TerraForm Global, a Nasdaq-listed clean-energy holding company currently embroiled in a $2 billion dispute with parent SunEdison, has given its consent to the bankrupt firm to pursue the sale of its entire Indian and Uruguayan portfolio of solar and wind projects.The consent paves the way for Hyderabad-headquartered Greenko to buy out SunEdison’s entire India portfolio — 390 MW operating solar assets and 48 MW of wind parks — for an enterprise valuation of $315 million.
Both Sun Edison and Greenko are expected to make a formal announcement of the deal this Friday, having finalised all pending documentation, said sources in the know.Earlier this year, Terraform had sued SunEdison alleging that it diverted funds to cook its balance sheet instead of completing these projects that were already presold to them in the fourth quarter of 2015. The suit was seen as a possible hurdle in the Greenko deal.
Once completed, this would be the biggest distress sale of all time in the sector. It includes an equity value of $30 million and around $280 million of debt, as per sources aware of the negotiations. Greenko declined to comment.Mails sent to Pashupathy Gopalan, managing director and president (Asia Pacific) at SunEdison, did not generate a response till the time of going to press. ET in on September 19 first reported about the impending sale to Greenko.
Under the deal, a pipeline of another 800 MW will also get transferred to Greenko for no extra cost. Greenko, backed by GIC and Abu Dhabi Investment Authority, has agreed to pump in $50-60 million as equity funding to build these new projects and will also take on additional debt for capital expenditure. This, however, would still be much lower than the originally envisaged billion-dollar-plus valuation for the SunEdison assets.
TerraForm Global said it agreed not to pursue claims against a third-party buyer relating in any way to assets included in a third-party sale transaction. By accepting to this sale — which also covers SunEdison’s Bora Bora solar farm in India and certain assets in Uruguay — the subsidiary is giving some flexibility to its parent to clean up its act. Simultaneously, by softening its stand in the ongoing fight, it is also disentangling itself from the financial mess at SunEdison.
The company, however, said it will “retain all of its claims against SunEdison and its affiliated persons”. Further, by consenting to a third party sale transaction, Terra-Form Global has ensured that it will receive a portion of SunEdison’s cash proceeds. The company expects its share to be no more than $10 million.Last weekend, TerraForm Global and fellow SunEdison yieldco TerraForm Power initiated settlement discussions with the bankrupt company for more than $3 billion in claims pertaining to damages to each other’s enterprise value “as a result of SunEdison’s catastrophic breach of its sponsorship and legal duties”.
SunEdison, the world’s largest renewable energy company, has been looking to divest its global assets ever since it filed for protection from creditors in the US in April this year. It had mandated investment bank Rothschild to help sell its Indian portfolio, which was once considered its crown jewel. The process drew interests from a diverse set that also included Adani and Singapore utilities major Sembcorp and Actis backed renewable energy platform Ostro Energy.The acquisition also marks the Greenko’s debut into solar, after missing out on Welspun’s solar business that Tata Power bought recently.