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SEC Filings
10-K
TERRAFORM POWER, INC. filed this Form 10-K on 07/21/2017
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The consummation of the Sponsorship Transaction would trigger a change in control under the terms of our Revolver. Such change in control constitutes an event of default under the Revolver and would entitle our Revolver lenders to accelerate the principle amount outstanding under the Revolver. The Company intends to pay down and terminate the Revolver concurrently with completing the Sponsorship Transaction through a refinancing transaction. However, there can be no assurance that the Company will be able to enter into a replacement credit facility or otherwise secure financing on equal or more favorable terms. Such inability could have a materially adverse effect on our liquidity and our growth strategy. There is no financing contingency or condition to the consummation of the transactions contemplated by the Merger Agreement.

The consummation of the Sponsorship Transaction would also trigger a change in control under our Indentures. The Indentures require the Company to make an offer to repurchase the Senior Notes issued under the Indentures at 101% of the applicable principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date following a change in control. Brookfield and its affiliates have secured a backstop financing facility that is available to be drawn by the Company subject to certain conditions in the event the Company makes this offer and noteholders elect to accept the offer. If a significant number of noteholders tender into the offer to repurchase at 101% of par, the Company would need to draw upon this backstop financing facility which would have a shorter maturity and more restrictive covenants than the Senior Notes issued under the Indentures, which could have a material adverse effect on the Company’s financial position, performance and operations.

Pursuant to the terms of our 2014 Second Amended and Restated Long-Term Incentive Plan and individual employee grant agreements, all of our outstanding restricted stock units (“RSUs”) will vest upon a change in control as defined in the plan. This immediate vesting could result in the turnover of key personnel following the consummation of the Sponsorship Transaction and could have a material adverse effect on the Company.

One of our PPAs and a limited number of our non-recourse debt and tax equity financing arrangements also include change in control provisions that would permit the counterparty to terminate the contract or accelerate maturity following the consummation of the Sponsorship Transaction. We are working to obtain consents or waivers from those counterparties to the applicable change of control provisions, however, there is no assurance those consents will be obtained.

There is no assurance we will be able to successfully negotiate a waiver to any such change in control provision.

Risks Related to a Failure to Consummate our Proposed Sponsorship Transaction with Brookfield and its affiliates. The following risk factors assume that we remain a stand-alone company except as otherwise noted:

Failure to consummate, or delays in consummating, the Merger and the Sponsorship Transaction with Brookfield and its affiliates could materially and adversely affect our business, results of operations and prospects and the price of the shares of our Class A common stock.

We believe that the current trading price of our Class A common stock reflects some amount of speculation regarding the probability of the closing of the Merger and the Sponsorship Transaction. The loss of the benefits or perceived benefits of the Sponsorship Transaction, including the loss of Brookfield as a sponsor and the right to receive the merger consideration payable to the holders of our Class A common stock at the consummation of the Merger and the Sponsorship Transaction could negatively impact the price of our Class A common stock. Likewise, potential returns on any investment in our common stock may also be limited until the closing or abandonment of the Merger and the Sponsorship Transaction.

If we are unable to successfully consummate the Merger and the Sponsorship Transaction, the Company would be forced to reevaluate its available strategic alternatives. Such reevaluation would likely result in a diversion of the Company’s resources to focus on that reevaluation, including legal fees, financial advisor fees and management’s time and attention.

Moreover, a failure to consummate the Sponsorship Transaction will result in the Company operating without a financially viable sponsor for, at a minimum, the length of time required to reevaluate our strategic alternatives. Our ability to successfully operate the Company without a financially viable sponsor is uncertain. Our business, including our growth strategy, has been substantially dependent on our sponsor, including our sponsor’s ability to obtain financing and generate sufficient cash to adequately fund its operations and on our sponsor’s ability to fund the construction and development of projects to be dropped down to the Company pursuant to certain contractual arrangements. The Company would likely face difficulties acquiring new projects during the pendency of a reevaluation of strategic alternatives or period of stand-alone operations and the Company’s management, and our Board may choose to prioritize stabilization of the Company’s operations and determination of strategic alternatives over pursuing growth opportunities. If we are unable to consummate the Merger and the Sponsorship Transaction, current and prospective employees may experience uncertainty about their future with the


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