Brookfield makes offers to TerraForms in exclusive talks

SunEdison's former yieldcos have been considering bids for months and Brookfield appears to be the top contender.

TerraForm Power and TerraForm Global, yieldcos belonging to bankrupt renewable energy company SunEdison, have entered into exclusivity agreements with Brookfield Asset Management to discuss a potential $2.46 billion buyout.

TerraForm Global said Brookfield proposed in a letter possible transactions, including a 100 percent acquisition at $4.35 per share, or to buy 50.1 percent of the company at $4.25 per share. TerraForm Global’s shares closed at $4 last Friday.

Brookfield meanwhile offered to buy TerraForm Power for $12 per share, but on the condition that it also acquires more than half of TerraForm Global, according to a regulatory filing. The Canadian asset manager had proposed a buyout price of $13 per share for TerraForm Power in November.

The TerraForm companies were created to hold solar and wind assets SunEdison acquired during a rapid expansion over the past few years. SunEdison, once the world’s largest renewable energy provider, filed for bankruptcy in April 2016 and has steadily been shedding assets. Its two yieldcos are viewed as its most prized possessions.

TerraForm Power holds close to 3GW of renewable generating capacity in North America, while TerraForm Global has close to 1GW spread throughout emerging markets like Brazil, India and China.

There is no assurance that either TerraForm company will enter into a definitive transaction agreement with Brookfield at this time.

Talks will continue until 21 February for TerraForm Power and until 6 March for TerraForm Global, the yieldcos said.

The companies also agreed to a memorandum of understanding with SunEdison to resolve outstanding legal issues regarding their parent company’s bankruptcy. The agreement states that SunEdison would receive considerations equal to 25 percent what TerraForm Global is sold for and 36.9 percent for TerraForm Power.