TerraForm secures consents needed to obtain waivers for 9¾% notes

By Wendy Van Sickle

Columbus, Ohio, Dec. 6 – TerraForm Global, Inc. subsidiary TerraForm Global Operating, LLC received the necessary consents via an amended and restated consent solicitation to waive some reporting covenants and defaults under its 9¾% senior notes due 2022, according to a company news release.

The company asked noteholders to waive compliance with the annual and quarterly reporting covenants and any and all defaults or events of default existing due to the failure to comply with those covenants as of Dec. 6 as a result of the expiration of the waiver received in September.

The consent solicitation expired at 5 p.m. ET on Dec. 6.

Consents were needed from the holders of at least a majority of the notes.

The company offered a consent fee of $3.50 per $1,000 principal amount of the notes.

The waiver became effective on Dec. 6 and will remain effective until 5 p.m. ET on Dec. 26.

Until 5 p.m. ET on Dec. 26, the company has the option to extend the waiver to 5 p.m. ET on Jan. 6 by paying an extension fee of $1.50 per $1,000 principal amount.

“Today’s announcement marks another positive step forward for TerraForm Global,” Peter Blackmore, chairman and interim chief executive officer of the company, said in the release. “We are pleased to have worked closely with our bondholders throughout the process and appreciate their support.”

In connection with the waiver, TerraForm Global will make publicly available by Dec. 7 some information relating to its project-level cash balance, project-level debt, cash balances and total debt, each as of Oct. 31, and pay the fees and expenses of Willkie Farr & Gallagher LLP and Evercore Group LLC, which are acting as advisers to an ad hoc group of noteholders.

An event of default will occur if TerraForm Global fails to comply with these additional agreements for five business days after written notice given by the trustee or holders of at least 25% of the notes.

The consent solicitation amended and restated the terms of the consent solicitation that began Nov. 15, which was scheduled to end at 5 p.m. ET on Dec. 2 after being extended from 5 p.m. ET on Nov. 22.

Under the original terms of the consent solicitation, holders were being offered a $1.00 consent fee and the deadline for paying the $1.50 extension fee was Dec. 6.

TerraForm Power, Inc. subsidiary TerraForm Power Operating, LLC is seeking waivers from the holders of its 5 7/8% senior notes due 2023 and 6 1/8% senior notes due 2025. That consent solicitation was scheduled to end at 5 p.m. ET on Dec. 2.

Buyout offer

As reported on Nov. 18, TerraForm Power’s largest independent shareholder, Brookfield Asset Management Inc., is offering to buy the company in order to eliminate the need for the waiver extension.

Under the waiver currently in place, compliance with the annual and quarterly reporting covenants would be suspended if TerraForm Power were to publicly announce a binding transaction that has been approved by its board of directors, if that transaction would constitute either a change of control or a qualifying acquisition and if the transaction includes an offer by TerraForm Power or the acquirer to buy back the notes at a purchase price of at least 101% of par plus accrued interest. In addition to the suspension, the waiver would continue to be effective regardless of the waiver expiration date, provided that the suspension is lifted within six months.

Brookfield said it was prepared to work to be in a position to enter into binding agreements by Dec. 6 so that no extension would be required.

Brookfield was prepared to make an all-cash offer for 100% of the shares of TerraForm Power or, alternatively, an all-cash offer for a minimum 50% and maximum 60% stake in TerraForm Power in connection with a long-term Brookfield sponsorship transaction.

Subject to due diligence, Brookfield anticipated that its offer price would be at a value of $13 per TerraForm Power class A or class B share, which represents a 49% premium to the TerraForm Power class A closing price on June 28, the day prior to Brookfield’s original 13D filing that disclosed its ownership interest in TerraForm Power.

Brookfield would also be prepared, if desired by TerraForm Power, to make an offer for TerraForm Global.

The solicitation agent is Citigroup Global Markets Inc. (800 558-3745 or 212 723-6106). The tabulation agent for the consent solicitation is Global Bondholder Services Corp. (866 924-2200).

TerraForm is a Bethesda, Md., owner and operator of clean energy power plants.

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