Brookfield Asset Ready to Acquire TerraForm Power Inc (NASDAQ:TERP)


Brookfield Asset Management has made a buyout offer to acquire TerraForm Power Inc (NASDAQ:TERP) for $13 per share, or $1.8-billion. TerraForm Power is a spun-off unit of renewable energy company SunEdison, which filed for bankruptcy on November 20. Brookfield made the offer in a letter to TerraForm’s shareholders. Canada’s largest alternative asset management firm said that it owns about 34% of the Class A shares of the company, if the Appaloosa Management position, which Brookfield called a “partner”, is also incorporated. The letter said that the outcome of the recent efforts of shareholders to stop TerraForm Power Inc (NASDAQ:TERP) and TerraForm Global’s bondholders to waive financial statement reporting requirements would result in additional costs and restrictions on the companies’ capabilities to raise capital. The fund also fears that if the bondholders do not agree to waive off the filings, it would result in a default of the bonds and bankruptcy.

Henceforth, Brookfield Asset Management is ready to make an all-cash offer for 100% TerraForm Power Inc (NASDAQ:TERP) shares or an all-cash offer for a minimum 50% and maximum 60% stake in the company, which would come with some conditions such as long-term Brookfield sponsorship transaction, which would include a substantial ROFO pipeline and additional capital provided by Brookfield to support future growth. The hedge fund is prepared to make a deal by December 6. The letter, written by Brookfield’s senior managing partner, Sachin Shah, said that the valuation made by Brookfield is “fair” due to the current market situation. Mr. Shah urged TerraForm’s shareholders to act “quickly” to avoid further declines in value.

Brookfield Asset Management is a Toronto-based hedge fund which manages a portfolio of over $17 billion, as of the end of the third quarter. Back in July, the Canadian firm joined hands with billionaire David Tepper’s Appaloosa Management to jointly bid for TerraForm. In its own capacity, Brookfield Asset Management owns about 12.12% stake in TerraForm Power Inc (NASDAQ:TERP), as of the end of the third quarter.

On November 16th, TerraForm Power announced that it had received the approval for an extension until March 2017 to regain Nasdaq compliance. The company was seeking an extension from bondholders over its failure to file its 2015 annual report. TerraForm Power Inc (NASDAQ:TERP)’s stock is up over 5% year-to-date. Shares have gained over 48% since Brookfield Asset Management disclosed a positon in the company in June 2016, and showed an interest to acquire SunEdison’s stake in the company.

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