Brookfield Asset Management has proposed a buyout price for TerraForm Power at $13 per share, one cent under the SunEdison yieldco's closing stock price last Thursday.
In a letter emailed to the independent directors of TerraForm Power, Brookfield, which, along with its deal partner Appaloosa Management, owns 34 percent of Class A Shares, said it is willing to make a 100 percent all-cash offer for TerraForm Power or take a minimum of 50 percent and a maximum of 60 percent stake.
Brookfield warned of a potential lose-lose situation if TerraForm Power and its sister company, TerraForm Global, let the process drag on too long.
“Our fear is that there are only two outcomes arising out of this consent solicitation, both of which are not positive for shareholders,” Brookfield's letter said.
One possibility is that TerraForm Power would incur more costs for failing to file audited financial statements, an action TerraForm says it has been unable to do due to the SunEdison bankruptcy. The other possibility is that bondholders will push the company's debt into default.
Brookfield said this can be avoided by 6 December if the TerraForm companies enter into a binding change of control.
The move comes a week after Brookfield reported it had met with the TerraForms' board of directors. In that meeting, the asset manager said it was willing to purchase TerraForm Power without buying TerraForm Global.
There have been multiple buyers pursuing TerraForm Power, including BlackRock and DE Shaw & Co. TerraForm Power is a renewable energy company with close to 3GW of assets spread throughout North America. TerraForm Global owns close to 1GW of assets in emerging markets including Brazil, India and China.
Sachin Shah, chief executive of Brookfield's renewables subsidiary, Brookfield Renewable Partners, said on a conference call earlier this month the company remained in “constructive dialogue” regarding the future of the TerraForm companies.
The potential sale of the TerraForm companies has been on investors' radars since SunEdison filed for bankruptcy in April. One of the largest renewable energy companies in the world, SunEdison fuelled an unsustainable growth by funnelling assets into the TerraForm companies and botching a $1.9 billion takeover of Vivint Solar.