DEFM14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant  ☒                            Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

 

Preliminary Proxy Statement

  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material Pursuant to §240.14a-11(c) or §240.14a-12

 

 

LOGO

TerraForm Power, Inc.

(Exact name of registrant as specified in its charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

 

No fee required.

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

(1)

 

Title of each class of securities to which transaction applies:

 

     

 

(2)

 

Aggregate number of securities to which transaction applies:

 

     

 

(3)

 

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

     

 

(4)

 

Proposed maximum aggregate value of transaction:

 

     

 

(5)

 

Total fee paid:

 

     

 

Fee paid previously with preliminary materials.

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

(1)

 

Amount Previously Paid:

 

     

 

(2)

 

Form, Schedule or Registration Statement No.:

 

     

 

(3)

 

Filing Party:

 

     

 

(4)

 

Date Filed:

 

     

 

 

 


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LOGO

200 Liberty Street, 14th Floor

New York, New York 10281

June 29, 2020

Dear TerraForm Power, Inc. Stockholders:

TerraForm Power, Inc. (“TerraForm Power” or “TERP”), Terra Form Power NY Holdings, Inc., a wholly owned subsidiary of TerraForm Power (“TerraForm New York”), Brookfield Renewable Partners L.P. (“BEP”), Brookfield Renewable Corporation (“BEPC”), and 2252876 Alberta ULC, a wholly owned subsidiary of BEP (“Acquisition Sub”), have entered into an Agreement and Plan of Reorganization, dated as of March 16, 2020 (as the same may be amended from time to time, the “Reorganization Agreement”), a copy of which is attached as Annex A to the accompanying proxy statement/prospectus.

The Reorganization Agreement provides that, on the terms and subject to the conditions in the Reorganization Agreement, and in accordance with the Delaware General Corporation Law and the New York Business Corporation Law, on the closing date of the TERP acquisition (as defined below), BEP will acquire all of the outstanding shares of class A common stock, par value $0.01, of TerraForm Power not held by the Brookfield stockholders (as defined below) (such shares, the “public TERP shares”), through a series of transactions that include the reincorporation merger and the share exchange (each as defined below). Pursuant to the Reorganization Agreement and that certain Plan of Merger, dated as of March 16, 2020 (the “Plan of Merger”), by and between TerraForm Power and Terra Form New York, a copy of which is attached as Exhibit B to the Reorganization Agreement, TerraForm Power will merge with and into TerraForm New York, with TerraForm New York as the surviving corporation of such merger (the “reincorporation merger”), and (i) BBHC Orion Holdco L.P. and Orion U.S. Holdings 1 L.P. (collectively, the “Brookfield stockholders”), each an affiliate of BEP, will receive shares of TerraForm New York class A common stock, par value $0.01, (ii) holders of public TERP shares who do not make an election to receive non-voting limited partnership units of BEP (the “BEP units”) will receive shares of TerraForm New York class B common stock, par value $0.01, and (iii) holders of public TERP shares who make an election to receive BEP units will receive shares of TerraForm New York class C common stock, par value $0.01. Immediately thereafter, (i) pursuant to a binding share exchange, BEPC will acquire each share of TerraForm New York class B common stock that is issued and outstanding after the reincorporation merger effective time in exchange for BEPC class A exchangeable subordinate voting shares, no par value (the “BEPC exchangeable shares”) and cash in lieu of fractional BEPC exchangeable shares and (ii) pursuant to a binding share exchange, Acquisition Sub will acquire each share of TerraForm New York class C common stock that is issued and outstanding after the reincorporation merger effective time in exchange for BEP units and cash in lieu of fractional BEP units (such exchanges collectively, the “share exchange” and, together with the reincorporation merger, the “TERP acquisition”). It is a condition to the completion of the TERP acquisition that the planned special distribution of BEPC exchangeable shares (the “special distribution”) by BEP to holders of BEP units has occurred or that all actions reasonably necessary to cause the special distribution to occur substantially simultaneously with, but no later than immediately prior to, the completion of the TERP acquisition have been taken.

If the TERP acquisition is completed, each public TERP share will automatically be exchanged into the right to receive consideration consisting of a number of, at the election of the holder of such public TERP shares, BEPC exchangeable shares or BEP units, in each case, equal to the adjusted exchange ratio and subject to further adjustment to prevent dilution in accordance with the Reorganization Agreement. The adjusted exchange ratio will be determined by multiplying (x) 0.381 by (y) the sum of (i) the number (rounded, if necessary, to three


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decimal points) of BEPC exchangeable shares to be distributed with respect to each BEP unit upon the consummation of the special distribution and (ii) one. For example, if holders of BEP units receive one BEPC exchangeable share for every four BEP units in the special distribution, the adjusted exchange ratio will be equal to 0.47625, and holders of public TERP shares will receive 0.47625 of a BEPC exchangeable share or of a BEP unit per public TERP share. BEP units are currently traded on the New York Stock Exchange under the symbol “BEP” and on the Toronto Stock Exchange under the symbol “BEP.UN”. As further described in the accompanying proxy statement/prospectus, each BEPC exchangeable share will be structured with the intention of providing an economic return equivalent to one BEP unit (subject to adjustment to reflect certain capital events). Holders of public TERP shares will not participate in the special distribution. If the special distribution does not occur, the TERP acquisition will not be completed because it is a condition to the completion of the TERP acquisition that the special distribution has occurred or that all actions have been taken which are reasonably necessary to cause the special distribution to occur substantially simultaneously with, but no later than immediately prior to, the completion of the TERP acquisition.

It is my pleasure to cordially invite you to attend TerraForm Power’s 2020 Annual Meeting of Stockholders (the “TERP stockholders meeting”). The TERP stockholders meeting will be held solely virtually, via live webcast at www.virtualshareholdermeeting.com/TERP2020 on July 29, 2020 at 11:00 a.m., Eastern Time.

Details regarding attendance at the TERP stockholders meeting and the business to be conducted at the TERP stockholders meeting are described in the accompanying Notice of Annual Meeting of TERP Stockholders and proxy statement/prospectus.

At the TERP stockholders meeting, TERP stockholders will be asked to vote on a proposal to (i) adopt the Plan of Merger and (ii) approve the Reorganization Agreement, the reincorporation merger and the share exchange (collectively referred to herein as the “Merger Proposal”). In addition, TERP stockholders will be asked to vote on (i) the election of seven directors to the TerraForm Power board of directors (the “TerraForm Power Board” or the “TERP board”) to serve until the next TerraForm Power annual stockholders meeting and until their respective successors are duly elected or appointed and qualified, subject to his or her earlier resignation or removal (including in connection with the completion of the TERP acquisition) or death; (ii) the ratification of the appointment of Ernst & Young LLP as TerraForm Power’s independent registered public accounting firm for 2020; and (iii) the ratification, on a non-binding, advisory basis, of the compensation paid to TerraForm Power’s named executive officers ((i), (ii) and (iii) collectively referred to herein as the “TERP Stockholders Meeting Proposals”). Finally, the TERP stockholders will be asked to vote on the approval of the adjournment of the TERP stockholders meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the Merger Proposal (the “Adjournment Proposal”).

Approval of the Merger Proposal will require the affirmative vote of (i) holders of a majority of the outstanding shares of TERP common stock entitled to vote thereon as of June 26, 2020 (the “TERP record date”) AND (ii) holders of a majority of the outstanding shares of TERP common stock entitled to vote thereon as of the TERP record date that are not owned, directly or indirectly, by BEP or its affiliates or any person with whom BEP or its affiliates has formed (and not terminated) a “group” (as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (the approval in clause (ii) referred to herein as the “unaffiliated TERP stockholder approval”). Approval of the election of directors to the TerraForm Power Board will require the affirmative vote of the majority of the votes cast with respect to each such director at the TERP stockholders meeting, assuming a quorum is present. Approval of the other proposals (including the Adjournment Proposal) will require the affirmative vote of the majority in voting power of the shares of TERP common stock present in person at the virtual TERP stockholders meeting or represented by proxy at the TERP stockholders meeting and entitled to vote thereon, assuming a quorum is present. The approval of the Merger Proposal as set forth above is a condition to the obligations of BEP, BEPC and TerraForm Power to complete the TERP acquisition. None of the TERP Stockholders Meeting Proposals or the Adjournment Proposal is a condition to the obligations of BEP, BEPC or TerraForm Power to complete the TERP acquisition.

In connection with the execution of the Reorganization Agreement, on March 16, 2020, the Brookfield stockholders entered into a voting agreement with TerraForm Power (the “TERP Voting Agreement”). Pursuant


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to the TERP Voting Agreement, the Brookfield stockholders have agreed to vote all of their shares of TERP common stock in favor of the Merger Proposal and against, among other things, any alternative transaction that may be proposed. As of March 13, 2020 (the business day immediately prior to the date of the Reorganization Agreement), such Brookfield stockholders collectively held approximately 62% of the issued and outstanding shares of TERP common stock entitled to vote at the TERP stockholders meeting and as of the TERP record date, such Brookfield stockholders collectively held approximately 62% of the issued and outstanding shares of TERP common stock entitled to vote at the TERP stockholders meeting. As a result, the holders of a majority of outstanding shares of TERP common stock entitled to vote thereon as of the TERP record date have agreed to vote in favor of the Merger Proposal. The Merger Proposal will not be approved, however, unless the unaffiliated TERP stockholder approval is obtained. For more information on the TERP Voting Agreement, see the section entitled “The TERP Voting Agreement”.

Please carefully review the information under “Material United States Federal Income Tax Considerations” and “Material Canadian Federal Income Tax Considerations”, respectively, of the accompanying proxy statement/prospectus for a description of material U.S. and Canadian federal income tax considerations of the TERP acquisition to U.S. and Canadian TERP stockholders, respectively. The tax consequences to you will depend on your own situation. We urge you to consult your tax advisors as to the specific tax consequences to you of the TERP acquisition and your receipt of the TERP acquisition consideration (as defined below), including the applicability and effect of U.S. federal, state, local and non-U.S. income and other tax laws in light of your particular circumstances.

We cannot complete the TERP acquisition without the approval of the Merger Proposal by the TERP stockholders, including obtaining the unaffiliated TERP stockholder approval. It is important that your shares of TERP common stock be represented and voted regardless of the size of your holdings. Whether or not you plan to attend the TERP stockholders meeting, we urge you to promptly submit a proxy to have your shares of TERP common stock represented and voted at the TERP stockholders meeting by using one of the methods described in the accompanying proxy statement/prospectus.

On January 12, 2020, the TerraForm Power Board, acting by written consent, constituted a special committee of the TerraForm Power Board (the “Special Committee”), comprised of directors who are not directly or indirectly affiliated with, and are otherwise independent from, BEP and who are not members of TerraForm Power’s management or otherwise interested in the TERP acquisition. The TerraForm Power Board delegated to the Special Committee the exclusive power and authority of the TerraForm Power Board to, among other things, review and to evaluate the terms and conditions, and determine the advisability of the TERP acquisition and any alternative thereto.

Following extensive negotiations between the Special Committee and BEP, the TerraForm Power Board, acting on the unanimous recommendation of the Special Committee, unanimously (i) approved and declared advisable the Reorganization Agreement, the Plan of Merger, the reincorporation merger and the share exchange; (ii) determined that the terms of the Reorganization Agreement, the Plan of Merger, the reincorporation merger and the share exchange are fair to and in the best interests of TerraForm Power and the stockholders of TerraForm Power who are not affiliated with BEP; (iii) submitted the Plan of Merger and the approval of the Reorganization Agreement and the transactions contemplated thereby to the TERP stockholders for adoption; (iv) recommended that TERP stockholders adopt the Plan of Merger and approve the Reorganization Agreement and the transactions contemplated thereby, including the reincorporation merger and the share exchange; and (v) approved TerraForm Power’s entry into the TERP Voting Agreement.

The TerraForm Power Board (acting on the recommendation of the Special Committee in the case of the Merger Proposal) recommends that the TERP stockholders vote “FOR” the Merger Proposal, “FOR” each of the TERP Stockholders Meeting Proposals and “FOR” the Adjournment Proposal.

The accompanying proxy statement/prospectus provides important information regarding the TERP stockholders meeting and a detailed description of the Reorganization Agreement, the TERP acquisition and the matters to be presented at the TERP stockholders meeting. We urge you to read the accompanying proxy


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statement/prospectus, including all documents incorporated by reference into the accompanying proxy statement/prospectus, and its annexes carefully and in their entirety. Please pay particular attention to “Risk Factors” beginning on page 81 of the accompanying proxy statement/prospectus.

We hope you will attend the TERP stockholders meeting and look forward to the successful completion of the TERP acquisition.

 

Sincerely,

/s/ Brian Lawson

Brian Lawson

Chair of the Board

TerraForm Power, Inc.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the TERP acquisition or the securities to be issued in connection with the TERP acquisition as described in the accompanying proxy statement/prospectus, passed upon the merits or fairness of the TERP acquisition or determined that the accompanying proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

The accompanying proxy statement/prospectus is dated June 29, 2020, and is first being mailed to the TERP stockholders on or about June 29, 2020.


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LOGO

200 Liberty Street, 14th Floor

New York, New York 10281

NOTICE OF ANNUAL MEETING OF TERP STOCKHOLDERS

 

Time and Date

 

July 29, 2020 at 11:00 a.m., Eastern Time

Place

 

Virtually, via live webcast at www.virtualshareholdermeeting.com/TERP2020.

Items of Business

 

Proposal No. 1: To consider and vote upon a proposal to (i) adopt that certain Plan of Merger, dated as of March 16, 2020 (the “Plan of Merger”), by and between TerraForm Power, Inc. (“TerraForm Power” or “TERP”) and Terra Form Power NY Holdings, Inc., a wholly owned subsidiary of TerraForm Power (“TerraForm New York”), pursuant to which TerraForm Power will merge with and into TerraForm New York, with TerraForm New York as the surviving corporation of such merger (the “reincorporation merger”), and (ii) approve that certain Agreement and Plan of Reorganization, dated as of March 16, 2020 (as the same may be amended from time to time, the “Reorganization Agreement”), by and among Brookfield Renewable Partners L.P. (“BEP”), Brookfield Renewable Corporation (“BEPC”), 2252876 Alberta ULC, a wholly owned subsidiary of BEP (“Acquisition Sub”), TerraForm Power and TerraForm New York, pursuant to which the reincorporation merger will occur and, immediately thereafter, (x) pursuant to a binding share exchange, BEPC will acquire each share of TerraForm New York’s class B common stock, par value $0.01, that is issued and outstanding after the reincorporation merger effective time in exchange for BEPC class A exchangeable subordinate voting shares, no par value, and (y) pursuant to a binding share exchange, Acquisition Sub will acquire each share of TerraForm New York’s class C common stock, par value $0.01, that is issued and outstanding after the reincorporation merger effective time in exchange for non-voting limited partnership units of BEP (such exchanges collectively, the “share exchange” and, together with the reincorporation merger, the “TERP acquisition”) (such Proposal No. 1, the “Merger Proposal”).

 

Proposal No. 2: To consider and vote upon a proposal to elect seven directors to serve until the next TerraForm Power annual stockholders meeting and until their respective successors are duly elected or appointed and qualified, subject to his or her earlier resignation or removal (including in connection with the completion of the TERP acquisition) or death.

 

Proposal No. 3: To consider and vote upon a proposal to ratify the appointment of Ernst & Young LLP as TerraForm Power’s independent registered public accounting firm for 2020.

 

Proposal No. 4: To consider and vote upon a proposal to ratify, on a non-binding, advisory basis, the compensation paid to TerraForm Power’s named executive officers.

 

Proposal No. 5: To consider and vote upon a proposal to approve the adjournment of the TERP stockholders meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the Merger Proposal (the “Adjournment Proposal”).


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Proposal Nos. 2, 3 and 4 are referred to herein collectively as the “TERP Stockholders Meeting Proposals”.

TERP Record Date  

You are entitled to vote at the TERP stockholders meeting and at any adjournments or postponements thereof if you were a stockholder of record as of 5:00 p.m. (Eastern Time) on June 26, 2020.

TerraForm Power Board Recommendation  

On January 12, 2020, the TerraForm Power board of directors (the “TerraForm Power Board”), acting by written consent, constituted a special committee of the TerraForm Power Board (the “Special Committee”), comprised of directors who are not directly or indirectly affiliated with, and are otherwise independent from, BEP and who are not members of TerraForm Power’s management or otherwise interested in the TERP acquisition. The TerraForm Power Board delegated to the Special Committee the exclusive power and authority of the TerraForm Power Board to, among other things, review and to evaluate the terms and conditions, and determine the advisability of the TERP acquisition and any alternative thereto.

 

Following extensive negotiations between the Special Committee and BEP, the TerraForm Power Board, acting on the unanimous recommendation of the Special Committee, unanimously (i) approved and declared advisable the Reorganization Agreement, the Plan of Merger, the reincorporation merger and the share exchange; (ii) determined that the terms of the Reorganization Agreement, the Plan of Merger, the reincorporation merger and the share exchange are fair to and in the best interests of TerraForm Power and the stockholders of TerraForm Power who are not affiliated with BEP; (iii) submitted the Plan of Merger and the approval of the Reorganization Agreement and the transactions contemplated thereby to the TERP stockholders for adoption; (iv) recommended that the TERP stockholders adopt the Plan of Merger and approve the Reorganization Agreement and the transactions contemplated thereby, including the reincorporation merger and the share exchange; and (v) approved TerraForm Power’s entry into the TERP Voting Agreement (as defined in the accompanying proxy statement/prospectus).

 

The TerraForm Power Board (acting on the recommendation of the Special Committee in the case of the Merger Proposal) recommends that the TERP stockholders vote “FOR” the Merger Proposal, “FOR” the TERP Stockholders Meeting Proposals, and “FOR” the Adjournment Proposal.

