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SunEdison Inc (SUNEQ) Enters $3 Billion Settlement Talks with Yieldcos

SunEdison Inc (OTCMKTS:SUNEQ) has entered into settlement discussions with its two yieldcos – TerraForm Power Inc (NASDAQ:TERP) and TerraForm Global Inc (NASDAQ:GLBL). The two yieldcos are looking to end theirs dispute with SunEdison as they seek out potential buyers of the struggling solar firms. They argue that its parent firm has eroded their values this year because it hasn’t released its financials.

Will SunEdison Inc Release its Financials to Help Yieldcos?

The conclusion on Wall Street is that TerraForm Power and TerraForm Global are undervalued. And the reason for these lower valuations is because SunEdison has not released the financials. If SunEdison wants to maintain its own value then it must not sell the yieldcos before releasing the financials, analysts say.

SunEdison Inc SUNEQ

Here is what Jack Stark, TerraForm Power chair of Corporate Governance and Conflicts Committee, said in a statement:

“TerraForm Power has lost a large part of its enterprise value as a result of SunEdison’s catastrophic breach of its sponsorship and legal duties.”

The yieldcos are seeking out more than $3 billion in claims from SunEdison. TerraForm Power and TerraForm Global claim SunEdison did not prioritize the needs of its stockholders. They also argue that they lost business opportunities because of their sponsor. Moreover, their values decreased because SunEdison did not issue audited financials on time.

Power is demanding a $1 billion settlement. Global wants a $2 billion settlement. They will have until October 7 to supply proof of these claims. The case is taking place in the southern district of New York’s U.S. Bankruptcy Court.

The yieldcos have argued since the beginning of spring that SunEdison’s difficult situation is not affecting them. However, the market didn’t take the bait. Over the last 12 months, Power has its shares dip 15 percent. Global has lost nearly 50 percent in that same time period.

Today, SunEdison’s most valuable assets are its yieldcos. SunEdison and the yieldcos are working together to sell the parent’s shares in the yieldcos. TerraForm Power has seen interest from several firms, including Brookfield Asset Management, Appaloosa Management and Golden Concord Holdings. The yieldcos own and operate solar and wind farms worldwide.

SunEdison filed for Chapter 11 bankruptcy protection in April. Since then, financial experts have wondered if its two yieldcos would follow it into bankruptcy.

SunEdison Inc Selling Many Assets

After a slow start to summer, SunEdison has seen many of its assets across the globe sold to an array of buyers.

The solar firm is selling some assets to GCL-Poly Energy. It is also in the process of selling several solar and wind farms to Houston-based NRG Energy. Last week, it was reported that Greenko is going to acquire SunEdison’s Indian portfolio for an estimated $315 million. It was announced Monday that SoCore Energy is buying 22 Minnesota Solar Projects from SunEdison.

In July, it was estimated that SunEdison’s assets are actually worth $1.5 billion. This is up from initial projections of around $850 million.

Rothschild is the group that’s in charge of SunEdison’s asset sale.

SunEdison is looking to pay down up to $5 billion worth of debt over the next several years.

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