Court clears TerraForm settlement, setting up Brookfield buy

A US court has approved a bankruptcy settlement between SunEdison and its yieldco, TerraForm Global, paving the way for a $2.5 billion buyout from Brookfield Asset Management.

The US Bankruptcy Court for the Southern District of New York has cleared the way for Brookfield to move forward with its previously announced agreement to purchase TerraForm Global and sister company TerraForm Power. The agreement was pending the legal status of SunEdison’s settlement.

“Bankruptcy court approval is a key condition to the closing of the merger with Brookfield,” said Peter Blackmore, TerraForm Global’s chief executive. “We look forward to completing the remaining conditions to the closing of the merger.”

Under the agreement, Brookfield, Canada’s largest asset manager, said it would buy TerraForm Global for $787 million in cash and assume $455 million of debt. It would also take a majority stake in TerraForm Power, increasing its interest from 34 percent to 51 percent, for $1.7 billion.

Hurdles remain to closing the transaction, however. TerraForm Global has other outstanding legal litigation that requires resolution, and the deal must meet regulatory and shareholder approval.

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.

The TerraForm companies were created to hold the 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.