 

The adoption of the Plan of Merger and the approval of the Reorganization Agreement, the reincorporation merger and the share exchange by the TERP stockholders, including the approval by holders of a majority of the outstanding shares of TERP common stock entitled to vote that are not owned, directly or indirectly, by BEP and its affiliates or any person with whom BEP or its affiliates has formed (and not terminated) a “group” (as defined in the Exchange Act) (the “unaffiliated TERP stockholder approval”), is a condition to the obligations of BEP, BEPC and TerraForm Power to complete the TERP acquisition. None of the TERP Stockholders Meeting Proposals nor the Adjournment Proposal are conditions to the obligations of BEP, BEPC or TerraForm Power to complete the TERP acquisition.

Appraisal Rights  

Under Delaware law and New York law, TERP stockholders will not have appraisal rights or dissenter’s rights in connection with the TERP acquisition.


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Voting  

Your vote is very important. We urge you to read the accompanying proxy statement/prospectus, including all documents incorporated by reference into the accompanying proxy statement/prospectus, and its annexes carefully and in their entirety. In particular, see “Risk Factors” beginning on page 81 of the accompanying proxy statement/prospectus. If you have any questions concerning the TERP acquisition, the Reorganization Agreement, the Merger Proposal, the TERP Stockholders Meeting Proposals, the Adjournment Proposal, the TERP stockholders meeting or the accompanying proxy statement/prospectus, or if you would like additional copies of the accompanying proxy statement/prospectus (at no charge) or need help submitting a proxy to have your shares of TERP common stock voted, please contact TerraForm Power’s proxy solicitor:

 

MacKenzie Partners, Inc.

1407 Broadway, 27th Floor

New York, New York 10018

 

Telephone Toll-Free: (800) 322-2885

Telephone Call Collect: (212) 929-5500

Email: proxy@mackenziepartners.com

 

Whether or not you plan to attend the TERP stockholders meeting, TerraForm Power encourages you to read this proxy statement/prospectus and submit your proxy or voting instructions as soon as possible. You may cause your shares to be present and voted at the TERP stockholders meeting by either marking, signing and returning the enclosed proxy card or submitting a proxy using the telephone or internet instructions described herein, if available. For specific instructions on submitting a proxy to vote your shares, please refer to the instructions on your enclosed proxy card.

Internet
Availability of
Proxy Materials
 

Important Notice Regarding the Availability of Proxy Materials for the TERP stockholders meeting to be held on July 29, 2020. TerraForm Power, Inc.’s proxy statement/prospectus and 2019 Annual Report to Stockholders are available at: www.terraformpower.com.

 

By Order of the Board of Directors,

June 29, 2020

   
 

/s/ Brian Lawson

 

New York, New York

 

Brian Lawson

Chair of the Board

TerraForm Power, Inc.

 


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ADDITIONAL INFORMATION

The accompanying proxy statement/prospectus incorporates important business and financial information about TerraForm Power and BEP from documents that are not included in or delivered with the accompanying proxy statement/prospectus. This information is available to you without charge upon your written or oral request. You can obtain documents incorporated by reference into the accompanying proxy statement/prospectus (other than certain exhibits or schedules to these documents) by requesting them in writing, or by email or telephone, from the appropriate company at the following addresses and telephone numbers:

 

TerraForm Power, Inc.

200 Liberty Street, 14th Floor

Attention: Investor Relations

New York, New York 10281

Email: investors@terraform.com

Telephone: (646) 992-2400

  

Brookfield Renewable Partners L.P.

73 Front Street, 5th Floor

Hamilton HM 12, Bermuda

Email: enquiries@brookfieldrenewable.com

Telephone: (441) 294-3304

In addition, if you have any questions concerning the TERP acquisition, the Reorganization Agreement, the election of directors to the TerraForm Power board of directors, the ratification of the appointment of Ernst & Young LLP as TerraForm Power’s independent registered public accounting firm for 2020, the non-binding, advisory vote on the compensation paid to TerraForm Power’s named executive officers, the vote to adjourn the TERP stockholders meeting, if necessary, the TERP stockholders meeting or the accompanying proxy statement/prospectus, or if you would like additional copies of the accompanying proxy statement/prospectus (at no charge) or need help submitting a proxy to have your shares of TERP common stock voted, please contact MacKenzie Partners, Inc., TerraForm Power’s proxy solicitor, toll-free at (800) 322-2885 or collect at (212) 929-5500. You will not be charged for any of these documents.

If you would like to request documents, please do so no later than five business days before the date of the TERP stockholders meeting (which is July 22, 2020) to receive them before the TERP stockholders meeting.

See “Where You Can Find More Information” for further information.


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TABLE OF CONTENTS

 

NOTICE TO INVESTORS

     1  

GLOSSARY

     4  

QUESTIONS AND ANSWERS

     13  

SUMMARY

     44  

The Companies

     44  

TERP Stockholders Meeting

     46  

The TERP Acquisition and the Reorganization Agreement

     48  

The Special Distribution

     60  

Recent Developments

     61  

Ownership and Organization Structure

     62  

BEPC Management

     66  

BEP and BEPC Relationship with Brookfield

     66  

BEPC Dividend Policy

     66  

BEPC Capital Structure

     67  

Comparison of Rights of Holders of BEPC Exchangeable Shares, BEP Units and TERP Common Stock

     67  

Rights Agreement

     68  

SUMMARY HISTORICAL FINANCIAL DATA OF TERRAFORM POWER

     69  

SUMMARY HISTORICAL FINANCIAL DATA OF THE UNITED STATES, BRAZILIAN AND COLOMBIAN OPERATIONS OF BEP

     70  

SUMMARY HISTORICAL FINANCIAL DATA OF BEP.

     71  

SUMMARY UNAUDITED PRO FORMA FINANCIAL INFORMATION OF BEPC

     72  

SUMMARY UNAUDITED PRO FORMA FINANCIAL INFORMATION OF BEP

     74  

UNAUDITED COMPARATIVE PER SHARE INFORMATION

     76  

COMPARATIVE STOCK PRICES AND CASH DIVIDENDS

     78  

RISK FACTORS

     81  

Risks Relating to the TERP Acquisition

     81  

Risks Relating to BEPC

     88  

Risks Relating to BEPC Exchangeable Shares

     93  

Risks Relating to BEPC’s Operations and the Renewable Power Industry

     100  

Risks Relating to BEPC’s Relationship with Brookfield and Brookfield Renewable

     110  

Risks Relating to Taxation

     115  

SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

     122  

THE COMPANIES

     124  

THE TERP STOCKHOLDERS MEETING

     126  

PROPOSAL NO. 1: ADOPTION OF THE PLAN OF MERGER AND APPROVAL OF THE REORGANIZATION AGREEMENT, THE REINCORPORATION MERGER AND THE SHARE EXCHANGE

     134  

PROPOSAL NO. 2: ELECTION OF DIRECTORS

     135  

PROPOSAL NO. 3: RATIFICATION OF APPOINTMENT OF ERNST & YOUNG LLP AS TERRAFORM POWER’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2020

     136  

PROPOSAL NO. 4: RATIFICATION, ON A NON-BINDING ADVISORY BASIS, OF THE COMPENSATION PAID TO TERRAFORM POWER’S NAMED EXECUTIVE OFFICERS

     137  


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PROPOSAL NO. 5: ADJOURNMENT OF THE TERP STOCKHOLDERS MEETING, IF NECESSARY, TO SOLICIT ADDITIONAL PROXIES IF THERE ARE NOT SUFFICIENT VOTES TO APPROVE THE MERGER PROPOSAL

     138  

TERRAFORM POWER BOARD AND CORPORATE GOVERNANCE

     139  

SECURITY OWNERSHIP OF CERTAIN TERP BENEFICIAL OWNERS AND MANAGEMENT AND RELATED TERP STOCKHOLDER MATTERS

     146  

REPORT OF THE AUDIT COMMITTEE OF THE TERRAFORM POWER BOARD

     148  

OTHER MATTERS

     149  

THE TERP ACQUISITION

     150  

Effects of the TERP Acquisition

     150  

Background of the TERP Acquisition

     151  

Reasons for the Special Committee’s Recommendation

     160  

Reasons for the TerraForm Power Board’s Recommendation

     165  

BEP and BEPC’s Reasons for the TERP Acquisition

     166  

Opinions of Financial Advisors to the Special Committee of TerraForm Power

     168  

Interests of Certain TERP Directors and Executive Officers

     192  

Certain Relationships of BAM and TerraForm Power and Related Party Transactions

     194  

Regulatory Approvals for the TERP Acquisition

     202  

Accounting Treatment

     204  

Exchange of Public TERP Shares in the TERP Acquisition

     204  

Treatment of TERP Equity Awards

     205  

Dividends and Share Repurchases

     206  

Listing of BEPC Exchangeable Shares and BEP Units

     206  

Delisting and Deregistration of TERP Common Stock

     206  

Certain TerraForm Power Forecasts

     206  

Certain BEP Forecasts

     211  

THE REORGANIZATION AGREEMENT

     215  

Terms of the Reincorporation Merger

     215  

Terms of the Share Exchange

     216  

Closing of the TERP Acquisition

     216  

Consideration to Be Received in the TERP Acquisition

     217  

Election Procedures

     217  

Fractional BEP Units and BEPC Exchangeable Shares

     218  

Representations and Warranties

     218  

Material Adverse Effect

     220  

Conduct of Business

     221  

No Solicitation by TerraForm Power of Takeover or Alternative Proposals

     223  

Recommendation of the TERP Board and the Special Committee

     225  

Efforts to Obtain Required Stockholder Votes

     226  

Efforts to Complete the TERP Acquisition

     227  

Indemnification and Insurance

     228  

Employee Matters

     228  

Equity Based Compensation

     229  

Tax Matters

     229  

Transaction Documents

     230  

Other Covenants and Agreements

     230  


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Conditions to the TERP Acquisition

     230  

Termination of the Reorganization Agreement

     233  

Expenses and Expense Reimbursement Fee

     234  

Amendments, Extensions and Waivers

     234  

No Third-Party Beneficiaries

     235  

Enforcement

     235  

Governing Law

     235  

THE TERP VOTING AGREEMENT

     236  

THE SPECIAL DISTRIBUTION

     237  

Background to and Purpose of the Special Distribution

     237  

Transactions Occurring Prior to the Special Distribution

     237  

Mechanics of the Special Distribution

     238  

Transaction Agreements

     239  

Trading of BEPC Exchangeable Shares

     240  

BEPC DIVIDEND POLICY

     241  

LISTING OF BEPC EXCHANGEABLE SHARES AND BEP UNITS

     242  

BEP AND BEPC CAPITALIZATION

     243  

BEPC Capitalization

     243  

BEP Capitalization

     244  

CORPORATE STRUCTURE

     247  

UNAUDITED PRO FORMA FINANCIAL STATEMENTS

     252  

Unaudited Pro Forma Financial Statements for BEPC

     252  

Unaudited Pro Forma Financial Statements for BEP

     268  

SELECTED HISTORICAL FINANCIAL INFORMATION OF THE UNITED STATES, BRAZILIAN AND COLOMBIAN OPERATIONS OF BEP

     284  

BEPC BUSINESS

     285  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE UNITED STATES, BRAZILIAN AND COLOMBIAN OPERATIONS OF BEP

     296  

BEPC GOVERNANCE

     335  

The BEPC Board of Directors

     335  

Board Structures, Practices and Committees

     338  

Corporate Governance Disclosure

     341  

Indemnifications and Limitations on Liability

     346  

Compensation

     346  

Director Share Ownership Requirements

     347  

Management Diversity

     347  

BEPC MANAGEMENT AND THE BEP MASTER SERVICES AGREEMENT

     348  

BEPC Management

     348  

About Brookfield

     348  

The BEP Master Services Agreement

     350  

BEPC EXECUTIVE COMPENSATION

     355  

BEP AND BEPC RELATIONSHIP WITH BROOKFIELD

     364  

Brookfield Asset Management

     364  


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Brookfield Relationship Agreement

     364  

Management Services

     366  

Other Services and Arrangements

     366  

Rights Agreement

     366  

BEP Registration Rights Agreement

     370  

Incentive Distributions

     370  

Indemnification Arrangements

     371  

Brazil Development Projects

     371  

Licensing Agreement

     371  

Conflicts of Interest and Fiduciary Duties

     372  

BEPC RELATIONSHIP WITH BROOKFIELD RENEWABLE

     387  

Credit Support

     387  

Subscription Agreement

     388  

Subordinated Credit Facilities

     388  

Equity Commitment Agreement

     388  

BEPC Voting Agreements

     389  

Conflicts of Interest

     389  

DESCRIPTION OF BEPC SHARE CAPITAL

     391  

BEPC Exchangeable Shares

     391  

BEPC Class B Shares

     396  

BEPC Class C Shares

     397  

BEPC Preferred Shares

     398  

COMPARISON OF RIGHTS OF HOLDERS OF BEPC EXCHANGEABLE SHARES, BEP UNITS AND TERP COMMON STOCK

     400  

BROOKFIELD RENEWABLE PARTNERS L.P.

     431  

SECURITY OWNERSHIP

     435  

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

     437  

MATERIAL CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

     459  

LEGAL MATTERS

     462  

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

     462  

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

     462  

CEASE TRADE ORDERS, BANKRUPTCIES, PENALTIES OR SANCTIONS

     463  

INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

     464  

STOCKHOLDER PROPOSALS AND HOUSEHOLDING

     465  

EXPERTS, TRANSFER AGENT AND REGISTRAR

     467  

SERVICE OF PROCESS AND ENFORCEABILITY OF CIVIL LIABILITIES

     468  

WHERE YOU CAN FIND MORE INFORMATION

     469  

MATERIAL CONTRACTS

     473  

INDEX TO FINANCIAL STATEMENTS

     F-1  

ANNEX A – Agreement and Plan of Reorganization

     A-1  

ANNEX B – Opinion of Morgan Stanley & Co. LLC

     B-1  

ANNEX C – Opinion of Greentech Capital Advisors Securities, LLC

     C-1  


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NOTICE TO INVESTORS

About this Proxy Statement/Prospectus

This proxy statement/prospectus, which forms part of the registration statement on Form F-1/F-4 filed by BEP and BEPC with the U.S. Securities and Exchange Commission, constitutes (i) a prospectus of BEPC under Section 5 of the Securities Act of 1933, as amended, with respect to the BEPC exchangeable shares to be issued as TERP acquisition consideration to unaffiliated TERP stockholders in the TERP acquisition and (ii) a prospectus of BEP under Section 5 of the Securities Act of 1933, as amended, with respect to the BEP units to be issued as TERP acquisition consideration to unaffiliated TERP stockholders in the TERP acquisition. This proxy statement/prospectus also constitutes a proxy statement for TerraForm Power under Section 14(a) of the Securities and Exchange Act of 1934, as amended. In addition, it constitutes a notice of meeting with respect to the TERP stockholders meeting.

You should rely only on the information contained in or incorporated by reference into this proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this proxy statement/prospectus. You should assume that the information appearing in this proxy statement/prospectus is accurate only as of the date on the front cover of this proxy statement/prospectus, regardless of the time of delivery of this proxy statement/prospectus. You should not assume that the information incorporated by reference into this proxy statement/prospectus is accurate as of any date other than that date. BEPC, BEP and TerraForm Power expressly disclaim any duty to update this proxy statement/prospectus, except as required by applicable law.

This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Information contained in this proxy statement/prospectus regarding BEPC has been provided by BEPC, information contained in this proxy statement/prospectus regarding BEP has been provided by BEP and information contained in this proxy statement/prospectus regarding TerraForm Power has been provided by TerraForm Power.

FERC Restrictions

Some of BEPC’s U.S. operating subsidiaries are “public utilities” (as defined in the Federal Power Act, or “FPA”) and, therefore, subject to the jurisdiction of the U.S. Federal Energy Regulatory Commission, or “FERC,” under the FPA. As a result, the FPA places certain restrictions and requirements on the transfer of an amount of BEPC’s voting securities sufficient to convey direct or indirect control over BEPC. See “Risk Factors—Risks Relating to the BEPC Exchangeable Shares”. As a result of the FPA and FERC’s regulations in respect of transfers of control, consistent with the requirements for blanket authorizations granted under or exemptions from FERC’s regulations, absent prior authorization by FERC, no investor will be permitted to receive an amount of BEPC exchangeable shares pursuant to the special distribution or TERP acquisition that would cause such investor and its affiliate and associate companies in aggregate to hold a 10% or more voting interest in BEPC.

Meaning of Certain References

Unless otherwise noted or the context otherwise requires, when used in this document, the term “BEPC” means Brookfield Renewable Corporation together with all of its subsidiaries. References to “Brookfield Renewable” mean BEP collectively with BRELP, the Holding Entities (but excluding BEPC) and the Operating Entities. References to “Brookfield Renewable group” mean, collectively, BEPC and Brookfield Renewable. Certain capitalized terms and phrases used in this document are defined in the “Glossary”. Words importing the singular number include the plural, and vice versa, and words importing any gender include all genders.

Unless otherwise noted or the context otherwise requires, the disclosure in this document assumes that (i) the special distribution has been completed and BEPC has acquired its operating subsidiaries from Brookfield

 

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Renewable, although BEPC will not acquire such subsidiaries until prior to the special distribution and (ii) the TERP acquisition has not been completed.

Historical Performance and Market Data

This document contains information relating to the Business as well as historical performance and market data for Brookfield Renewable and certain of its operating subsidiaries. When considering this data, you should bear in mind that historical results and market data may not be indicative of the future results that you should expect from BEPC or BEP.

Financial Information

The financial information contained or incorporated by reference in this document is presented in United States dollars and, with the exception of certain financial information relating to TerraForm Power and unless otherwise indicated, has been prepared in accordance with International Financial Reporting Standards, which we refer to as IFRS, as issued by the International Accounting Standards Board, or the IASB. The financial information relating to TerraForm Power contained or incorporated by reference herein has been prepared in accordance with U.S. generally accepted accounting principles, which we refer to as U.S. GAAP. Information prepared in accordance with IFRS may differ from financial information prepared in accordance with U.S. GAAP and therefore may not be comparable.

