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SEC Filings
10-K
TERRAFORM POWER, INC. filed this Form 10-K on 07/21/2017
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Company. This uncertainty may impair our ability to retain, recruit or motivate key personnel, may negatively impact the productivity of current employees and may result in an increase in retention costs.

Depending on the circumstances surrounding a potential failure to consummate the Merger and the Sponsorship Transaction we may face increased exposure to litigation and attendant costs and we may be required to pay a termination fee of $50.0 million to Brookfield. Additionally, in certain circumstances if the Merger is not consummated, we may be required to reimburse Brookfield for up to $17.0 million of Brookfield’s reasonable and documented expenses in connection with the Merger Agreement and the transactions contemplated thereby.

If we fail to consummate the Merger and the Sponsorship Transaction with Brookfield and its affiliates, the Settlement Agreement entered into with SunEdison and certain of its affiliates in the Chapter 11 Bankruptcy Case of SunEdison may be terminated.

Concurrently with the execution and delivery of the Merger Agreement, SunEdison and the Company, along with certain of their respective subsidiaries, executed and delivered a Settlement Agreement, which, among other things, generally resolves claims, disputes and other issues arising from the historical sponsor relationship between the Company and SunEdison. If the Merger Agreement is terminated, the Settlement Agreement may also be terminated by either party thereto. The Settlement Agreement provides for the resolution of the intercompany claims and defenses between the Company and SunEdison in connection with the SunEdison Bankruptcy in exchange for, among other things, a set allocation of the proceeds of the Merger being provided to SunEdison. In the event the Settlement Agreement is terminated, there is no guarantee that the Company will be able to enter into a comparable transaction or that the Company would be able to negotiate settlement terms with equal or more favorable terms than those contained in the Settlement Agreement.
    
Moreover, we believe that the resolution of the intercompany claims and defenses is a necessary prerequisite to the execution of any strategic alternative with a third party. The termination of the Settlement Agreement could negatively impact the Company’s ability to engage in a change of control transaction with an alternative third party due to the uncertainty regarding the resolution of the intercompany claims and defenses in connection with the SunEdison Bankruptcy.

In the event that the Settlement Agreement is terminated, the Company would be forced to continue to litigate its claims and defenses in the SunEdison Bankruptcy case or renegotiate the terms of an alternative settlement agreement with SunEdison. Either option is likely to result in a drain on the Company’s resources, including significant litigation costs and management’s time and attention. Among the claims currently resolved by the Settlement Agreement which the Company would be forced to defend are certain avoidance actions seeking to recapture payments or transfers of value made by SunEdison to the Company prior to SunEdison’s bankruptcy filing. SunEdison's unsecured creditors committee asserted in their original objection to the Settlement Agreement that in connection with the Company's IPO, “the Company received completed energy projects, services and payments worth hundreds of millions, if not billions, of dollars, for which the Debtors did not receive reasonably equivalent value in exchange." The Company disagrees with the unsecured creditor committee's assertions regarding potential avoidance claims. The Company would not consider settling these potential avoidance claims alone and has not recorded a loss related to such claims. However, in the event of an unfavorable determination with respect to such claims, the Company could be forced to pay significant amounts to the SunEdison estate. If the Settlement Agreement is terminated, we will continue to be subject to certain risks associated with SunEdison as described more fully under “Risks Related to our Relationship with SunEdison and the SunEdison Bankruptcy” below.

If we fail to consummate the Merger, there is no guarantee that SunEdison will be able to successfully exit its Chapter 11 Bankruptcy case or that SunEdison’s interests in the Company, including its shares of our Class B common stock and Class B units in Terra LLC, will be disposed of in a way that is favorable to the holders of the Company’s Class A common stock.

SunEdison’s proposed Plan of Reorganization in the SunEdison Bankruptcy case is predicated on the successful consummation of the Merger. If we fail to consummate the Merger, the Plan of Reorganization will not be successful and there is no guarantee that SunEdison will be able to successfully exit its Chapter 11 Bankruptcy case. In such an event, SunEdison’s current Chapter 11 reorganization may be converted into a Chapter 7 liquidation. We continue to utilize SunEdison for certain business and operational services and, as such, a liquidation of SunEdison may have a material adverse effect on our business, results of operations and financial condition. In addition, if the Settlement Agreement is terminated and the Plan of Reorganization is not successfully implemented, SunEdison may seek Bankruptcy Court approval to transfer its shares of our Class B common stock and Class B units in Terra LLC without converting them into shares of our Class A common stock and without seeking our approval. Such a disposition may be less favorable to our holders of Class A common stock than the Merger and the Sponsorship Transaction.



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