SunEdison share options being explored; TerraForm adopts poison pill

By Caroline Salls

Pittsburgh, July 25 – SunEdison, Inc. will work with TerraForm Power, Inc. and TerraForm Global, Inc. to explore value creation options for SunEdison’s controlling class B shares in both companies, according to a SunEdison news release.

In addition, TerraForm Power said in a separate release that its board of directors adopted a stockholder protection rights agreement and declared a dividend of one right on each outstanding share of its class A common stock.

SunEdison said the initiative to explore options for the class B shares will be conducted through a jointly managed sales process and accompanying marketing protocol.

“This is a collaborative undertaking, marking the next step in SunEdison’s Chapter 11 process as we explore restructuring options, including whether to monetize our interests in TerraForm Power and TerraForm Global,” SunEdison chief executive officer John S. Dubel said in the release.

TerraForm said in its release that the record date to determine which stockholders are entitled to receive the rights as part of the dividend is Aug. 4.

“The rights agreement was adopted in response to the potential sale of a significant equity stake in TerraForm Power by SunEdison and the announced accumulation of TerraForm Power class A shares by entities affiliated with Brookfield Asset Management,” TerraForm Power chairman and interim CEO Peter Blackmore said in the release.

“The TerraForm Power board of directors believes it is in the best interests of all TerraForm Power stockholders for acquisition proposals for all or a portion of the TerraForm Power equity interests to be able to emerge in an environment free of a blocking position accumulated by possible bidders.”

The company said the independent directors of TerraForm Power and TerraForm Global determined that it is in the best interests of their respective class A stockholders for any potential SunEdison transaction to achieve a strong valuation, as a sale that includes class A shares may emerge and be in the best interests of all stockholders.

Rights plan terms

Until the earlier of TerraForm announcing that a person or group has acquired beneficial ownership of 15% or more of the class A common stock (the flip-in date) and the 10th business day after launch of a tender offer that will result in that person or group beneficially owning 15% or more of the class A stock, the rights will be evidenced by class A common stock certificates, will automatically trade with the class A common stock and will not be exercisable.

After that, separate rights certificates will be distributed. and each right will entitle its holder to purchase fractions of participating preferred stock having economic and voting terms similar to those of one share of class A common stock for an exercise price of $40.

Upon the occurrence of the flip-in date, each right, other than those owned by any acquiring person, will be automatically exchanged for one share of class A common stock, unless the board determines otherwise or the acquiring person owns more than 50% of the class A common stock.

If the board decides not to exchange, each right will entitle its holder to purchase a number of shares of the class A common stock having a market value of twice the exercise price.

In response to a qualified offer, the stockholder protection rights agreement also gives the stockholders the right to request that the board call a special meeting of stockholders to vote on a resolution authorizing the redemption of the rights.

The rights agreement expires immediately before the sale by SunEdison of all or substantially all of the shares of common stock it owns.

TerraForm said the rights agreement does not in any way weaken its financial strength or interfere with its business plans, and the issuance of rights has no dilutive effect, will not affect reported earnings per share, is not taxable to TerraForm Power or its stockholders and will not change the way in which TerraForm Power’s shares are traded.

Based in Maryland Heights, Mo., SunEdison operates renewable power plants. It filed for bankruptcy on April 21 in the U.S. Bankruptcy Court for the Southern District of New York under Chapter 11 case number 16-10992. TerraForm is a Bethesda, Md., owner and operator of clean energy power plants.

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