All figures are unaudited unless otherwise indicated. In this document, all references to “$” are to United States dollars, references to “C$” are to Canadian dollars, references to “R$” are to Brazilian real and references to “COP” are to Colombian pesos.

Use of Non-IFRS Measures

To measure performance, BEPC focuses on net income, an IFRS measure, as well as certain non-IFRS measures, including Funds from Operations, or FFO, and adjusted earnings before interest, taxes, depreciation, and amortization, or Adjusted EBITDA.

BEPC uses FFO to assess the performance of the business before the effects of certain cash items (e.g., acquisition costs and other typical non-recurring cash items) and certain non-cash items (e.g., deferred income taxes, depreciation, non-cash portion of non-controlling interests, unrealized gain or loss on financial instruments, non-cash gain or loss from equity-accounted investments, and other non-cash items) as these are not reflective of the performance of the underlying business. In this document, BEPC uses the revaluation approach in accordance with IAS 16, Property, Plant and Equipment, whereby depreciation is determined based on a revalued amount, thereby reducing comparability with BEPC’s peers who do not report under IFRS as issued by the IASB or who do not employ the revaluation approach to measuring property, plant and equipment. BEPC adds back deferred income taxes on the basis that it does not believe this item reflects the present value of the actual tax obligations that it expects to incur over its long-term investment horizon. FFO is therefore unlikely to be comparable to similar measures presented by other issuers. FFO has limitations as an analytical tool. Specifically, BEPC’s definition of FFO may differ from the definition used by other organizations, as well as the definition of Funds from Operations used by the Real Property Association of Canada and the National Association of Real Estate Investment Trusts, Inc., or NAREIT, in part because the NAREIT definition is based on U.S. GAAP, as opposed to IFRS.

BEPC uses Adjusted EBITDA to assess the performance of the Business before the effects of interest expense, income taxes, depreciation, management service costs, non-controlling interests, unrealized gain or loss on financial instruments, non-cash gain or loss from equity-accounted investments, distributions to preferred limited partners and other typical non-recurring items. BEPC adjusts for these factors as they may be non-cash, unusual in nature and/or are not factors used by management for evaluating operating performance. Adjusted

 

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EBITDA is a measure of operating performance that is not calculated in accordance with, and does not have any standardized meaning prescribed by, IFRS. Adjusted EBITDA is therefore unlikely to be comparable to similar measures presented by other issuers and has limitations as an analytical tool.

See “Managements Discussion and Analysis of Financial Condition and Results of Operations of the United States, Brazilian and Colombian Operations of BEP” for reconciliations of non-IFRS measures to the nearest IFRS measures.

Market Data and Industry Data

Market and industry data presented throughout, or incorporated by reference in, this document was obtained from third party sources, industry publications, and publicly available information, as well as industry and other data prepared by the Brookfield Renewable group on the basis of its collective knowledge of the Canadian, U.S. and international markets and economies (including estimates and assumptions relating to these markets and economies based on that knowledge). The Brookfield Renewable group believes that the market and economic data is accurate and that the estimates and assumptions are reasonable, but there can be no assurance as to the accuracy or completeness thereof. The accuracy and completeness of the market and economic data used throughout this document, or incorporated by reference herein, are not guaranteed and the Brookfield Renewable group does not make any representation as to the accuracy of such information. Although the Brookfield Renewable group believes it to be reliable, the Brookfield Renewable group has not independently verified any of the data from third party sources referred to or incorporated by reference in this document, analyzed or verified the underlying studies or surveys relied upon or referred to by such sources, or ascertained the underlying economic and other assumptions relied upon by such sources.

 

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GLOSSARY

Acquisition Sub” means 2252876 Alberta ULC, an unlimited liability corporation incorporated under the laws of Alberta and a wholly owned direct subsidiary of BEP;

Adjournment Proposal” or “Proposal No. 5” means proposal that is scheduled to be voted on at the TERP stockholders meeting to approve the adjournment of the TERP stockholders meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the Merger Proposal;

adjusted exchange ratio” means the product of (x) 0.381 multiplied by (y) the sum of (i) the number (rounded, if necessary, to three decimal points) of BEPC exchangeable shares to be distributed with respect to each BEP unit upon the consummation of the special distribution and (ii) one;

BAM” means Brookfield Asset Management Inc.;

BAM Class A Shares” has the meaning ascribed thereto under “BEPC Executive Compensation”;

BBHC Orion” means BBHC Orion Holdco L.P.;

BCBCA” means the Business Corporations Act (British Columbia);

BEP” means Brookfield Renewable Partners L.P.;

BEP contribution” means BEP’s contribution of certain of its Colombian, Brazilian and United States operations to BEPC;

BEP Master Services Agreement” means the third amended and restated master services agreement dated as of May 11, 2020, among the Service Recipients, BRELP, Brookfield, the Service Providers and others, as amended;

BEP Registration Rights Agreement” has the meaning ascribed thereto under “BEP and BEPC Relationship with Brookfield—BEP Registration Rights Agreement”;

“BEP share exchange” means the binding share exchange to be effected immediately following the reincorporation merger, pursuant to which Acquisition Sub will acquire each share of TerraForm New York class C common stock that is issued and outstanding after the reincorporation merger effective time in exchange for BEP units;

“BEP units” means BEP’s limited partnership units, and “BEP unit” means any one of them;

BEP’s Annual Report” means BEP’s annual report on Form 20-F for the fiscal year ended December 31, 2019, as amended (filed in Canada with the Canadian securities regulatory authorities in lieu of an annual information form), which includes BEP’s audited consolidated statements of financial position as of December 31, 2019 and December 31, 2018, and the related consolidated statements of income, comprehensive income (loss), changes in equity and cash flows for each of the three years in the period ended December 31, 2019, together with the reports thereon of the independent registered public accounting firm and management’s discussion and analysis of BEP as of December 31, 2019 and 2018 and for each of the three years in the period ended December 31, 2019;

BEPC” means Brookfield Renewable Corporation;

BEPC articles” means the notice of articles and articles of BEPC;

 

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BEPC audit committee” means the audit committee of the BEPC board, as further described under “BEPC GovernanceCorporate Governance DisclosureCommittees of the Board of DirectorsBEPC Audit Committee”;

BEPC board” means the board of directors of BEPC;

BEPC class B shares means the class B multiple voting shares in the capital of BEPC, as further described under “Description of BEPC Share Capital—BEPC Class B Shares”, and “BEPC class B share” means any one of them;

BEPC class C shares means the class C non-voting shares in the capital of BEPC, as further described under “Description of BEPC Share Capital—BEPC Class C Shares”, and “BEPC class C share” means any one of them;

BEPC committees” means the BEPC audit committee and the BEPC nominating and governance committee;

BEPC exchangeable shares” means the class A exchangeable subordinate voting shares in the capital of BEPC, as further described under “Description of BEPC’s Share Capital—BEPC Exchangeable Shares”, and “BEPC exchangeable share” means any one of them;

BEPC nominating and governance committee” means the nominating and governance committee of the BEPC board, as further described under “BEPC Governance—Corporate Governance Disclosure—Committees of the Board of Directors—BEPC Nominating and Governance Committee”;

BEPC pre-approval policy” means the written policy on auditor independence of the BEPC board;

BEPC preferred shares” has the meaning ascribed thereto under “Description of BEPC Share Capital”;

BEPC share exchange” means the binding share exchange to be effected immediately following the reincorporation merger, pursuant to which BEPC will acquire each share of TerraForm New York class B common stock that is issued and outstanding after the reincorporation merger effective time in exchange for BEPC exchangeable shares;

BEPC Voting Agreements” has the meaning ascribed thereto under “BEP and BEPC Relationship with Brookfield Renewable—BEPC Voting Agreements”;

BPUSHA” means Brookfield Power US Holding America Co.;

BRELP” means Brookfield Renewable Energy L.P.;

BRELP Class A Preferred Units” means the Class A preferred partnership units of BRELP;

BRELP Distribution” means the distribution in specie by BRELP of BEPC exchangeable shares to all holders of its equity units (which does not include preferred partnership units) that occurs immediately prior to the special distribution;

Brookfield” means BAM and its subsidiaries (other than entities within the Brookfield Renewable group and TerraForm Power and its subsidiaries);

Brookfield Accounts” means Brookfield and/or other Brookfield-sponsored vehicles, consortiums and/or partnerships (including private funds, joint ventures and similar arrangements);

 

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Brookfield Personnel” means the partners, members, shareholders, directors, officers and employees of Brookfield;

Brookfield Relationship Agreement” means the amended and restated relationship agreement dated as of March 28, 2014, as amended from time to time, by, among others, BAM, BEP and BRELP;

Brookfield Renewable” means BEP collectively with BRELP, the Holding Entities and the Operating Entities (but excluding BEPC);

Brookfield Renewable group” means Brookfield Renewable, BEPC and their respective subsidiaries, including Acquisition Sub;

Brookfield stockholders” means BBHC Orion and Orion Holdings, each an affiliate of Brookfield and a stockholder of TerraForm Power;

Brookfield Trading Policy” has the meaning ascribed thereto under “BEPC Governance—Corporate Governance Disclosure—Personal Trading Policy”;

BRPI” means Brookfield Renewable Power Inc.;

BRPPE” means Brookfield Renewable Power Preferred Equity Inc.;

Business” means the United States, Brazilian and Colombian operations of BEP to be acquired by BEPC immediately prior to the special distribution;

Canada SubCo” means BEP Subco Inc.;

cash bonus” has the meaning ascribed thereto under “BEPC Executive Compensation”;

CDS” means CDS Clearing and Depository Services Inc.;

CEE Funds” means the Germany based asset manager that holds renewable energy funds targeting low risk renewable investments, which is a portfolio company of Brookfield;

chair” means the chairperson of the BEPC board;

Code” means the Internal Revenue Code of 1986, as amended;

Competition Act” means Competition Act, R.S.C., 1985, c. C 34.;

collateral account” means the non-interest bearing trust account established by Brookfield or its affiliates to be administered by the rights agent;

combined company” means Brookfield Renewable group after giving effect to the TERP acquisition;

completion date” means the date on which the TERP acquisition is completed;

conflicts management policy” has the meaning ascribed thereto under “BEP and BEPC Relationship with Brookfield—Conflicts of Interest and Fiduciary Duties”;

CRA” means the Canada Revenue Agency;

 

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customary rates” means the same or substantially similar services provided by Brookfield to one or more third parties;

DGCL” means General Corporation Law of the State of Delaware;

distribution date” means the date on which the special distribution occurs;

distribution record date” means the record date for the special distribution;

DSU Allotment Price” has the meaning ascribed thereto under “BEPC Executive Compensation”;

DSUP” means the Deferred Share Unit Plan;

DSUs” has the meaning ascribed thereto under “BEPC Executive Compensation—Cash Bonus and Long-Term Incentive Plans”;

DTC” means the Depository Trust Company;

EDGAR” means the Electronic Data Gathering, Analysis, and Retrieval system at www.sec.gov;

Equity Commitment Agreement” has the meaning ascribed thereto under “BEPC Relationship with Brookfield Renewable—Equity Commitment Agreement”;

Ethics code” means the BEPC Code of Business Conduct and Ethics;

Escrow Company” has the meaning ascribed thereto under “BEPC Executive Compensation”;

Escrowed Shares” has the meaning ascribed thereto under “BEPC Executive Compensation”;

Escrowed Stock Plan” has the meaning ascribed thereto under “BEPC Executive Compensation”;

ESG” means environmental, social and governance;

Euro Holdco” means Brookfield BRP Europe Holdings (Bermuda) Limited;

Exchange Act” means the Securities Exchange Act of 1934, as amended;

exchange ratio” means 0.381;

FERC” means the Federal Energy Regulatory Commission;

FFO” means Funds from Operations;

Finco” means Brookfield Renewable Partners ULC;

forward-looking statements” has the meaning ascribed thereto under “Special Note Regarding Forward-Looking Information”;

Holding Entities” means LATAM Holdco, NA Holdco, Euro Holdco, Investco and any other direct or indirect wholly owned subsidiary of BRELP created or acquired after the date of BRELP’s limited partnership agreement;

Holdings IV” means BEP Bermuda Holdings IV Limited;

 

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HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended;

HSS&E” has the meaning ascribed thereto under “BEPC Business—Operating Philosophy”;

Hydro Holdings” means an entity that is entitled to appoint a majority of the board of directors of Isagen;

IFRS” means International Financial Reporting Standards as issued by the International Accounting Standards Board;

Investco” means Brookfield Renewable Investments Limited;

investing affiliate” has the meaning ascribed thereto under “BEP and BEPC Relationship with Brookfield—Conflicts of Interest and Fiduciary Duties—Investments by the Investing Affiliate”;

IRS” means the Internal Revenue Service;

Isagen” means Isagen S.A. E.S.P.;

LATAM Holdco” means BRP Bermuda Holdings I Limited;

LIBOR” means the London Interbank Offered Rate;

Licensing Agreement” has the meaning ascribed thereto under “BEP and BEPC Relationship with Brookfield—Licensing Agreement”;

LTA” means long-term average;

Merger Proposal” or “Proposal No. 1” means proposal that is scheduled to be voted on at the TERP stockholders meeting to consider and vote upon a proposal to adopt the Plan of Merger and approve the Reorganization Agreement, the reincorporation merger and the share exchange;

MI 61-101” means Canadian Multilateral Instrument 61-101—Protection of Minority Securityholders in Special Transactions;

MRE” has the meaning ascribed thereto under “The BEPC Business—Current Operations—Brazil—Market Opportunity”;

MSOP” has the meaning ascribed thereto under “BEPC Executive Compensation”;

NA HoldCo” means Brookfield BRP Holdings (Canada) Inc.;

NASDAQ” means National Association of Securities Dealers Automated Quotations System;

NEOs” means the named executive officers of BEPC;

non-resident holder” has the meaning ascribed thereto under “Material Canadian Federal Income Tax Considerations—Taxation of Holders Not Resident in Canada”;

non-U.S. holder” has the meaning ascribed thereto under “Material United States Federal Income Tax Considerations”;

NYBCL” means Business Corporation Law of the State of New York;

 

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NYSE” means the New York Stock Exchange;

Operating Entities” means the subsidiaries of the Holding Entities which, from time to time, directly or indirectly hold, or may in the future hold, operations or assets, including any of the assets or operations held through joint ventures, partnerships and consortium arrangements;

operating performance compensation” means performance-based compensation;

Orion Holdings” means Orion U.S. Holdings 1 L.P.;

PFIC” has the meaning ascribed thereto under “Material United States Federal Income Tax Considerations—Consequences to U.S. Holders—Ownership and Disposition of BEPC Exchangeable Shares”;

Plan of Merger” means the agreement and plan of merger set forth in Exhibit B to the Reorganization Agreement;

Plans of Exchange” means, collectively, the parent plan of exchange set forth in Exhibit C to the Reorganization Agreement and the BEPC plan of exchange set forth in Exhibit D to the Reorganization Agreement, and “Plan of Exchange” is a reference to either of them as the context may require;

PPA” means a power purchase agreement, power guarantee agreement or similar long-term agreement between a seller and buyer of electrical power generation;

preferred units” means BEP’s preferred limited partnership units;

proposed amendments” has the meaning ascribed thereto under “Material Canadian Federal Income Tax Considerations”;

PSG” means Brookfield’s Public Securities Group;

public TERP shares” means the shares of issued and outstanding TERP common stock that are not owned by the Brookfield stockholders, and “public TERP share” means any one of them;

Registration Rights Agreement” has the meaning ascribed thereto under “BEP and BEPC Relationship with Brookfield—Registration Rights Agreement”;

reincorporation merger” means the first step of the TERP acquisition, in which TerraForm Power will merge with and into TerraForm New York, with TerraForm New York as the surviving corporation of such merger;

Reorganization Agreement” means the Agreement and Plan of Reorganization, dated as of March 16, 2020, as it may be amended from time to time, among BEP, BEPC, Acquisition Sub, TerraForm Power and TerraForm New York, a copy of which is attached as Annex A to this proxy statement/prospectus and is incorporated herein by reference;

Restricted Shares” or “RS” has the meaning ascribed thereto under “BEPC Executive Compensation”;

Restricted Stock Plan” has the meaning ascribed thereto under “BEPC Executive Compensation”;

rights agent” means Wilmington Trust, National Association;

Rights Agreement” has the meaning ascribed thereto under “BEP and BEPC Relationship with Brookfield—Rights Agreement”;

 

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RRSP” means registered retirement savings plan;

RSU Allotment Price” has the meaning ascribed thereto under “BEPC Executive Compensation”;

RSUP” has the meaning ascribed thereto under “BEPC Executive Compensation”;

RSUs” has the meaning ascribed thereto under “BEPC Executive Compensation”;

Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002 (United States);

SEC” means the United States Securities and Exchange Commission;

SEDAR” means the System for Electronic Document Analysis and Retrieval at www.sedar.com;

Service Providers” has the meaning ascribed thereto in the BEP Master Services Agreement;

Service Recipients” has the meaning ascribed thereto in the BEP Master Services Agreement;

share exchange” means BEPC share exchange and BEP share exchange;

SHPP” has the meaning ascribed thereto under “BEPC BusinessCurrent OperationsBrazil”;

Special Committee” means the special committee of the board of directors of TerraForm Power, comprised of directors who are not directly or indirectly affiliated with, and are otherwise independent from, BEP and who are not members of TerraForm Power’s management or otherwise interested in the TERP acquisition, which committee was established to, among other things, review, evaluate and negotiate the Reorganization Agreement and the reincorporation merger and the share exchange contemplated thereby and any alternatives thereto;

special distribution” means the planned special distribution by BEP to the holders of BEP units of approximately 44.7 million BEPC exchangeable shares;

Subordinated Credit Facilities” has the meaning ascribed thereto under “BEPC Relationship with Brookfield Renewable—Subordinated Credit Facilities”;

Tax Act” means the Income Tax Act (Canada);

TERP” or “TerraForm Power” means TerraForm Power, Inc. and, where the context requires, the entity surviving after the reincorporation merger;

