TerraForm, SunEdison Make Transformative $2B Wind Acquisition

Energy

Published: July 7, 2015 9:45 am

Last Updated: April 28, 2020 5:51 am

Energy yieldco TerraForm Power Inc. (NASDAQ: TERP) has agreed to acquire 930 megawatts of wind power-generation plants from Invenergy Wind for $2 billion. TerraForm will acquire net ownership of 460 megawatts of wind power plants, and the remaining 470 megawatts will be acquired by a new warehouse facility to be sponsored by SunEdison Corp. (NYSE: SUNE), TerraForm Power’s parent, and third party equity investors, with assets dropping down to TerraForm in the future.

TerraForm is acquiring seven contracted wind farms in the United States and Canada with a weighted average remaining contract life of 19 years. The company expects unlevered cash available for distribution of $141 million annually for the next 10 years. Invenergy retains a 9.9% stake in the U.S. assets and is providing certain operation and maintenance services for these wind plants. The acquisition is expected to close in the fourth quarter of this year.

TerraForm Power raised its previous 2016 dividend per share target of $1.53 to $1.70, an 11% increase, and 26% higher than the anticipated 2015 dividend. TerraForm also updated its long-term dividend per share growth target to a 20% compound annual growth rate (CAGR) from its current first-quarter dividend, driven by the increased visibility and growth provided by this transaction.

Following on the success of its TerraForm Power yieldco, SunEdison filed a Form S-1 with the U.S. Securities and Exchange Commission in April for an initial public offering (IPO) to raise up to $700 million for new yieldco to be named TerraForm Global Inc. Since then, the maximum value of the IPO has been raised to $800 million, but the number of shares and pricing have yet to be established. The new yieldco has applied for listing on the Nasdaq under the ticker symbol GLBL.

ALSO READ: Deutsche Bank Says to Buy the Weakness in Renewable Energy Yieldcos

TerraForm Power’s stock closed at $37.53 on Monday, in a 52-week range of $21.58 to $42.66. The stock’s consensus price target is $44.10. Shares were up 5.5% early Tuesday to $39.60.

SunEdison’s stock traded about 4.0% Tuesday morning to $30.13, in a 52-week range of $13.09 to $32.66. The consensus price target is around $35.70.

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