New York-based investment adviser Knighthead Capital Management took a key position in TerraForm Global Inc. (NASDAQ:GLBL), a company sponsored by bankrupt clean-energy giant SunEdison Inc. (OTCMKTS:SUNEQ), to become one of its top shareholders.
According to an SEC filing dated December 27, Knighthead Capital acquired 7.28 million shares in the renewable energy firm representing a 6.43% interest, for approximately $27.76 million.
This compares to about 2.22 million shares or about a 1.25% stake, as of the end of the third quarter of 2016. The previous position comprised about 1.31% of Knighthead Capital’s portfolio and has a market value of $9.12 million.
Knighthead Capital believes the acquisition represented an attractive investment opportunity.
As part of the deal, the investment firm may purchase additional shares, debt and notes of TerraForm, off-load any or all of its securities in the open market at any time and take part in any hedging or similar transactions.
Strategic Alternatives, Settlement Talks
TerraForm previously disclosed that it was exploring strategic alternatives to maximize shareholder value, including a merger or sale of the entire company.
It also noted that it was in settlement talks covering claims against SunEdison.
TerraForm’s claims are estimated to be more than $2.0 billion and include damages associated with a breach of SunEdison’s obligations under the sponsorship agreement; contribution and indemnification claims; an alleged breach of fiduciary, agency and other duties; and claims relating to the loss of business opportunities.
First Quarter Performance
In the three months ended March 31, TerraForm posted a net loss of $6.25 million, narrowing from a loss of $11.23 million booked a year ago.
Net operating revenues during the period, meanwhile, totaled $47.69 million, up from $17.81 million a year earlier. Unrestricted cash at the end of the period was $922 million.
Knighthead Capital’s Top Equity Picks
The investment firm holds 2.46 million shares in SPDR S&P 500 ETF Index Depositary Receipts valued at $532.83 million as of the end of the third quarter. This position comprises 76.47% of its portfolio.
Another key equity bet is YPF S.A. ADR (NYSE:YPF). Knighthead Capital owns about 2.62 million shares in the energy firm valued at $47.70 million as of the end of the period. This makes up 6.85% of its portfolio.
In Thursday’s trading, TerraForm Global Inc. (NASDAQ:GLBL) close the day at $4 up 1.27%.