TERP acquisition” means the acquisition by the Brookfield Renewable group of all of the public TERP shares through the reincorporation merger and the share exchange;

TERP acquisition consideration” means the consideration, per public TERP share, to be received in the TERP acquisition by TERP stockholders (other than the Brookfield stockholders), equivalent to 0.381 of a BEPC exchangeable share or, at the election of the holder of such share, 0.381 of a BEP unit (in each case, subject to adjustment for the special distribution and subject to further adjustment to prevent dilution in accordance with the Reorganization Agreement as described in the section entitled “The Reorganization Agreement—Consideration to Be Received in the TERP Acquisition”);

TERP board” or “TerraForm Power Board” means the board of directors of TerraForm Power;

TERP Brookfield MSA” means a master services agreement dated October 16, 2017, amongst TerraForm Power and Brookfield and certain of its affiliates;

 

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TERP common stock” means class A common stock, par value $0.01, of TerraForm Power;

TERP record date” means June 26, 2020;

TERP stockholder approvals” means (1) the adoption of the Plan of Merger and the approval of the Reorganization Agreement, the reincorporation merger and the share exchange by the holders of a majority of outstanding shares of TERP common stock entitled to vote thereon and (2) the unaffiliated TERP stockholder approval;

TERP stockholders meeting” means the meeting that TerraForm Power will hold for its stockholders on July 29, 2020, and any adjournments or postponements thereof, to vote on, among other matters, the adoption of the Plan of Merger and the approval of the Reorganization Agreement, the reincorporation merger and the share exchange, and is the meeting to which this proxy statement/prospectus relates;

TERP Stockholders Meeting Proposals” means, collectively, proposals that are scheduled to be voted on at the TERP stockholders meeting to (i) to elect seven directors to serve until the next TerraForm Power annual stockholders meeting and until their respective successors are duly elected or appointed and qualified, subject to his or her earlier resignation or removal (including in connection with the completion of the TERP acquisition) or death, (ii) to ratify the appointment of Ernst & Young LLP as TerraForm Power’s independent registered public accounting firm for 2020 and (iii) to ratify, on a non-binding, advisory basis, the compensation paid to TerraForm Power’s named executive officers;

TERP Takeover Proposal” has the meaning ascribed thereto under “The Reorganization AgreementNo Solicitation by TerraForm Power of Takeover or Alternative Proposals”;

TERP Voting Agreement” means the Voting Agreement dated as of March 16, 2020, among TerraForm Power, BBHC Orion and Orion Holdings, which is attached as Exhibit A to the Reorganization Agreement;

TerraForm New York” means TerraForm Power NY Holdings, Inc., a newly formed New York corporation and a wholly owned direct subsidiary of TerraForm Power;

TerraForm New York class A common stock” means TerraForm New York’s class A common stock, par value $0.01;

TerraForm New York class B common stock” means TerraForm New York’s class B common stock, par value $0.01;

TerraForm New York class C common stock” means TerraForm New York’s class C common stock, par value $0.01;

TerraForm New York RSUs” means all outstanding TerraForm New York restricted stock units;

TerraForm Power RSUs” means all outstanding TerraForm Power restricted stock units;

Treasury Regulations” means the U.S. Treasury Regulations promulgated under the U.S. Internal Revenue Code;

TSX” means the Toronto Stock Exchange;

unaffiliated TERP stockholders” means holders of TERP common stock other than the Brookfield stockholders;

 

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unaffiliated TERP stockholder approval” means the adoption of the Plan of Merger and the approval of the Reorganization Agreement, the reincorporation merger and the share exchange by the holders of a majority of outstanding shares of TERP common stock entitled to vote thereon that are not owned, directly or indirectly, by BEP or its affiliates or any person with whom BEP or its affiliates has formed (and not terminated) a “group” (as defined in the Exchange Act);

Unaudited Pro Forma Financial Statements” means collectively or separately, as the context requires, BEPC’s unaudited condensed combined pro forma financial statements and BEP’s unaudited condensed combined pro forma financial statements;

U.S. GAAP” means generally accepted accounting principles in the United States that the SEC has identified as having substantial authoritative support, as supplemented by Regulation S-X under the 1934 Act, as amended from time to time;

U.S. holder” has the meaning ascribed thereto under “Material United States Federal Income Tax Considerations”; and

U.S. Securities Act” means the Securities Act of 1933, as amended and the rules and regulations promulgated from time to time thereunder.

 

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QUESTIONS AND ANSWERS

The following questions and answers are intended to address briefly some commonly asked questions regarding the TERP acquisition, matters to be addressed at the TERP stockholders meeting and matters relating to the BEPC exchangeable shares, BEP units and special distribution. These questions and answers may not address all questions that may be important to stockholders of TerraForm Power. To better understand these matters, and for a description of the legal terms governing the TERP acquisition, you should carefully read this entire proxy statement/prospectus, including the attached Annexes, as well as the documents that have been incorporated herein by reference. See “Where You Can Find More Information”.

Questions and Answers Regarding the TERP Acquisition

 

Questions

  

Answers Regarding the TERP Acquisition

What is the proposed transaction on which I am being asked to vote?

  

BEP, BEPC, Acquisition Sub, TerraForm Power and TerraForm New York have entered into the Reorganization Agreement that is described in this proxy statement/prospectus, and a copy of which is attached as Annex A. Pursuant to the Reorganization Agreement and subject to the terms and conditions therein, the Brookfield Renewable group will acquire all of the public TERP shares through a series of transactions, referred to as the TERP acquisition, in which:

  

•  First, TerraForm Power will merge with and into TerraForm New York, with TerraForm New York as the surviving corporation of such merger, with (i) each share of TERP common stock that is owned by the Brookfield stockholders converted into one share of TerraForm New York class A common stock, (ii) each public TERP share that is issued and outstanding immediately prior to the reincorporation effective time with respect to which no election has been made to receive BEP units converted into one share of TerraForm New York class B common stock and (iii) each public TERP share with respect to which an election to receive BEP units has been validly made, and not validly revoked, converted into one share of TerraForm New York class C common stock.

  

•  Second, pursuant to two separate binding share exchanges effected under the NYBCL, (a) BEPC will acquire each share of TerraForm New York class B common stock (received by former holders of public TERP shares who have not made an election to receive BEP units) in exchange for 0.381 (referred to as the exchange ratio) of a BEPC exchangeable share per share of TerraForm New York class B common stock and cash in lieu of a fractional BEPC exchangeable share and (b) Acquisition Sub will acquire each share of TerraForm New York class C common stock (received by former holders of public TERP shares who have made an election to receive BEP units) in exchange for 0.381 of a BEP unit per share of TerraForm New York class C common stock and cash in lieu of a fractional BEP unit. In each case, the exchange ratio of 0.381 is subject to

 

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Questions

  

Answers Regarding the TERP Acquisition

  

adjustment as described in the section entitled “The Reorganization AgreementConsideration to Be Received in the TERP Acquisition”.

  

Each share of TERP common stock held by the Brookfield stockholders prior to the completion of the TERP acquisition will remain issued and outstanding as one share of class A common stock of TerraForm New York, the surviving corporation.

  

It is a condition to the completion of the TERP acquisition that the special distribution has occurred or that all actions have been taken which are reasonably necessary to cause the special distribution to occur substantially simultaneously with, but no later than immediately prior to, the completion of the TERP acquisition.

  

Upon completion of the TERP acquisition, TerraForm New York will become wholly owned by the Brookfield Renewable group and the Brookfield Renewable group’s affiliates.

Why am I receiving these materials?

  

You are receiving this proxy statement/prospectus because you were a holder of record of TERP common stock as of the close of business on the TERP record date.

  

BEP, BEPC, Acquisition Sub, TerraForm Power and TerraForm Power NY have agreed to a transaction, pursuant to which TerraForm Power will become wholly owned by the Brookfield Renewable group and the Brookfield Renewable group’s affiliates and will no longer be a publicly traded corporation. If the TERP acquisition is completed, each public TERP share will be acquired, through a series of transactions, for TERP acquisition consideration, as further described in the section entitled “The Reorganization Agreement—Consideration to Be Received in the TERP Acquisition”.

  

TerraForm Power is holding a meeting of stockholders in order to, among other matters, obtain the TERP stockholder approvals. In order to complete the TERP acquisition, TERP stockholders must vote to adopt the Plan of Merger and approve the Reorganization Agreement, the reincorporation merger and the share exchange. This proxy statement/prospectus is being delivered to you as both a proxy statement of TerraForm Power and a prospectus of BEP and BEPC in connection with the TERP acquisition. It is the proxy statement by which the TerraForm Power Board is soliciting proxies from you to vote in favor of the proposal to adopt the Plan of Merger and approve the Reorganization Agreement, the reincorporation merger and the share exchange at the TERP stockholders meeting or at any adjournment or postponement thereof. It is also the prospectus for the offering by BEP and BEPC of BEP units and BEPC exchangeable shares, respectively, in the TERP acquisition.

 

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Questions

  

Answers Regarding the TERP Acquisition

  

TERP stockholders will also be asked at the TERP stockholders meeting to approve the TERP Stockholders Meeting Proposals (Proposals Nos. 2, 3 and 4) and the Adjournment Proposal (Proposal No. 5).

  

BEP, BEPC, Acquisition Sub, TerraForm Power and TerraForm New York will be unable to complete the TERP acquisition without, among other things, the unaffiliated TERP stockholder approval.

What will unaffiliated TERP stockholders receive in the TERP acquisition?

  

If the TERP acquisition is completed, each public TERP share will automatically be exchanged into the right to receive consideration, referred to as the TERP acquisition consideration, consisting of a number of, at the election of the holder of such public TERP shares, BEPC exchangeable shares or BEP units, in each case, equal to the adjusted exchange ratio and subject to further adjustment to prevent dilution in accordance with the Reorganization Agreement. The adjusted exchange ratio will be determined by multiplying (x) 0.381 by (y) the sum of (i) the number (rounded, if necessary, to three decimal points) of BEPC exchangeable shares to be distributed with respect to each BEP unit upon the consummation of the special distribution and (ii) one. For example, if holders of BEP units receive one BEPC exchangeable share for every four BEP units in the special distribution, the adjusted exchange ratio will be equal to 0.47625, and holders of public TERP shares will receive 0.47625 of a BEPC exchangeable share or BEP unit per public TERP share. Each BEPC exchangeable share has been structured with the intention of providing an economic return equivalent to one BEP unit (subject to adjustment to reflect certain capital events). See “BEPC Relationship with Brookfield Renewable” and “Description of BEPC Share Capital—BEPC Exchangeable Shares”. Holders of public TERP shares will not participate in the special distribution.

  

Unaffiliated TERP stockholders will not receive any fractional BEPC exchangeable shares or BEP units as TERP acquisition consideration. Instead, unaffiliated TERP stockholders will receive cash in lieu of any fractional BEPC exchangeable shares or BEP units that they would otherwise have been entitled to receive.

Will the TERP acquisition be completed if the special distribution does not occur?

  

No, it is a condition to TerraForm Power’s and TerraForm New York’s obligations to complete the TERP acquisition that the special distribution has occurred or that all actions have been taken which are reasonably necessary to cause the special distribution to occur substantially simultaneously with, but no later than immediately prior to, the completion of the TERP acquisition.

 

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Questions

  

Answers Regarding the TERP Acquisition

  

For a summary of this and the other conditions that must be satisfied (or, to the extent legally permissible, waived (except with respect to the receipt of the TERP stockholder approvals condition, which is not waivable)) prior to completion of the TERP acquisition, see “The Reorganization AgreementConditions to the TERP Acquisition”.

How do I make an election to receive BEP units if I am an unaffiliated TERP stockholder?

  

Holders of public TERP shares wishing to receive BEP units as the TERP acquisition consideration are required to make an election to receive BEP units (referred to as the BEP unit election) by 5:00 p.m. New York time on July 28, 2020, the business day immediately prior to the TERP stockholders meeting (referred to as the election deadline). Concurrently with the mailing of this proxy statement/prospectus, an election form will be mailed to each holder of record of TERP common stock for the TERP stockholders meeting. BEPC and Acquisition Sub will make available one or more election forms as may be reasonably requested from time to time by all persons who become holders (or beneficial owners) of TERP common stock during the period following the record date and prior to the close of business on the business day prior to the election deadline.

  

To elect to receive BEP units, you must indicate on the election form your election to receive TerraForm New York class C common stock, and such TerraForm New York class C common stock, subject to the treatment of fractional shares, will automatically exchange into BEP units following completion of the TERP acquisition. After a BEP unit election is validly made with respect to any public TERP shares, no further registration of transfer of such shares will be made on the transfer books of TerraForm Power unless and until such BEP unit election is revoked in accordance with the procedures set forth in the election form. In the event any BEP unit election is made by a beneficial owner of public TERP shares, such BEP unit election will be deemed automatically revoked in the event of any transfer of such beneficial ownership. If you elect to receive BEP units, you must make the same election with respect to all of the TERP common stock held by you. Unaffiliated TERP stockholders who do not make a BEP unit election prior to the election deadline will be entitled to receive BEPC exchangeable shares upon completion of the TERP acquisition. There is no limit on the number of public TERP shares that may be exchanged for BEPC exchangeable shares or BEP units.

  

You must return your properly completed and signed form by the election deadline. If you hold public TERP shares through a bank, broker or other nominee, you should follow the instructions provided by such bank, broker or other nominee to ensure that your election instructions are timely returned. For further information, see the sections entitled “The TERP Acquisition—Exchange of Public TERP Shares in the TERP Acquisition” and “The Reorganization Agreement—Election Procedures”.

 

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Questions

  

Answers Regarding the TERP Acquisition

Can I revoke or change my election after I mail my election form?

  

Yes. Any election form may be revoked prior to the election deadline with respect to all of the public TERP shares subject thereto by the stockholder who submitted the applicable election form in accordance with the procedures set forth in the election form. If an election form is revoked, the holder of such public TERP shares as to which such election previously applied will be deemed to have made no BEP unit election unless an election is subsequently submitted by the stockholder prior to the election deadline. For further information, see the section entitled “The Reorganization Agreement—Election Procedures”. Unaffiliated TERP stockholders who do not make a BEP unit election will be entitled to receive BEPC exchangeable shares upon completion of the TERP acquisition.

What happens if I do not make an election or my election form is not received before the election deadline?

  

If an unaffiliated TERP stockholder does not make a BEP unit election with respect to its shares of TERP common stock or the exchange agent does not receive a properly completed and signed election form by the election deadline, such unaffiliated TERP stockholder will receive BEPC exchangeable shares in respect of its public TERP shares following completion of the TERP acquisition. For more information, see the section entitled “The Reorganization Agreement—Election Procedures.

If I am an unaffiliated TERP stockholder, how will I receive the TERP acquisition consideration to which I am entitled?

  

After receiving any requisite documentation from you, following the completion of the TERP acquisition, the exchange agent will mail to you (1) a statement reflecting the whole number of BEPC exchangeable shares or BEP units, as applicable, you have the right to receive as TERP acquisition consideration and (2) a check for any cash, in dollars, if any, in lieu of a fractional BEPC exchangeable share or BEP unit and dividends and other distributions payable (if any) to which you are entitled. If you hold your shares of TERP common stock in certificated form, you will need to complete certain exchange procedures with respect to such certificated shares to receive the TERP acquisition consideration you are entitled to receive. For additional information about the exchange of shares of public TERP shares for the TERP acquisition consideration, see “The TERP Acquisition—Exchange of Public TERP Shares in the TERP Acquisition”.

Who is the exchange agent for the TERP acquisition?

  

Computershare Trust Company of Canada is the exchange agent.

What are the important differences between BEPC exchangeable shares and BEP units?

  

While BEPC exchangeable shares and BEP units are structured with the intention of being economically equivalent, there are some differences between these two securities. These differences include:

  

•  holders of BEPC exchangeable shares have the right to exchange all or a portion of their BEPC exchangeable shares for, at the election of BEPC, one BEP unit per BEPC exchangeable share held or its cash equivalent based on the

 

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Questions

  

Answers Regarding the TERP Acquisition

  

NYSE closing price of one BEP unit on the date of the request for exchange (or if not a trading day, the next trading day thereafter), in each case subject to adjustment to reflect certain capital events, plus all unpaid accrued dividends, if any, while holders of BEP units do not have any exchange rights;

  

•  unlike BEP units, BEPC exchangeable shares are subject to redemption rights, where in the sole discretion of the board of BEPC or at the request of BEP, as the indirect holder of class B shares of BEPC, BEPC may, without the consent of holders of BEPC exchangeable shares, redeem all of the then outstanding BEPC exchangeable shares for BEP units upon sixty (60) days’ prior written notice from BEPC to holders of the BEPC exchangeable shares, subject to applicable law;

  

•  the BEPC exchangeable shares are not BEP units and will not be treated as BEP units for purposes of the application of applicable Canadian and U.S. rules relating to takeover bids, issuer bids and tender offers;

  

•  for U.S. federal income tax purposes, holders of BEPC exchangeable shares generally will be taxable under the rules that apply to shareholders of a corporation, whereas holders of BEP units generally will be taxable under the rules that apply to partners of a partnership;

  

•  the Canadian income taxation of amounts distributed on BEP units will generally depend on the character and source of the underlying income earned by BEP whereas the Canadian income taxation of amounts paid on the BEPC exchangeable shares as dividends will generally depend on whether the dividends are taxable dividends subject to withholding tax or capital gains dividends (which are generally received free of Canadian tax); and

  

•  holders of BEPC exchangeable shares, under the Business Corporations Act (British Columbia), have the right to bring oppression claims and derivative actions. These remedies are not available to a BEP unitholder under the Bermuda Limited Partnership Act 1883 and the Bermuda Exempted Partnerships Act 1992.

