|TERRAFORM POWER, INC. filed this Form 10-Q on 08/14/2018|
time when the related solar energy systems are placed in service. The Company concluded that the likelihood of a recapture event related to these assessments is remote. Under Topic 605, the Company would have recognized an increase of $1.6 million and $5.1 million in non-cash deferred revenue within operating revenues, net for the three and six months ended June 30, 2018, respectively. The remaining deferred revenue balance in the unaudited condensed consolidated balance sheet as of June 30, 2018 consisted of upfront government incentives of $9.0 million and contract liabilities of $5.6 million related to performance obligations that have not yet been satisfied. These contract liabilities represent advanced customer receipts primarily related to future REC deliveries that are recognized into revenue under Topic 606. The amount of revenue recognized during the three and six months ended June 30, 2018 related to contract liabilities was $0.4 million and $0.7 million, respectively.
4. ACQUISITIONS AND DISPOSITIONS
Acquisition of Saeta
On February 7, 2018, the Company announced that it intended to launch a voluntary tender offer (the “Tender Offer”) to acquire 100% of the outstanding shares of Saeta, a Spanish renewable power company with 1,028 MW of wind and solar facilities (approximately 250 MW of wind and 778 MW of solar) located primarily in Spain. The Tender Offer was for €12.20 in cash per share of Saeta. On June 8, 2018, the Company announced that Spain’s National Securities Market Commission confirmed an over 95% acceptance of shares of Saeta in the Tender Offer (the “Tendered Shares”). On June 12, 2018, the Company completed the acquisition of the Tendered Shares for total aggregate consideration of $1.12 billion and $1.91 billion of project-level debt assumed. With 95.28% of the shares of Saeta being acquired, the Company pursued a statutory squeeze out procedure under Spanish law to procure the remaining approximately 4.72% of the shares of Saeta, which closed on July 2, 2018.
The Company funded the $1.12 billion purchase price of the Tendered Shares with $650.0 million of proceeds from the private placement of its Class A common stock to Orion Holdings and BEP as discussed in Note 1. Basis of Presentation and Note 12. Stockholders’ Equity, along with approximately $471 million from its existing liquidity, including (i) the proceeds of a $30.0 million draw on its Sponsor Line (as defined in Note 8. Long-term Debt), (ii) a $359.0 million draw on the Company’s Revolver (as defined in Note 8. Long-term Debt), and (iii) approximately $82 million of cash on hand.
As discussed in Note 2. Summary of Significant Accounting Policies, the Company accounted for the acquisition of Saeta under the acquisition method of accounting for business combinations. The final accounting for the Saeta acquisition has not been completed because the evaluation necessary to assess the fair values of acquired assets and assumed liabilities is still in process. The provisional amounts for this acquisition are subject to revision until these evaluations are completed. The preliminary allocation of the acquisition-date fair values of assets, liabilities and non-controlling interests pertaining to this business combination as of June 30, 2018, were as follows:
Renewable energy facilities in service
Total assets acquired
Accounts payable, accrued expenses and other current liabilities
Long-term debt, including current portion
Deferred income taxes
Asset retirement obligations
Other long-term liabilities
Total liabilities assumed
Redeemable non-controlling interests2
Purchase price, net of cash and restricted cash acquired3
Derivative liabilities are included within other long-term liabilities in the unaudited condensed consolidated balance sheets.
The fair value of the non-controlling interest was determined using a market approach using a quoted price for the instrument. As discussed above, the Company acquired the remaining shares of Saeta pursuant to a statutory squeeze out procedure under Spanish law,