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SEC Filings
10-K
TERRAFORM POWER, INC. filed this Form 10-K on 07/21/2017
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pending the resolution of any such litigation and an adverse ruling in any such lawsuit may prevent the Merger Agreement from being consummated.

We may not realize the expected benefits of the Sponsorship Transaction.

If the Sponsorship Transaction is consummated, the Company may not perform as we expect, or as the market expects, which could have an adverse effect on the price of our Class A common stock. Concurrently with the closing of the Merger Agreement, Brookfield and its affiliates will enter into various sponsorship obligations with respect to the Company, including the provision by Brookfield and its affiliates of strategic and investment management services pursuant to a Master Services Agreement, a pipeline of certain operating wind and solar assets located in North America and certain Western European nations to which the Company will have a right of first offer should Brookfield or its applicable affiliate decide to sell such asset (the ROFO Pipeline) under a Relationship Agreement with Brookfield and its affiliates and a $500 million secured revolving line of credit to TerraForm Power for acquisitions and permitted profit improving capital expenditures (the Sponsor Line Agreement). A wholly owned affiliate of Brookfield will also be given IDRs, a fixed and variable management fee, certain registration rights and certain governance rights to be reflected in amendments to our governing documents and the Terra LLC operating agreement, in addition to a governance agreement by and among the Company and affiliates of Brookfield.

There is no assurance that the projects in the ROFO Pipeline will be successfully acquired by the Company at attractive prices or at all. We do not have experience operating the particular projects in the ROFO Pipeline and we may experience difficulty integrating these projects into our fleet or successfully operating any projects we acquire from the ROFO Pipeline. The ROFO Pipeline is a right of first offer subject to the terms of the Relationship Agreement and is not a unilateral right to call or acquire an asset. Thus while the Company will not need to independently source the opportunity to acquire the assets in the ROFO Pipeline to the extent Brookfield and its affiliates elect to sell such assets, the Company may be required to compete with other third parties on price, terms or otherwise to acquire the assets in the ROFO Pipeline. In addition, we may not identify future acquisitions or be able to secure financing on attractive terms or at all for future acquisitions and we may not realize the expected benefits of the Sponsor Line. If the Sponsorship Transaction is consummated, Brookfield may not be able to maintain our current relationships with suppliers, lenders and other third parties. Brookfield lacks familiarity with our assets and may experience difficulty successfully managing our projects or replicating their previous management strategies. The foregoing risks may adversely affect our operational performance or limit our growth prospects, including our ability to grow our dividend per share.

The Merger Agreement contains provisions that limit the Company’s ability to pursue alternatives to the Sponsorship Transaction with Brookfield and its affiliates, which could discourage a third party from making a competing transaction proposal.

The Merger Agreement contains provisions that make it more difficult for us to sell our business to a party other than Brookfield and its affiliates during the period between signing and the closing of the Merger Agreement and might discourage competing offers for a higher price or premium. These provisions include the general prohibition on our soliciting any alternative acquisition proposal or offer for a competing transaction, the requirement that we pay a termination fee of $50.0 million if the Merger Agreement is terminated in specified circumstances and the requirement that we submit the Merger Agreement to a vote of the Company’s stockholders even if our Board changes its recommendation, subject to certain exceptions. Additionally, in certain circumstances if the Merger is not consummated, we may be required to reimburse Brookfield and its affiliates for up to $17.0 million of Brookfield and its affiliates' reasonable and documented expenses in connection with the Merger Agreement and the transactions contemplated thereby.

The pendency of the Sponsorship Transaction and related uncertainty could cause disruptions in our business, which could have an adverse effect on our business and financial results and the price of our Class A common stock.

We have important counterparties at every level of operations, including offtakers under our PPAs, corporate and project-level lenders and tax equity investors, suppliers and service providers. Uncertainty about the effect of the sponsorship with Brookfield may negatively affect our relationship with our counterparties due to concerns about the Brookfield sponsorship and its impact on our business. These concerns may cause counterparties to be more likely to reduce utilization of our services (or the provision of supplies or services) where the counterparty has flexibility in volume or duration or otherwise seek to change the terms on which they do business with us. These concerns may also cause our existing or potential new counterparties to be less likely to enter into new agreements or to demand more expensive or onerous terms, credit support, security or other conditions. Damage to our existing or potential future counterparty relationships may materially and adversely affect our business, financial condition and results of operations, including our growth strategy and the price of our Class A common stock.
    


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