  

In addition, below are a few additional differences between the two securities:

  

•  holders of BEPC exchangeable shares vote on all matters submitted to a vote of BEPC shareholders, while holders of BEP units are not generally entitled to vote on matters relating to BEP but are entitled to approve certain amendments to BEP’s limited partnership agreement, certain matters with respect to the withdrawal of BEP’s general partner, and certain fundamental matters; and

 

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Questions

  

Answers Regarding the TERP Acquisition

  

•  BEPC shareholders’ rights, such as the right to elect the BEPC board or propose resolutions, are only available to holders of BEPC exchangeable shares and may not be exercised by holders of BEP units in respect of BEP.

  

However, because Brookfield Renewable, which is controlled by Brookfield, will hold all of the BEPC class B shares, it will hold 75% of the votes eligible to be cast on all matters where the BEPC exchangeable shares and the BEPC class B shares vote together. As a result, Brookfield is able to control the election and removal of BEPC directors and, accordingly, exercises substantial influence over BEPC. For additional information regarding voting rights, see “Description of BEPC Share Capital—BEPC Exchangeable Shares—Voting”. For a more detailed discussion of BEPC exchangeable shares and BEP units, see “Description of BEPC Share CapitalBEPC Exchangeable Shares” and “Comparison of Rights of Holders of BEPC Exchangeable Shares, BEP Units and TERP Common Stock”.

What happens if the TERP acquisition is not completed?

  

If the TERP acquisition is not completed for any reason, TERP stockholders will not receive any consideration for their shares of TERP common stock, and TerraForm Power will remain a U.S. public company with TERP common stock continuing to be listed on NASDAQ.

Will I still be paid dividends prior to the TERP acquisition?

  

TerraForm Power most recently paid a quarterly dividend of $0.2014 per share to its stockholders. Under the Reorganization Agreement, prior to completion of the TERP acquisition, TerraForm Power may continue to declare and pay its regular quarterly cash dividend in an amount of up to $0.2014 per share.

Are there any important risks about the TERP acquisition or BEPC’s or BEP’s business of which I should be aware?

  

Yes, there are important risks involved. Before making any decision on whether and how to vote, you are urged to read carefully and in its entirety “Risk Factors” beginning on page 81 of this proxy statement/prospectus.

Is the transaction expected to be taxable to unaffiliated TERP stockholders?

  

For U.S. federal income tax purposes, the BEPC share exchange is intended to qualify as a transaction described in Section 351 of the Code, generally with no material gain or loss recognition to U.S. holders of public TERP shares, including by reason of the application of Section 367(a) of the Code. However, this tax treatment is not free from doubt, and there are factual and legal uncertainties concerning these conclusions. If the IRS were to challenge this tax treatment and such challenge were to be sustained, a U.S. holder of public TERP shares generally would be required to recognize gain (and might not be allowed to recognize loss) equal to the difference between the amount realized in the BEPC share exchange and such U.S. holder’s adjusted tax basis in the public TERP shares exchanged for BEPC exchangeable shares.

 

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Questions

  

Answers Regarding the TERP Acquisition

  

 

For U.S. federal income tax purposes, the BEP share exchange is intended to qualify as a contribution described in Section 721(a) of the Code, generally with no material gain or loss recognition to U.S. holders of public TERP shares who elect to receive BEP units as TERP acquisition consideration. However, this tax treatment is not free from doubt. There are factual and legal uncertainties concerning this conclusion, and there is additional uncertainty as to whether steps undertaken by BEP in connection with the TERP acquisition could result in adverse U.S. federal income tax consequences under the rules governing “disguised sales” to partnerships. If the IRS were to challenge this tax treatment and such challenge were to be sustained, a U.S. holder of public TERP shares generally would be required to recognize gain equal to the difference between the amount realized in the BEP share exchange and such U.S. holder’s adjusted tax basis in the public TERP shares exchanged for BEP units.

 

Non-U.S. holders of public TERP shares generally should not be subject to U.S. federal income tax on any gain realized in the BEPC share exchange or BEP share exchange.

 

Upon the completion of the TERP acquisition, holders of public TERP shares who elect to receive BEP units as TERP acquisition consideration will be subject to the U.S. federal income tax rules that apply to partners of a partnership. These rules differ materially from the U.S. federal income tax rules that apply to stockholders of a corporation.

 

Tax matters are complicated, and the tax consequences of the share exchange to holders of public TERP shares may depend on each holder’s particular facts and circumstances. Holders of public TERP shares are urged to consult independent tax advisers to understand fully the tax consequences to them of the transactions. For additional information on the U.S. federal income tax consequences of the transactions to holders of public TERP shares, see “Material United States Federal Income Tax Considerations”.

  

For Canadian federal income tax purposes, a TERP stockholder not resident in Canada for purposes of the Tax Act will not be subject to tax under the Tax Act on the disposition of the stockholder’s public TERP shares (or any TerraForm New York class B common stock or TerraForm New York class C common stock into which such public TERP shares are exchanged) unless such public TERP shares are “taxable Canadian property” of the stockholder for purposes of the Tax Act at the time of the disposition and the stockholder is not entitled to relief under an applicable income tax convention between Canada and the country in which the stockholder is resident. It is generally not expected that BEPC exchangeable shares received pursuant to the transaction will be “taxable Canadian property” of such stockholder.

 

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Questions

  

Answers Regarding the TERP Acquisition

  

 

Please carefully review the information under “Material United States Federal Income Tax Considerations” and “Material Canadian Federal Income Tax Considerations” for a description of material U.S. and Canadian federal income tax considerations of the TERP acquisition to holders of public TERP shares, respectively. The tax consequences to you will depend on your own situation. We urge you to consult your tax advisors as to the specific tax consequences to you of the TERP acquisition and your receipt of the TERP acquisition consideration, including the applicability and effect of U.S. federal, state, local and non-U.S. income and other tax laws in light of your particular circumstances.

 

Is the obligation of each of BEP, BEPC and TerraForm Power to complete the TERP acquisition subject to any conditions?

  

Yes. The obligation of each of BEP, BEPC, TerraForm Power and the other parties to the Reorganization Agreement to complete the TERP acquisition remains subject to a number of closing conditions, including:

  

•  receipt of the TERP stockholder approvals;

  

•  the approval for listing on the NYSE of the BEPC exchangeable shares and the BEP units issuable as TERP acquisition consideration (subject to official notice of issuance);

  

•  the conditional approval for listing on the TSX of the BEPC exchangeable shares and the BEP units issuable as TERP acquisition consideration (subject only to customary conditions);

  

•  receipt of certain governmental consents, including requisite approvals under the Competition Act and the termination or expiration of any waiting period under the HSR Act;

  

•  the absence of any legal restraints that prevent, make illegal or prohibit the completion of the transactions contemplated by the Reorganization Agreement;

  

•  declaration by the SEC of the effectiveness of the Form F-1/F-4 (as defined on page 231) of which this proxy statement/prospectus forms a part and the Form F-3 (as defined on page 231) (and the absence of any stop order suspending the effectiveness of such registration statements or any initiated or threatened proceedings seeking such a stop order);

  

•  the filing of the Canadian Prospectus (as defined on page 231) and the obtaining of a receipt therefor from the Ontario Securities Commission;

  

•  accuracy of the representations and warranties made in the Reorganization Agreement by the other party, subject to certain exceptions based on a material adverse effect standard; and

 

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Questions

  

Answers Regarding the TERP Acquisition

  

•  the other party having performed in all material respects all obligations required to be performed by it under the Reorganization Agreement that are required to be performed on or prior to completion of the TERP acquisition.

  

TerraForm Power’s and TerraForm New York’s obligation to complete the TERP acquisition is further subject to the following conditions: (1) receipt by TerraForm Power from Torys LLP of an opinion described under “The Reorganization Agreement—Conditions to the TERP Acquisition”, (2) occurrence of BEP contribution prior to completion of the TERP acquisition, and (3) the special distribution has occurred or that all actions which are reasonably necessary to cause the special distribution to occur substantially, simultaneously with, but no later than immediately prior to, the completion of the TERP acquisition have been taken.

  

By reason of the commitment of the Brookfield stockholders under the TERP Voting Agreement to vote their TERP common stock in favor of the TERP acquisition, the condition described in the first bullet above will be satisfied if the unaffiliated TERP stockholder approval is obtained. For more information on the TERP Voting Agreement, see the section entitled “The TERP Voting Agreement”.

  

For a more complete summary of the conditions that must be satisfied (or, to the extent legally permissible, waived (except with respect to the receipt of the TERP stockholder approvals condition, which is not waivable)) prior to completion of the TERP acquisition, see “The Reorganization Agreement—Conditions to the TERP Acquisition”.

Will BEPC exchangeable shares or BEP units, as applicable, issued to unaffiliated TERP stockholders at the time of completion of the TERP acquisition be listed on an exchange?

  

Yes. It is a condition to the completion of the TERP acquisition that the BEPC exchangeable shares or BEP units to be issued to unaffiliated TERP stockholders at the time of completion of the TERP acquisition be approved for listing on the NYSE, subject to official notice of issuance, and be conditionally approved for listing on the TSX, subject only to customary conditions.

When do you expect the TERP acquisition to be completed?

  

As of the date of this proxy statement/prospectus, the target completion of the TERP acquisition is the third quarter of 2020, subject to the satisfaction or waiver (except with respect to the receipt of the TERP stockholder approvals condition, which is not waivable) of the closing conditions in the Reorganization Agreement. Due to the conditions to the TERP acquisition, no assurance can be given as to when, or if, the TERP acquisition will be completed. It is possible that factors outside the control of TerraForm Power or BEP could result in the TERP acquisition being completed at a later time, or not at all. An end date of December 16, 2020 has been set for the completion of the TERP acquisition, subject to a three-month extension under certain circumstances as detailed in the Reorganization Agreement.

 

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Questions

  

Answers Regarding the TERP Acquisition

How do I calculate the value of the TERP acquisition consideration?

  

The Reorganization Agreement does not contain any provision that would adjust the exchange ratio based on fluctuations in the market price of TERP common stock or BEP units. Because of this, the implied value of the TERP acquisition consideration will fluctuate between now and the completion of the TERP acquisition.

  

The value of the TERP acquisition consideration will depend on the market price of BEP units, at the time the TERP acquisition is completed.

As a TERP stockholder am I entitled to appraisal rights?

  

No. Under Delaware law, TERP stockholders are not entitled to appraisal rights in connection with the reincorporation merger. Under New York law, TerraForm New York shareholders are not entitled to appraisal rights in connection with the share exchange.

Questions and Answers About the Proxy Materials and the TERP Stockholders Meeting

 

Questions

  

Answers About the Proxy Materials and the TERP Stockholders Meeting

How do I obtain electronic access to the proxy materials?

  

This proxy statement/prospectus and TerraForm Power’s Annual Report are available at www.terraformpower.com. If you hold your shares in your name as a stockholder of record, you may elect to receive future annual reports or proxy statements electronically by so indicating on your proxy card. If you are a beneficial owner whose shares are held in street name, you should contact your broker, bank or other nominee for information regarding electronic delivery of proxy materials.

  

 

An election to receive proxy materials electronically will remain in effect for all future annual meetings unless revoked. Stockholders requesting electronic delivery may incur costs, such as telephone and internet access charges, that must be borne by the stockholder.

What do I need to do in order to be able to attend the TERP stockholders meeting online?

  

TerraForm Power will be hosting the virtual TERP stockholders meeting via live webcast only. Any stockholder can attend the virtual TERP stockholders meeting live online at www.virtualshareholdermeeting.com/TERP2020. The webcast will start at 11:00 a.m., Eastern Time on July 29, 2020. Stockholders may vote and submit questions while attending the virtual TERP stockholders meeting online. In order to be able to enter the virtual TERP stockholders meeting, you will need the control number, which is included on your proxy card if you are a stockholder of record or included with your voting instruction form that you received from your broker, bank or other nominee if you hold your shares in street name.

What proposals will be voted on at the TERP stockholders meeting?

  

The following proposals are scheduled to be voted on at the TERP stockholders meeting:

 

  

Proposal No. 1: To consider and vote upon a proposal to adopt the Plan of Merger and to approve the Reorganization Agreement, the reincorporation merger and the share exchange.

 

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Questions

  

Answers About the Proxy Materials and the TERP Stockholders Meeting

  

Proposal No. 2: To elect seven directors to serve until the next TerraForm Power annual stockholders meeting and until their respective successors are duly elected or appointed and qualified, subject to his or her earlier resignation or removal (including in connection with the completion of the TERP acquisition) or death.

  

Proposal No. 3: To ratify the appointment of Ernst & Young LLP as TerraForm Power’s independent registered public accounting firm for 2020.

  

Proposal No. 4: To ratify, on a non-binding, advisory basis, the compensation paid to TerraForm Power’s named executive officers.

  

Proposal No. 5: To approve the adjournment of the TERP stockholders meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the Merger Proposal.

What is the role of the Special Committee?

  

The TerraForm Power Board formed the Special Committee to review and evaluate BEP’s initial January 11, 2020 proposal, the TERP acquisition and TerraForm Power’s other available strategic alternatives, to negotiate with BEP if appropriate and to recommend to the TerraForm Power Board a transaction with BEP if the Special Committee determined that such a transaction is fair to and in the best interests of TerraForm Power and its stockholders (other than BEP and its affiliates). The Special Committee had no obligation to recommend the approval of, and had the power to reject, the TERP acquisition or any other transaction. The TerraForm Power Board could not independently consider and approve the Reorganization Agreement, the reincorporation merger and the share exchange or any alternative transaction without the prior approval of the Reorganization Agreement, the reincorporation merger and the share exchange by the Special Committee.

What is the recommendation of the Special Committee?

  

The Special Committee unanimously determined that the Reorganization Agreement, the Plan of Merger, the TERP Voting Agreement and certain other transaction documents, including the BEPC articles, are fair to and in the best interests of TerraForm Power and its stockholders (other than BEP and its affiliates) and recommended that the TERP board (i) approve and declare advisable the Reorganization Agreement, the Plan of Merger, the reincorporation merger and the share exchange; (ii) determine that the terms of the Reorganization Agreement, the Plan of Merger, the reincorporation merger and the share exchange are fair to and in the best interests of TerraForm Power and the stockholders of TerraForm Power (other than BEP and its affiliates); (iii) submit the Plan of Merger and the approval of the Reorganization Agreement and the transactions contemplated thereby to the TERP stockholders for adoption; (iv) recommend

 

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Questions

  

Answers About the Proxy Materials and the TERP Stockholders Meeting

  

that the TERP stockholders adopt the Plan of Merger and approve the Reorganization Agreement and the transactions contemplated thereby, including the reincorporation merger and the share exchange; and (v) approve TerraForm Power’s entry into the TERP Voting Agreement.

What are the voting recommendations of the TerraForm Power Board?

  

The TerraForm Power Board (acting on the recommendation of the Special Committee in the case of the Merger Proposal) recommends that you vote your shares:

  

FOR” the adoption of the Plan of Merger and the approval of the Reorganization Agreement, the reincorporation merger and the share exchange;

  

FOR” the election of seven directors to serve until the next TerraForm Power annual stockholders meeting and until their respective successors are duly elected or appointed and qualified, subject to his or her earlier resignation or removal (including in connection with the completion of the TERP acquisition) or death;

  

FOR” the ratification of the appointment of Ernst & Young LLP as TerraForm Power’s independent registered public accounting firm for 2020;

  

FOR” the ratification, on a non-binding, advisory basis, of the compensation paid to TerraForm Power’s named executive officers; and

  

FOR the approval of the adjournment of the TERP stockholders meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the Merger Proposal.

Who is entitled to vote?

  

All shares owned by you as of the close of business on June 26, 2020, referred to as the TERP record date, may be voted by you at the TERP stockholders meeting. These shares include shares that are:

  

•  held directly in your name as the stockholder of record; and

  

•  held for you in street name as the beneficial owner through a broker, bank or other nominee.

  

Approximately 226,531,665 shares of TERP common stock were outstanding as of the TERP record date.

What is the difference between holding shares as a stockholder of record and as a beneficial owner?

  

Many of TerraForm Power’s stockholders hold their shares through a broker, bank or other nominee rather than directly in their own name. As summarized below, there are some differences between shares held of record and those owned beneficially.

  

Stockholder of Record. If your shares are registered directly in your name with TerraForm Power’s transfer agent,

 

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Computershare, you are considered, with respect to those shares, the stockholder of record, and TerraForm Power is sending these proxy materials directly to you. As the stockholder of record, you have the right to grant your proxy directly to certain officers of TerraForm Power or to vote in person at the virtual TERP stockholders meeting. TerraForm Power has enclosed or sent a proxy card for you to use. You may also submit a proxy on the internet or by telephone, as described below under the heading “Questions and Answers—How do I vote my shares?

  

Beneficial Owner. If your shares are held in an account at a brokerage firm, bank or other nominee, you are considered the beneficial owner of shares held in street name, and a voting instruction form, together with these proxy materials, will be forwarded to you by that organization instead of us. As the beneficial owner, you have the right to direct your broker, bank or other nominee how to vote your shares, and you are also invited to attend the virtual TERP stockholders meeting.

  

Since a beneficial owner is not the stockholder of record, you may not vote your shares in person at the virtual TERP stockholders meeting unless you obtain a “legal proxy” from the broker, bank, or other nominee that is the stockholder of record of your shares giving you the right to vote the shares at the virtual TERP stockholders meeting. If you do not wish to vote in person or you will not be attending the virtual TERP stockholders meeting, you may vote by proxy. You may cause your shares to be voted at the meeting by providing voting instructions to your broker, bank or other nominee.

How do I vote my shares?

  

Whether you hold your shares directly as the stockholder of record or beneficially own your shares in street name, you may cause your shares to be voted at the TERP stockholders meeting by one of the following methods:

  

Submit a Proxy by Internet

  

Before the Virtual Meeting—Go to the website listed on your proxy card or voting instruction form and follow the instructions therein. You will need the control number included on your proxy card or voting instruction form.

  

Submit a Proxy by Telephone

  

Dial the number listed on your proxy card or your voting instruction form. You will need the control number included on your proxy card or voting instruction form.

  

Submit a Proxy by Mail

  

Complete and sign your proxy card or voting instruction form and return it in the enclosed postage-paid envelope or mail it to the address provided therein.

