renewables capacity spread throughout emerging markets like Brazil, India and China, has been a tougher sell – including for Brookfield. The asset manager said in its filing it would be willing to buy TerraForm Power without Global.

Sachin Shah, chief executive of Brookfield's renewables subsidiary, Brookfield Renewable Partners, said on a conference call last week it was not entering the official auction process yet. Brookfield acquired 12.13 percent of TerraForm Power's Class A shares in June and planned to make a joint bid with Appaloosa Management, prompting TerraForm Power to adopt a rights plan to prevent an immediate takeover.

“We continue to be on the outside, although we remain in a constructive dialogue. We are the largest shareholder from a Class A shareholder perspective with the company. We're constructive, we maintain a dialogue, but we are not in the formal process,” Shah said on the call.

Shah said this was to “maintain flexibility” and added Brookfield can “work constructively with the company, its board and the bankruptcy estate to come to a resolution in the near term”.

The potential sale of the TerraForm companies has been on investor's radars since SunEdison, which owns a 34 percent interest in both companies and 100 percent of Class B shares, filed for bankruptcy in April. Once one of the largest renewable energy companies in the world, SunEdison fueled an unsustainable growth by funneling assets into the TerraForm companies and botching a $1.9 billion takeover of Vivint Solar.

TerraForm Power and Global denied a request for comment, and Brookfield did not reply to a request for comment.