U.S. hedge fund D.E. Shaw and Co has made a non-binding proposal to replace SunEdison Inc as the operating sponsor of TerraForm Power Inc, an “yieldco” created by the bankrupt solar company.
SunEdison has been looking to sell its controlling stake in TerraForm Power and TerraForm Global Inc – yieldcos that hold renewable energy projects bought from their parent.
It was unclear from a regulatory filing on Tuesday if D.E. Shaw would buy SunEdison’s controlling Class B shares or acquire TerraForm Power outright. D.E. Shaw holds about 7 percent of TerraForm Power’s publicly traded Class A shares.
All Class B shares of TerraForm Power are owned by SunEdison, while its Class A shares are held by the public, private investors and the company’s executives.
Shares of TeraForm Power, which has said it is considering a replacing SunEdison with a new sponsor, were up nearly 1 percent at US$13.33 in early trading, valuing the company at US$1.86 billion.
“My understanding is that whoever is the controlling shareholder of a yieldco will be that yieldco’s sponsor,” said Raymond James Analyst Pavel Molchanov.
Under the proposal, D.E. Shaw’s renewable energy unit will oversee the operations and finance TerraForm Power’s projects among other things.
The fund’s renewable energy portfolio currently includes 26 utility-scale wind and solar projects in North America with more than 1,300 megawatts of aggregate capacity.
D.E. Shaw’s proposal to replace SunEdison comes less than two weeks after it said it may make an offer for the solar company’s stake in TerraForm Power.
Canada’s Brookfield Asset Management and U.S. hedge fund Appaloosa Management have also shown interest in buying SunEdison’s stake in TerraForm Power.
Once the fastest-growing U.S. renewable energy company, SunEdison filed for Chapter 11 bankruptcy protection in April after a short-lived but aggressive binge of debt-fueled acquisitions proved unsustainable.
(Reporting by Anet Josline Pinto and Ismail Shakil in Bengaluru; Editing by Saumyadeb Chakrabarty)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
Photo courtesy of TerraForm Power Inc