 

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Attend the Virtual Meeting and Vote by Internet

  

During the Virtual Meeting—Go to www.virtualshareholdermeeting.com/TERP2020 at the time of the virtual TERP stockholders meeting and vote in person at the virtual meeting. You will need the control number on your proxy card. If you are a beneficial owner of shares registered in the name of your broker, bank or other agent, you must obtain a valid legal proxy from your broker, bank or other agent to vote in person at the virtual meeting.

  

Whether or not you plan to attend the virtual TERP stockholders meeting, TerraForm Power urges you to submit a proxy to vote your shares before the TERP stockholders meeting to ensure your vote is counted. Even if you have submitted a proxy before the virtual TERP stockholders meeting, you may still attend and vote at the virtual TERP stockholders meeting. In such case, your previously submitted proxy will be revoked. If TerraForm Power receives your signed proxy card, or you submit a proxy by Internet or telephone before the virtual TERP stockholders meeting, TerraForm Power will vote your shares as you direct.

  

If you are a beneficial owner of shares registered in the name of your broker, bank or other agent, please refer to the voting instruction form provided with these proxy materials from that organization. To vote online during the virtual TERP stockholders meeting, you must obtain a valid legal proxy from your broker, bank or other agent. Follow the instructions from your broker, bank or other agent included with these proxy materials, or contact your broker, bank or other agent to request a proxy form.

  

If you submit a proxy on the internet or by telephone, you do not need to return your proxy card. You may submit a proxy on the internet or by telephone 24 hours a day up until 11:59 p.m., Eastern Time, on July 28, 2020. Please follow the instructions on the enclosed proxy card.

What is the quorum requirement for the TERP stockholders meeting?

  

A quorum is necessary to hold a valid TERP stockholders meeting. A quorum exists if holders of a majority in voting power of TerraForm Power’s capital stock issued and outstanding and entitled to vote thereat are present in person or represented by proxy at the virtual TERP stockholders meeting. Abstentions and broker non-votes are counted as present for determining whether a quorum exists. A broker non-vote occurs when an intermediary holding shares for a beneficial owner does not vote on a particular proposal because the intermediary does not have discretionary voting power for that particular proposal because it has not received specific voting instructions from the beneficial owner.

What happens if I do not give specific voting instructions?

  

Stockholder of Record. If you are a stockholder of record and you submit a signed proxy card or submit your proxy by

 

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telephone or the internet, but do not specify how you want to vote your shares on a particular proposal, then the proxy holders will vote your shares in accordance with the recommendations of the TerraForm Power Board on all matters described in this proxy statement/prospectus. With respect to any other matters properly presented for a vote at the TERP stockholders meeting, the proxy holders will vote your shares in accordance with their discretion.

  

Beneficial Owners. If you are a beneficial owner of shares held in street name and do not provide the broker, bank or other nominee that holds your shares with specific voting instructions, under applicable rules of NASDAQ, the broker, bank or other nominee that holds your shares are generally entitled to vote on routine matters, such as the ratification of the appointment of TerraForm Power’s independent registered public accounting firm or the adjournment of the TERP stockholders meeting if a quorum is not present, but are not entitled to vote on non-routine matters such as the Merger Proposal, the election of directors, the non-binding, advisory vote on the compensation paid to TerraForm Power’s named executive officers or the Adjournment Proposal. If the broker, bank or other nominee that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, the broker, bank or other nominee that holds your shares will inform the inspector of election that it does not have the discretionary authority to vote on this matter with respect to your shares. This is generally referred to as a broker non-vote. Therefore, TerraForm Power urges you to give voting instructions to your broker. Shares represented by such broker non-votes will be counted in determining whether there is a quorum. Broker non-votes will have the same effect as a vote “AGAINST” approval of the Merger Proposal, but will have no effect on the outcome of the TERP Stockholders Meeting Proposals or the Adjournment Proposal.

Is my vote important?

  

Yes, your vote is very important. The TERP acquisition cannot be completed without the adoption of the Plan of Merger and the approval of the Reorganization Agreement, the reincorporation merger and the share exchange by (1) holders of a majority of the outstanding shares of TERP common stock entitled to vote as of the TERP record date and (2) the unaffiliated TERP stockholder approval.

  

Whether or not you plan to attend the virtual TERP stockholders meeting, TerraForm Power encourages you to read this proxy statement/prospectus and submit your proxy or voting instructions as soon as possible. You may cause your shares to be present and voted at the TERP stockholders meeting by either marking, signing and returning the enclosed proxy card or submitting a proxy using the telephone or internet instructions described herein, if available. For specific instructions on

 

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submitting a proxy to vote your shares, please refer to the instructions on your enclosed proxy card.

  

The TerraForm Power Board (acting on the recommendation of the Special Committee in the case of the Merger Proposal) recommends that the TERP stockholders vote:

  

FOR” the adoption of the Plan of Merger and the approval of the Reorganization Agreement, the reincorporation merger and the share exchange;

  

FOR” the election of seven directors to serve until the next TerraForm Power annual stockholders meeting and until their respective successors are duly elected or appointed and qualified, subject to his or her earlier resignation or removal (including in connection with the completion of the TERP acquisition) or death;

  

FOR” the ratification of the appointment of Ernst & Young LLP as TerraForm Power’s independent registered public accounting firm for 2020;

  

FOR” the ratification, on a non-binding, advisory basis, of the compensation paid to TerraForm Power’s named executive officers; and

  

FOR the approval of the adjournment of the TERP stockholders meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the Merger Proposal.

  

See “The TERP Acquisition—Reasons for the Special Committee’s Recommendation; The TERP Acquisition—Reasons for the TerraForm Power Board’s Recommendation”; “The Reorganization AgreementRecommendation of the TERP Board and the Special Committee”; “Proposal No. 1: Adoption of the Plan of Merger and Approval of the Reorganization Agreement, the Reincorporation Merger and the Share Exchange”; “Proposal No. 2: Election of Directors”; “Proposal No. 3: Ratification of the Appointment of Ernst & Young LLP as TerraForm Power’s Independent Registered Public Accounting Firm for 2020”; “Proposal No. 4: Ratification, on a Non-Binding, Advisory Basis, of the Compensation Paid to TerraForm Power’s Named Executive Officers” and “Proposal No. 5: Adjournment of the TERP Stockholders Meeting, if Necessary, to Solicit Additional Proxies if There Are Not Sufficient Votes to Approve the Merger Proposal”.

 

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What is the voting requirement to approve each of the proposals?

  

Merger Proposal. The approval of the adoption of the Merger Proposal requires the affirmative vote of (1) holders of a majority of the outstanding shares of TERP common stock entitled to vote as of the TERP record date and (2) the unaffiliated TERP stockholder approval. An abstention or broker non-vote will have the same effect as a vote “AGAINST” the approval of the adoption of the Merger Proposal.

  

Election of Directors. Seven directors have been nominated for election at the TERP stockholders meeting to serve as TerraForm Power’s directors until the next TerraForm Power annual stockholders meeting and until their respective successors are duly elected or appointed and qualified, subject to his or her earlier resignation or removal (including in connection with the completion of the TERP acquisition) or death. Each director nominee designated by BAM and its affiliates pursuant to the TerraForm Power Certificate of Incorporation will be elected by the affirmative vote of a majority of votes cast, either in person or by proxy, with respect to such director, assuming a quorum is present. Each independent director nominee will be elected by the affirmative vote of a majority of votes cast, either in person or by proxy, with respect to such director, assuming a quorum is present, with BAM and its affiliates required to vote its TERP common stock (or abstain from voting) in the same proportion as all public TERP shares, pursuant to TerraForm Power’s Certificate of Incorporation. This means that the number of shares voted “FOR” a nominee must exceed the number of shares voted “AGAINST” such nominee. Stockholders cannot cumulate votes in the election of directors. Pursuant to TerraForm Power’s Certificate of Incorporation, abstentions and broker non-votes will have no effect on this proposal.

  

As of the TERP record date, Orion Holdings and BBHC Orion, both controlled affiliates of TerraForm Power’s sponsor, BAM (together with Orion Holdings and BBHC Orion, referred to as the sponsor group), together held approximately 62% of the outstanding shares of TERP common stock. With respect to the stockholder election of TerraForm Power’s three independent directors (Ms. Burke and Messrs. Fong and McFarland), the sponsor group is required by TerraForm Power’s Certificate of Incorporation to vote (or abstain from voting) its shares of TERP common stock in the same proportion as all other shares of TERP common stock that are voted (or abstained from voting) by stockholders other than the sponsor group, or the Non-Sponsor Stockholders, at the TERP stockholders meeting. This means that, with respect to the election of Ms. Burke and Messrs. Fong and McFarland, the number of votes by the Non-Sponsor Stockholders “FOR” must exceed the number of votes “AGAINST” each of Ms. Burke and Messrs. Fong and McFarland by the Non-Sponsor Stockholders.

 

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Appointment of Auditors. The ratification of the appointment of TerraForm Power’s independent registered public accounting firm requires the affirmative vote of a majority in the voting power of shares of TERP common stock present in person at the virtual TERP stockholders meeting or represented by proxy at the meeting and entitled to vote on the proposal, assuming a quorum is present. An abstention will have the same effect as a vote “AGAINST” the ratification of the appointment of TerraForm Power’s independent registered public accounting firm. Any broker, bank or other nominee that holds your shares may vote on this proposal even without instruction from you and therefore broker non-votes will have no effect on the outcome of this proposal.

  

Named Executive Officer Compensation. The non-binding, advisory vote on the compensation paid to TerraForm Power’s named executive officers requires the affirmative vote of a majority in voting power of shares of TERP common stock present in person at the virtual TERP stockholders meeting or represented by proxy at the meeting and entitled to vote on the proposal, assuming a quorum is present. As an advisory vote, the proposal to approve the compensation of TerraForm Power’s named executive officers is not binding on us. However, the Nominating and Corporate Governance Committee of the TerraForm Power Board, or the Governance Committee, which is responsible for designing and administering TerraForm Power’s executive compensation programs, and the TerraForm Power Board, value the opinions expressed by TerraForm Power’s stockholders and will consider the results of the vote when making future compensation decisions. An abstention will have the same effect as a vote “AGAINST” the approval, on a non-binding, advisory basis, of the compensation paid to TerraForm Power’s named executive officers. Broker non-votes will have no effect on the outcome of this proposal.

  

Adjournment Proposal. The approval of the adjournment of the TERP stockholders meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the Merger Proposal requires the affirmative vote of a majority in the voting power of shares of TERP common stock present in person at the virtual TERP stockholders meeting or represented by proxy at the meeting and entitled to vote on the proposal, assuming a quorum is present. An abstention will have the same effect as a vote “AGAINST” the Adjournment Proposal. Without instruction from you, any broker, bank or other nominee that holds your shares may not vote on the Adjournment Proposal. Broker non-votes will have no effect on the outcome of this proposal.

What does it mean if I receive more than one proxy card or voting instruction form?

  

It means your shares may be registered differently or are in more than one account. Please provide voting instructions for all proxy cards and voting instruction forms you receive.

 

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Who will count the vote?

  

A representative of MacKenzie Partners, Inc. will tabulate the votes and act as the inspector of election.

Can I revoke my proxy or change my vote?

  

Yes. You may revoke your proxy or change your voting instructions at any time prior to the vote at the TERP stockholders meeting by:

  

•  providing written notice to TerraForm Power’s Secretary;

  

•  delivering a valid, later-dated proxy by mail or on the internet or by telephone; or

  

•  attending the virtual TERP stockholders meeting and voting online during the meeting.

  

Please note that your attendance alone at the TERP stockholders meeting will not cause your previously granted proxy to be revoked. Shares held in street name may be voted by you at the virtual TERP stockholders meeting only if you obtain a legal proxy from your broker, bank or other holder of record giving you the right to vote the shares.

What happens if I transfer my shares of TERP common stock before the TERP stockholders meeting?

  

The TERP record date is earlier than the date of the TERP stockholders meeting and the date that the TERP acquisition is expected to be completed. If you transfer your shares of TERP common stock after the TERP record date but before the TERP stockholders meeting, you will retain your right to vote at the TERP stockholders meeting. However, you will have transferred the right to receive the TERP acquisition consideration in the TERP acquisition. In order to receive the TERP acquisition consideration, you must hold your shares of TERP common stock through the completion of the TERP acquisition.

What will happen if any of the proposals to be considered at the TERP stockholders meeting are not approved?

  

As a condition to completion of the TERP acquisition, the Plan of Merger must be adopted and the Reorganization Agreement, the reincorporation merger and the share exchange must be approved by holders of a majority of the outstanding shares of TERP common stock entitled to vote as of the TERP record date and the unaffiliated TERP stockholder approval must be obtained.

  

Completion of the TERP acquisition is not conditioned or dependent upon the approval of the TERP Stockholders Meeting Proposals or the Adjournment Proposal.

Why are TERP stockholders being asked to approve, on a non-binding, advisory basis, the compensation paid to TerraForm Power’s named executive officers?

  

The SEC has adopted rules that require TerraForm Power to seek approval, on a non-binding, advisory basis, of the compensation paid to TerraForm Power’s named executive officers.

 

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What happens if the proposal to approve, on a non-binding, advisory basis, the compensation paid to TerraForm Power’s named executive officers does not receive a majority of the votes cast at the TERP stockholders meeting?

  

Approval, on a non-binding, advisory basis, of the compensation paid to TerraForm Power’s named executive officers is not a condition to completion of the TERP acquisition. The vote is a non-binding, advisory vote. If the TERP acquisition is completed, TerraForm Power or BEPC will be obligated to pay all or a portion of the named executive officer compensation to TerraForm Power’s named executive officers following the TERP acquisition, even if TerraForm Power’s stockholders fail to approve this proposal.

Do any of the directors or executive officers of TerraForm Power have interests in the TERP acquisition that may be different from or in addition to the interests of other TERP stockholders?

  

TerraForm Power directors and executive officers may have interests in the TERP acquisition that may be different from, or in addition to, those of TerraForm Power stockholders generally, including that TerraForm Power’s directors and executive officers are entitled to continued indemnification and, for a period of six years following the completion of the TERP acquisition, insurance coverage through a directors’ and officers’ liability insurance policy purchased or maintained by TerraForm Power or BEP. The TerraForm Power Board and the Special Committee were aware of these interests during their deliberations on the merits of the TERP acquisition and in deciding to recommend that TERP stockholders vote to approve the Reorganization Agreement, the reincorporation merger and the share exchange at the TERP stockholders meeting.

  

You should also be aware of the ownership of BEPC exchangeable shares or BEP units by the TERP directors and executive officers, as set forth in the table under “The TERP Acquisition—Interests of Certain TERP Directors and Executive Officers—BEP Units Owned by TERP Directors and Executive Officers”. Additionally, TerraForm Power’s Chief Executive Officer (John Stinebaugh), Chief Financial Officer (Michael Tebbutt) and General Counsel (William Fyfe), and a majority of the TERP board are designated by BAM and are employed by BAM and its affiliates. See the risk factors under the heading “Risks Related to our Relationship with Brookfield” to TERP’s Form 10-K for the fiscal year ended December 31, 2019, which is incorporated into this proxy statement/prospectus by reference.

  

These interests may cause the directors and executive officers of TerraForm Power to view the proposals relating to the TERP acquisition differently than the TERP stockholders generally may view them. For more information on the interests of TerraForm Power’s directors and executive officers in the TERP acquisition, see “The TERP Acquisition—Interests of Certain TERP Directors and Executive Officers”.

What will happen to outstanding TerraForm Power equity awards in the TERP acquisition?

  

Under the terms of the Reorganization Agreement, upon the completion of the reincorporation merger, all outstanding TerraForm Power RSUs automatically will be converted into

 

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TerraForm New York RSUs on a one-for-one basis. Upon the completion of the share exchange, each outstanding TerraForm New York RSU award will be converted into a time-based restricted stock unit of BEPC with respect to a number of BEPC exchangeable shares (with any fractional shares rounded down to the nearest whole share) equal to the product of (1) the number of shares of TerraForm New York common stock subject to such TerraForm New York RSU immediately prior to the completion of the share exchange and (2) the adjusted exchange ratio, subject to further adjustment as provided in the Reorganization Agreement to prevent dilution. Such BEPC restricted stock units will be subject to substantially the same terms and conditions as were applicable to the TerraForm Power RSUs (except that the form of payment upon vesting will be in BEPC exchangeable shares).

Who will bear the cost of soliciting votes for the TERP stockholders meeting?

  

TerraForm Power will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials. In addition to the mailing of these proxy materials, the solicitation of proxies or votes may be made in person, by telephone or by electronic and facsimile transmission by TerraForm Power’s directors, officers and employees, who will not receive any additional compensation for such solicitation activities. In addition, TerraForm Power may reimburse the transfer agent, brokerage firms and other persons representing beneficial owners of shares of TERP common stock for their expenses in forwarding solicitation material to such beneficial owners. TerraForm Power has retained MacKenzie Partners, Inc. to aid in the proxy solicitation. The fees of MacKenzie Partners, Inc. are expected to be $17,500 plus reimbursement of its reasonable out-of-pocket costs.

Where may I request an additional copy of this proxy statement/prospectus or the TerraForm Power’s Annual Report?

  

Any stockholder who wishes to receive an additional copy of this proxy statement/prospectus or of the TerraForm Power’s Annual Report without charge may (i) call TerraForm Power at (646) 992-2400 or (ii) mail a request to: TerraForm Power, Inc., 200 Liberty Street, 14th Floor, New York, NY 10281, Attention: Secretary, and TerraForm Power will send the requested materials to you. You may also obtain the TerraForm Power’s Annual Report, as well as this proxy statement/prospectus, on the SEC’s website at www.sec.gov, or on TerraForm Power’s website at www.terraformpower.com.

Is my vote confidential?

  

Yes. TerraForm Power encourages stockholder participation in corporate transactions and corporate governance by ensuring the confidentiality of stockholder votes. TerraForm Power has designated MacKenzie Partners, Inc. to receive and tabulate stockholder votes. Your vote on any particular proposal will be kept confidential and will not be disclosed to TerraForm Power or any of its officers or employees unless (i) disclosure is required by applicable law, (ii) disclosure of your vote is

 

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expressly requested by you or (iii) TerraForm Power concludes in good faith that a bona fide dispute exists as to the authenticity of one or more proxies, ballots or votes, or as to the accuracy of any tabulation of such proxies, ballots or votes. However, aggregate vote totals will be publicly announced at the TERP stockholders meeting, and TerraForm Power will disclose the voting results in a Current Report on Form 8-K within four business days of the TERP stockholders meeting.

What is householding and how does it affect me?

  

The SEC permits TerraForm Power to deliver a single copy of its proxy statements and annual reports to the TERP stockholders who have the same address and last name, unless TerraForm Power has received contrary instructions from such TERP stockholders. Each TERP stockholder will continue to receive a separate proxy card. This procedure, called “householding”, will reduce the volume of duplicate information that TERP stockholders receive and reduce TerraForm Power’s printing and postage costs. TerraForm Power will promptly deliver a separate copy of this proxy statement/prospectus to any such TERP stockholder upon written or oral request. A stockholder wishing to receive a separate proxy statement/prospectus can notify TerraForm Power at TerraForm Power, Inc., 200 Liberty Street, 14th Floor, New York, NY 10281, telephone: 646-992-2400. Similarly, TERP stockholders currently receiving multiple copies of these documents can request the elimination of duplicate documents by contacting TerraForm Power as described above.

 

Questions and Answers Regarding BEPC Exchangeable Shares, BEP Units and the Special Distribution

 

Questions

  

Questions and Answers Regarding BEPC Exchangeable Shares, BEP Units
and the Special Distribution

Will TERP stockholders participate in the special distribution?

  

No. TERP stockholders will not participate in the special distribution. It is currently anticipated that the special distribution would close on or about the business day prior to the completion of the TERP acquisition.

How will the special distribution work?

  

Immediately prior to the special distribution, BRELP will complete the BRELP Distribution pursuant to which BEP will receive 44.7 million BEPC exchangeable shares. BEP will subsequently make a special distribution to holders of its equity units of these BEPC exchangeable shares. As a result of the special distribution, holders of BEP units will be entitled to receive one (1) BEPC exchangeable share for every four (4) BEP units held as of the distribution record date, provided that the special distribution will be subject to any applicable withholding tax and no holder will be entitled to receive any fractional interests in the BEPC exchangeable shares. Holders who would otherwise be entitled to a fractional BEPC exchangeable share will receive a cash payment. For additional information, see “The Special Distribution—Mechanics of the Special Distribution”.

 

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and the Special Distribution

  

 

The distribution ratio is intended to cause a proportionate split of the market capitalization of BEP between the BEP units and the BEPC exchangeable shares based on the value of the Business to be transferred to BEPC relative to BEP’s market capitalization. The distribution ratio has been determined using the fair market value of the Business to be transferred by BEP to BEPC, the number of BEP units outstanding (assuming exchange of the redeemable partnership units of BRELP), and the market capitalization of BEP. The fair market value of the Business to be transferred by BEP is determined by BEP’s management using commonly accepted valuation methodologies and the value of the BEPC exchangeable shares and BEP’s market capitalization is determined using the market price for the BEP units, each as of the most recent practicable date.

 

Holders of BEP’s preferred limited partnership units, which we refer to as the preferred units, and holders of TERP common stock, will not participate in this special distribution.

Why is BEP distributing BEPC exchangeable shares to its unitholders?

  

BEP believes that certain investors in certain jurisdictions may be dissuaded from investing in BEP because of the tax reporting framework that results from investing in units of a Bermuda-exempted limited partnership. Creating BEPC, a corporation, and distributing BEPC exchangeable shares, which have been structured with the intention of providing an economic return equivalent to the BEP units, is intended to achieve the following objectives:

 

•  Provide investors that would not otherwise invest in BEP with an opportunity to gain access to BEP’s globally diversified portfolio of high-quality renewable power assets.

 

•  Provide investors with the flexibility to own, through the ownership of a BEPC exchangeable share, the economic equivalent of a BEP unit because of the ability to exchange into a BEP unit or its cash equivalent and the identical dividends that are expected to be paid on each BEPC exchangeable share.

 

•  Provide investors with a tax reporting framework that may be favored by investors in some jurisdictions over the tax reporting framework provided by an investment in BEP, which BEP believes will attract new investors who will benefit from investing in its business.

 

•  Create a company that BEP expects to be eligible for inclusion in several indices, which may be attractive to certain investors.

 

•  Provide the Brookfield Renewable group with a greater securityholder base, thereby creating enhanced liquidity for the Brookfield Renewable group’s securityholders.

 

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•  Create a company that will provide the Brookfield Renewable group with the ability to access new capital pools.

 

The special distribution is being effected in a manner that BEP expects will not result in any adverse impact on Brookfield Renewable’s credit rating or its preference shareholders, preferred unitholders or debtholders.

 

See “The Special Distribution—Background to and Purpose of the Special Distribution” and “BEPC Relationship with Brookfield Renewable—Credit Support”. For additional information regarding Brookfield Renewable, see “Brookfield Renewable Partners L.P.”.

How will BEPC’s performance track to BEP’s performance?

  

Each BEPC exchangeable share has been structured with the intention of providing an economic return equivalent to one BEP unit. BEP therefore expects that the market price of BEPC exchangeable shares will be significantly impacted by the combined business performance of the Brookfield Renewable group as a whole and the market price of the BEP units in a manner that should result in the market price of the BEPC exchangeable shares tracking the market price of the BEP units. Following the special distribution, it is expected that dividends on BEPC exchangeable shares will be declared and paid at the same time as distributions are declared and paid on the BEP units and that dividends on each BEPC exchangeable share will be declared and paid in the same amount as are declared and paid on each BEP unit to provide holders of BEPC exchangeable shares with an economic return equivalent to holders of BEP units. BEPC expects to commence paying dividends on BEPC exchangeable shares on the first distribution payment date for the BEP units occurring after the distribution date for the special distribution. Additionally, pursuant to the Equity Commitment Agreement, BEP has agreed that it will not declare or pay any distribution on the BEP units if on such date BEPC does not have sufficient funds or other assets to enable the declaration and payment of an equivalent dividend on the BEPC exchangeable shares.

 

Each BEPC exchangeable share will be exchangeable at the option of the holder for one BEP unit (subject to adjustment to reflect certain capital events) or its cash equivalent (the form of payment to be determined at the election of BEPC). BEP may elect to satisfy its exchange obligation by acquiring such tendered BEPC exchangeable shares for an equivalent number of BEP units (subject to adjustment to reflect certain capital events) or its cash equivalent (the form of payment to be determined at the election of BEP). See “Description of BEPC Share Capital—BEPC Exchangeable Shares—Exchange by Holder—Adjustments to Reflect Certain Capital Events” for a description of such

 

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Questions

  

Questions and Answers Regarding BEPC Exchangeable Shares, BEP Units
and the Special Distribution

  

capital events. BEPC and BEP currently intend to satisfy any exchange requests on the BEPC exchangeable shares through the delivery of BEP units rather than cash. However, factors that BEP and BEPC may consider when determining whether to satisfy any exchange request for cash rather than BEP units include, without limitation, compliance with applicable securities laws, changes in law (including the Bermuda limited partnership laws), BEP’s and BEPC’s respective available consolidated liquidity, and any change in the tax consequences to BEP or BEPC or to a holder as a result of delivery of BEP units.

Does BEPC intend to pay dividends on the BEPC exchangeable shares?

  

Yes. The board of directors of BEPC, or the board of directors of BEP, may declare dividends at their discretion. However, each BEPC exchangeable share has been structured with the intention of providing an economic return equivalent to one BEP unit and it is expected that dividends on the BEPC exchangeable shares will be declared and paid at the same time and in the same amount as distributions are declared and paid on each BEP unit. BEPC expects to commence paying dividends on BEPC exchangeable shares on the first distribution payment date for the BEP units occurring after the distribution date for the special distribution. Additionally, pursuant to the Equity Commitment Agreement, BEP has agreed that it will not declare or pay any distribution on the BEP units if on such date BEPC does not have sufficient funds or other assets to enable the declaration and payment of an equivalent dividend on the BEPC exchangeable shares. BEP pursues a strategy which the Brookfield Renewable group expects will provide for highly stable, predictable cash flows sourced from predominantly hydroelectric, wind and solar assets ensuring a sustainable distribution yield. The Brookfield Renewable group’s objective is to pay a distribution that is sustainable on a long-term basis and targets a payout ratio of approximately 70% of Brookfield Renewable’s FFO. See “BEPC Dividend Policy”.

What will BEPC’s relationship with Brookfield be after the special distribution?

  

BEPC’s relationship with Brookfield will be substantially the same as Brookfield Renewable’s existing relationship with Brookfield. After the special distribution:

 

•  Brookfield will be BEPC’s largest investor and will, directly and indirectly, hold approximately 57.2% of BEPC exchangeable shares (37.4% assuming the TERP acquisition is completed and the TERP acquisition consideration consists solely of BEPC exchangeable shares). Assuming the TERP acquisition is completed and the TERP acquisition consideration consists solely of BEPC exchangeable shares, holders of public TERP shares will hold approximately 34.7% of the issued and outstanding BEPC exchangeable shares.

 

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Questions

  

Questions and Answers Regarding BEPC Exchangeable Shares, BEP Units
and the Special Distribution

  

 

•  The Service Providers, being wholly-owned subsidiaries of Brookfield, will provide management and administrative services to BEPC pursuant to the BEP Master Services Agreement in exchange for a base management fee and incentive distributions. The BEP Master Services Agreement will continue in perpetuity until terminated in accordance with its terms.

 

•  During at least the first seven years after the distribution date, if BEPC or BEP has not satisfied its obligation under BEP’s notice of articles and articles, or the BEPC articles, to deliver the BEP unit amount or its cash equivalent amount upon an exchange request, Brookfield will satisfy or cause to be satisfied the obligation to deliver BEP units or cash on an exchange of the BEPC exchangeable shares.

 

•  If the TERP acquisition is completed, Brookfield and Brookfield Renewable intend to enter into voting agreements with a subsidiary of BEPC, giving BEPC voting control over the TERP common stock held by BEP and its affiliates.

 

For additional information, see “BEPC Management and the BEP Master Services Agreement—The BEP Master Services Agreement” and “BEP and BEPC Relationship with Brookfield”.

What will BEPC’s relationship with Brookfield Renewable be after the special distribution?

  

Brookfield Renewable, together with BEPC, comprise the Brookfield Renewable group, which will serve as the primary vehicle through which Brookfield will acquire renewable power assets on a global basis, subject to certain exceptions. After the special distribution:

 

•  Each BEPC exchangeable share has been structured with the intention of providing an economic return equivalent to one BEP unit. BEPC therefore expects that the market price of BEPC exchangeable shares will be significantly impacted by the combined business performance of the Brookfield Renewable group as a whole and the market price of the BEP units in a manner that should result in the market price of the BEPC exchangeable shares tracking the market price of the BEP units.

 

•  Following the special distribution, it is expected that dividends on BEPC exchangeable shares will be declared and paid at the same time as distributions are declared and paid on the BEP units and that dividends on each BEPC exchangeable share will be declared and paid in the same amount as are declared and paid on each BEP unit to provide holders of BEPC exchangeable shares with an economic return equivalent to holders of BEP units. BEPC expects to commence paying dividends on BEPC exchangeable shares on the first distribution payment date

 

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Questions

  

Questions and Answers Regarding BEPC Exchangeable Shares, BEP Units
and the Special Distribution

  

for the BEP units occurring after the distribution date for the special distribution.

 

•  Each BEPC exchangeable share will be exchangeable at the option of the holder for one BEP unit (subject to adjustment to reflect certain capital events) or its cash equivalent (the form of payment to be determined at the election of BEPC). BEP may elect to satisfy its exchange obligation by acquiring such tendered BEPC exchangeable shares for an equivalent number of BEP units (subject to adjustment to reflect certain capital events) or its cash equivalent (the form of payment to be determined at the election of BEP).

 

•  Brookfield Renewable will hold a 75% voting interest in BEPC through its holding of BEPC class B shares and will hold all of the BEPC class C shares, which entitle BEP to all of the residual value in BEPC after payment in full of the amount due to holders of BEPC exchangeable shares and BEPC class B shares and subject to the prior rights of holders of BEPC preferred shares. Brookfield Renewable’s ownership of BEPC class C shares will entitle it to receive dividends as and when declared by the BEPC board, subject to the holders of the BEPC exchangeable shares and BEPC class B shares receiving the dividends to which they are entitled and the rights of holders of BEPC preferred shares.

 

•  Brookfield Renewable will provide BEPC with an equity commitment in the amount of $1 billion. In addition, BEPC expects to enter into two credit agreements with Brookfield Renewable, one as borrower and one as lender, each providing for a ten-year revolving credit facility to facilitate the movement of cash within the Brookfield Renewable group. Each credit facility will contemplate potential deposit arrangements pursuant to which the lender thereunder would, with the consent of the borrower, deposit funds on a demand basis to such borrower’s account at a reduced rate of interest.

 

•  BEPC expects that the BEPC board will mirror the board of the general partner of BEP, except that there will be one additional non-overlapping board member to assist BEPC with, among other things, resolving any conflicts of interest that may arise from its relationship with Brookfield Renewable. Eleazar de Carvalho Filho will initially serve as the non-overlapping member of the BEPC board. Mr. de Carvalho Filho has served on the board of directors of the general partner of BEP since November 2011 and will resign from such board of directors prior to the special distribution. If in the 12 months following the special distribution, BEPC considers a related party transaction in which BEP is an interested party within the meaning of MI 61-101, Mr. de Carvalho Filho will not be considered an

 

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Questions

  

Questions and Answers Regarding BEPC Exchangeable Shares, BEP Units
and the Special Distribution

  

independent director under MI 61-101 for purposes of serving on a special committee to consider such transaction.

 

•  If the TERP acquisition is completed, Brookfield and Brookfield Renewable intend to enter into voting agreements with a subsidiary of BEPC, giving BEPC voting control over the TERP common stock held by BEP and its affiliates.

 

For additional information, see “Description of BEPC Share Capital—BEPC Exchangeable Shares”, “Description of BEPC Share Capital—BEPC Exchangeable Shares—Exchange by Holder—Adjustments to Reflect Certain Capital Events”, and “BEPC Relationship with Brookfield Renewable”.

Will there be any significant shareholders of BEPC after the special distribution?

  

Yes. Brookfield Renewable will hold all of the BEPC class B shares, thereby giving Brookfield Renewable a 75% voting interest, and all of the BEPC class C shares, which entitle BEP to all of the residual value in BEPC after payment in full of the amount due to holders of BEPC exchangeable shares and BEPC class B shares and subject to the prior rights of holders of BEPC preferred shares. In addition, Brookfield will, directly and indirectly, hold approximately 57.2% of BEPC exchangeable shares immediately upon completion of the special distribution as a result of BEPC exchangeable shares distributed to Brookfield in respect of the redeemable partnership units and general partner interests that it holds in BRELP, the BEP units and general partner interest that it holds in BEP (37.4% assuming the TERP acquisition is completed and the TERP acquisition consideration consists solely of BEPC exchangeable shares). Assuming the TERP acquisition is completed and the TERP acquisition consideration consists solely of BEPC exchangeable shares, holders of public TERP shares will hold approximately 34.7% of the issued and outstanding BEPC exchangeable shares. Together, Brookfield and Brookfield Renewable will hold an approximate 89.3% voting interest in BEPC (84.3% assuming the TERP acquisition is completed and the TERP acquisition consideration consists solely of BEPC exchangeable shares). See “The Special Distribution—Background to and Purpose of the Special Distribution”.

How will owning a BEPC exchangeable share be different from owning a BEP unit?

  

Each BEPC exchangeable share will be structured with the intention of providing an economic return equivalent to one BEP unit (subject to adjustment to reflect certain capital events), including identical dividends on a per share basis as are paid on each BEP unit. See “Description of BEPC Share Capital—BEPC Exchangeable Shares—Exchange by Holder—Adjustments to Reflect Certain Capital Events”. BEPC and BEP currently intend to satisfy any exchange requests on the BEPC exchangeable shares through the delivery of BEP units rather than cash. However, there are certain material differences between the

 

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Questions

  

Questions and Answers Regarding BEPC Exchangeable Shares, BEP Units
and the Special Distribution

  

rights of holders of BEPC exchangeable shares and holders of the BEP units under the governing documents of BEPC and BEP and applicable law, such as the right of holders of BEPC exchangeable shares to request an exchange of their BEPC exchangeable shares for an equivalent number of BEP units or its cash equivalent (the form of payment to be determined at the election of the Brookfield Renewable group) and the redemption right of BEPC. These material differences are described in the section entitled “Comparison of Rights of Holders of BEPC Exchangeable Shares, BEP Units and TERP Common Stock”.

Can BEP units be exchanged for BEPC exchangeable shares?

  

No, BEP units are not exchangeable. A unitholder of BEP who would like to acquire additional BEPC exchangeable shares would be required to acquire them in the market. However, BEPC or one of its affiliates may in the future consider, subject to market and other conditions, making an offer to unitholders of BEP to permit them to exchange their BEP units for BEPC exchangeable shares.

Where will a holder of BEPC exchangeable shares be able to trade BEPC exchangeable shares?

  

There is currently no public market for BEPC exchangeable shares. BEPC has applied to have the BEPC exchangeable shares listed on the NYSE and the TSX, under the symbol “BEPC”. The NYSE has conditionally authorized BEPC to list on the NYSE and the TSX has conditionally approved the listing of these securities. Listing on the NYSE is subject to BEPC fulfilling all of the requirements of the NYSE, and listing on the TSX is subject to BEPC fulfilling all of the requirements of the TSX on or before September 21, 2020, including distribution of BEPC exchangeable shares to a minimum number of public shareholders.

 

BEPC anticipates that trading in BEPC exchangeable shares will begin on a “when-issued” basis as early as one (1) trading day prior to the distribution record date and will continue up to and including the distribution date. “When-issued” trading in the context of a special distribution refers to a sale or purchase made conditionally on or before the distribution date because the securities of the entity have not yet been distributed.

How does a recipient of BEPC exchangeable shares in the TERP acquisition exchange such shares into BEP units?

  

If you receive BEPC exchangeable shares in the TERP acquisition, you will be entitled to exchange BEPC exchangeable shares for an equivalent number of BEP units (subject to adjustment to reflect certain capital events) or its cash equivalent (the form of payment to be determined at the election of BEPC) at any time. BEP may elect to satisfy BEPC’s exchange obligation by acquiring such tendered BEPC exchangeable shares for an equivalent number of BEP units (subject to adjustment to reflect certain capital events) or its cash equivalent (the form of payment to be determined at the election of BEP). BEPC and BEP currently intend to satisfy any exchange requests through

 

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Questions

  

Questions and Answers Regarding BEPC Exchangeable Shares, BEP Units
and the Special Distribution

  

the delivery of BEP units rather than cash. For additional information, see “Description of BEPC Share Capital—BEPC Exchangeable Shares” and “Description of BEPC Share Capital —BEPC Exchangeable Shares—Exchange by Holder—Adjustments to Reflect Certain Capital Events”. However, factors that BEP and BEPC may consider when determining whether to satisfy any exchange request for cash rather than BEP units include, without limitation, compliance with applicable securities laws, changes in law (including the Bermuda limited partnership laws), BEP’s and BEPC’s respective available consolidated liquidity, and any change in the tax consequences to BEP or BEPC or to a holder as a result of delivery of BEP units.

 

An exchange of BEPC exchangeable shares for an equivalent number of BEP units or its cash equivalent may have tax consequences. See “Material Canadian Federal Income Tax Considerations” and “Material United States Federal Income Tax Considerations”.

Are there risks associated with owning BEPC exchangeable shares or BEP units?

  

Yes, BEPC’s Business and the ownership of BEPC exchangeable shares are subject to both general and specific risks and uncertainties. Owning BEP units also is subject to risks. For a discussion of factors you should consider, please see “Risk Factors”.

 

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SUMMARY

This summary highlights selected information from this proxy statement/prospectus. It may not contain all of the information that is important to you. You should read this entire proxy statement/prospectus carefully, especially the “Risk Factors” section and the more detailed information and financial data and statements contained elsewhere in this proxy statement/prospectus and incorporated herein by reference in order to fully understand the TERP acquisition and the Reorganization Agreement. Some of the statements in this proxy statement/prospectus constitute forward-looking statements that involve risks and uncertainties. See “Special Note Regarding Forward-Looking Information” for more information. Unless otherwise indicated or the context otherwise requires, the disclosure in this proxy statement/prospectus assumes that the special distribution has been completed. See “Where You Can Find More Information”. See “Glossary” for the definitions of the various defined terms used throughout this proxy statement/prospectus. We have included page references to direct you to a more complete description of the topics presented in this summary.

The Companies (See Page 124)

Brookfield Renewable Partners L.P.

Brookfield Renewable Partners L.P.

73 Front Street, 5th Floor

Hamilton, HM 12, Bermuda

Telephone: (441) 294-3304

Brookfield Renewable Partners L.P. (referred to herein as BEP) is a Bermuda exempted limited partnership and its sole material asset is its limited partnership interest and preferred limited partnership interest in BRELP. Brookfield Renewable was established by BAM to own and operate high-quality power assets globally, and is one of the largest, publicly traded, pure-play renewable power businesses in the world. BEP’s portfolio consists of hydroelectric, wind, solar and storage facilities in North America, South America, Europe and Asia, and totals over 19,000 MW of installed capacity and an approximately 13,000 MW development pipeline. BEP units are listed on the NYSE under the symbol “BEP” and on the TSX under the symbol “BEP.UN”.

Additional information about BEP and its subsidiaries is included in documents incorporated herein by reference. See the section entitled “Where You Can Find More Information”.

Brookfield Renewable Corporation

Brookfield Renewable Corporation

250 Vesey Street, 15th Floor

New York, New York 10281-1023

Telephone: (212) 417-7000

Brookfield Renewable Corporation (referred to herein as BEPC) is a corporation incorporated under the laws of British Columbia and is a controlled subsidiary of BEP. Immediately prior to completion of the TERP acquisition and following completion of the BEP contribution, BEPC’s operations are expected to consist of approximately 8,326 MW of installed hydroelectric, wind, solar, storage and ancillary capacity across Brazil, Colombia and the United States, and annualized long-term average generation on a consolidated basis of 33,088 GWh and on a proportionate basis of approximately 16,327 GWh, which excludes the 10% interest in LATAM Holdco that will be retained by Brookfield Renewable. Immediately prior to the completion of the TERP acquisition, BEPC exchangeable shares are expected to be listed on the NYSE and the TSX.

Additional information about BEPC is included elsewhere in this proxy statement/prospectus.



 

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TerraForm Power, Inc.

TerraForm Power, Inc.

200 Liberty Street, 14th Floor

New York, New York 10281

Telephone: (646) 992-2400

TerraForm Power, Inc. (referred to herein as TerraForm Power or TERP) owns and operates over 4,200 MW of diversified high-quality solar and wind assets in North America and Western Europe underpinned by long-term contracts. Significant diversity across technologies and locations coupled with contracts across a large, diverse group of creditworthy counterparties significantly reduces the impact of resource variability on cash available for distribution and limits TerraForm Power’s exposure to any individual counterparty. TerraForm Power is sponsored by BAM, a leading global alternative asset manager with over $515 billion in assets under management. BEP and affiliates of BAM held approximately 62% of TERP common stock as of the TERP record date.

Shares of TERP common stock are traded on NASDAQ under the symbol “TERP”. If the TERP acquisition is completed, TERP common stock will cease to be listed on NASDAQ and will be deregistered under the Exchange Act.

Additional information about TerraForm Power is included in documents incorporated herein by reference. See “Where You Can Find More Information”.

TerraForm Power NY Holdings, Inc.

TerraForm Power NY Holdings, Inc.

c/o TerraForm Power, Inc.

200 Liberty Street, 14th Floor

New York, New York 10281

Telephone: (646) 992-2400

TerraForm Power NY Holdings, Inc. (referred to herein as TerraForm New York), a wholly owned direct subsidiary of TerraForm Power, is a New York corporation that was incorporated on March 16, 2020 for the purpose of effecting the TERP acquisition. To date, TerraForm New York has not conducted any activities other than those incidental to its incorporation and the matters contemplated by the Reorganization Agreement in connection with the TERP acquisition. Pursuant to the Reorganization Agreement, TerraForm Power will merge with and into TerraForm New York, with TerraForm New York as the surviving corporation, and the separate corporate existence of TerraForm Power will cease. As of the completion of the TERP acquisition, TerraForm New York will become wholly owned by the Brookfield Renewable group and the Brookfield Renewable group’s affiliates.

2252876 Alberta ULC

2252876 Alberta ULC

4600 Eighth Avenue Place East

525 – 8th Avenue SW

Calgary, AB T2P 1G1

Telephone: (403) 776-3700

2252876 Alberta ULC (referred to herein as Acquisition Sub), a wholly owned direct subsidiary of BEP, is an unlimited liability corporation incorporated under the laws of Alberta that was incorporated on March 13,



 

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2020 for the purpose of facilitating the TERP acquisition. To date, Acquisition Sub has not conducted any activities other than those incidental to its incorporation and the matters contemplated by the Reorganization Agreement in connection with the TERP acquisition.

TERP Stockholders Meeting (See Page 126)

 

Time and Date

  

July 29, 2020 at 11:00 a.m., Eastern Time

Place

  

Virtually, via live webcast at www.virtualshareholdermeeting.com/TERP2020.

Items of Business

  

Proposal No. 1: To consider and vote upon a proposal to adopt the Plan of Merger and to approve the Reorganization Agreement, the reincorporation merger and the share exchange, referred to herein as the Merger Proposal.

  

Proposal No. 2: To elect seven directors to serve until the next TerraForm Power annual stockholders meeting and until their respective successors are duly elected or appointed and qualified, subject to his or her earlier resignation or removal (including in connection with the completion of the TERP acquisition) or death.

  

Proposal No. 3: To ratify the appointment of Ernst & Young LLP as TerraForm Power’s independent registered public accounting firm for 2020.

  

Proposal No.  4: To ratify, on a non-binding, advisory basis, the compensation paid to TerraForm Power’s named executive officers.

  

Proposal No. 5: To approve the adjournment of the TERP stockholders meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the Merger Proposal, referred to herein as the Adjournment Proposal.

TERP Record Date

  

You are entitled to vote at the TERP stockholders meeting and at any adjournments or postponements thereof if you were a stockholder of record as of 5:00 p.m. (Eastern Time) on June 26, 2020.

Voting

  

Your vote is very important. Whether or not you plan to attend the TERP stockholders meeting, TerraForm Power encourages you to read this proxy statement/prospectus and submit your proxy or voting instructions as soon as possible. You may cause your shares to be present and voted at the TERP stockholders meeting by either marking, signing and returning the enclosed proxy card or submitting a proxy using the telephone or internet instructions described herein, if available. For specific instructions on submitting a proxy to vote your shares, please refer to the instructions on your enclosed proxy card.



 

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Required Vote

 

Item

     

Vote Necessary*

Proposal No. 1

(Merger Proposal)

 

To consider and vote upon a proposal to adopt the Plan of Merger and to approve the Reorganization Agreement, the reincorporation merger and the share exchange.

 

The affirmative vote of (i) the holders of a majority of outstanding shares of TERP common stock entitled to vote thereon as of the TERP record date that are not owned, directly or indirectly, by BEP and its affiliates or any person with whom BEP or its affiliates has formed (and not terminated) a “group” (as defined in the Exchange Act, as amended), AND (ii) the holders of a majority of the issued and outstanding shares of TERP common stock, in each case that are entitled to vote thereon.

Proposal No. 2

 

To elect seven directors to serve until the next TerraForm Power annual stockholders meeting and until their respective successors are duly elected or appointed and qualified, subject to his or her earlier resignation or removal (including in connection with the completion of the TERP acquisition) or death.

 

Each director nominee designated by BAM and its affiliates pursuant to TerraForm Power’s Certificate of Incorporation will be elected by the affirmative vote of a majority of votes cast in the election of directors, either in person or by proxy; provided that, if the TERP board determines that the number of director nominees exceeds the number of directors to be elected, and such determination has not been rescinded by the TERP board on or prior to the tenth day preceding the date TerraForm Power first mails its notice of meeting for such meeting to the stockholders, then the four director nominees designated by BAM and its affiliates who receive the largest number of votes shall be elected as directors. Each independent director nominee will be elected by the affirmative vote of a majority of votes cast, either in person or by proxy, with respect to such director, assuming a quorum is present, with BAM and its affiliates required to vote its TERP common stock (or abstain from voting) in the same proportion as all public TERP shares, pursuant to TerraForm Power’s Certificate of Incorporation; provided that, if the TERP board determines that the number of independent director nominees exceeds the number of independent directors to



 

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Item

     

Vote Necessary*

   

be elected, and such determination has not been rescinded by the TERP board on or prior to the tenth day preceding the date TerraForm Power first mails its notice of meeting for such meeting to the stockholders, then the three independent director nominees who receive the largest number of votes shall be elected as directors.

Proposal No. 3

 

To ratify the appointment of Ernst & Young LLP as TerraForm Power’s independent registered public accounting firm for 2020.

 

The affirmative vote of the majority in voting power of the shares of TERP common stock present in person or represented by proxy at the TERP stockholders meeting and entitled to vote thereon, assuming a quorum is present.

Proposal No. 4

 

To ratify, on a non-binding, advisory basis, the compensation paid to TerraForm Power’s named executive officers.

 

The affirmative vote of the majority in voting power of the shares of TERP common stock present in person or represented by at the TERP stockholders meeting and entitled to vote thereon, assuming a quorum is present.

Proposal No. 5

(Adjournment Proposal)

 

To approve the adjournment of the TERP stockholders meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the Merger Proposal.

 

The affirmative vote of the majority in voting power of the shares of TERP common stock present in person or by proxy at the TERP stockholders meeting and entitled to vote thereon, assuming a quorum is present.

 

*

Under the rules of NASDAQ, if you hold your shares of TERP common stock in street name, your nominee or intermediary may not vote your shares on non-routine matters without instructions from you. Without your voting instructions, a broker non-vote will occur on the Merger Proposal, the election of directors, the non-binding, advisory vote on the compensation paid to TerraForm Power’s named executive officers and the Adjournment Proposal. Abstentions are considered shares of TERP common stock present and entitled to vote and will have the same effect as a vote “AGAINST” the Merger Proposal, the TERP Stockholders Meeting Proposals and the Adjournment Proposal. Broker non-votes will have the same effect as a vote “AGAINST” approval of the Merger Proposal, but will have no effect on the TERP Stockholders Meeting Proposals or the Adjournment Proposal.

The TERP Acquisition and the Reorganization Agreement (See Pages 150 and 215)

The Reorganization Agreement provides that, on the terms and subject to the conditions in the Reorganization Agreement, and in accordance with the DGCL and NYBCL, on the completion date, the Brookfield Renewable group will acquire all of the outstanding public TERP shares, through a series of transactions that include the reincorporation merger and the share exchange. In the reincorporation merger, TerraForm Power will merge with and into TerraForm New York, with TerraForm New York as the surviving



 

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corporation of such merger, and the Brookfield stockholders, holders of public TERP shares who do not make an election to receive BEP units and holders of public TERP shares who make an election to receive BEP units, will receive TerraForm New York class A common stock, TerraForm New York class B common stock and TerraForm New York class C common stock, respectively. See “Reorganization Agreement—Election Procedures”. In the share exchange, BEPC will acquire each share of TerraForm New York class B common stock in exchange for BEPC exchangeable shares and cash in lieu of fractional BEPC exchangeable shares and Acquisition Sub will acquire each share of TerraForm New York class C common stock in exchange for BEP units and cash in lieu of fractional units. The TERP acquisition will not be completed without the approval of the Reorganization Agreement and the reincorporation merger and the share exchange contemplated thereby by the TERP stockholders, including the unaffiliated TERP stockholder approval.

A copy of the Reorganization Agreement is attached as Annex A to this proxy statement/prospectus. You are urged to read the Reorganization Agreement in its entirety because it is the legal document that governs the TERP acquisition. See The Reorganization Agreement.

Assuming the satisfaction (or, to the extent legally permissible, waiver (except with respect to the receipt of the TERP stockholder approvals condition, which is not waivable)) of the conditions set forth in the Reorganization Agreement, the target completion of the TERP acquisition is the third quarter of 2020, and we expect to consummate the special distribution on or about the business day prior to the completion of the TERP acquisition. However, the TERP acquisition is subject to various conditions, including the condition that the special distribution has occurred or all actions reasonably necessary to cause the special distribution to occur no later than immediately prior to the completion of the TERP acquisition have been taken, and it is possible that factors outside the control of TerraForm Power or the Brookfield Renewable group could result in the TERP acquisition being completed at a later time, or not at all. An end date of December 16, 2020 has been set for the completion of the TERP acquisition, subject to a three-month extension under certain circumstances as detailed in the Reorganization Agreement. In addition, there is no assurance the satisfaction of the special distribution condition will occur by the end date or occur at all.

Effects of the TERP Acquisition (See Page 150)

If the conditions to the completion of the TERP acquisition are either satisfied or, to the extent legally permissible, waived (except with respect to the receipt of the TERP stockholder approvals condition, which is not waivable), as a first step of the TERP acquisition, TerraForm Power will merge with and into TerraForm New York, with TerraForm New York as the surviving corporation of such merger, and the separate corporate existence of TerraForm Power will cease. Immediately following the reincorporation merger and as a result of the share exchange, each public TERP share automatically will be exchanged into the right to receive consideration consisting of a number of, at the election of the holder of such public TERP share, BEPC exchangeable shares or BEP units, in each case, equal to the adjusted exchange ratio and subject to further adjustment to prevent dilution in accordance with the Reorganization Agreement. Following completion of the TERP acquisition, TerraForm New York will become wholly owned by the Brookfield Renewable group and the Brookfield Renewable group’s affiliates, and TERP common stock will no longer be publicly traded. Each share of TERP common stock held by the Brookfield stockholders prior to the completion of the TERP acquisition will remain issued and outstanding as one share of class A common stock of TerraForm New York, the surviving corporation.

What TERP Stockholders Will Receive in the TERP Acquisition (See Page 204)

If the TERP acquisition is completed, each public TERP share will automatically be exchanged into the right to receive TERP acquisition consideration consisting of a number of, at the election of the holder of such public TERP shares, BEPC exchangeable shares or BEP units, in each case, equal to the adjusted exchange ratio and subject to further adjustment to prevent dilution in accordance with the Reorganization Agreement. The



 

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adjusted exchange ratio will be determined by multiplying (x) 0.381 by (y) the sum of (i) the number (rounded, if necessary, to three decimal points) of BEPC exchangeable shares to be distributed with respect to each BEP unit upon the consummation of the special distribution and (ii) one. For example, if holders of BEP units receive one BEPC exchangeable share for every four BEP units in the special distribution, the adjusted exchange ratio will be equal to 0.47625, and holders of public TERP shares will receive, at their election, 0.47625 of a BEPC exchangeable share or BEP unit per public TERP share. Each BEPC exchangeable share has been structured with the intention of providing an economic return equivalent to one BEP unit (subject to adjustment to reflect certain capital events). See “BEPC Relationship with Brookfield Renewable” and “Description of BEPC Share Capital—BEPC Exchangeable Shares”. Holders of public TERP shares will not participate in the special distribution. Unaffiliated TERP stockholders will receive cash in lieu of any fractional BEPC exchangeable shares or BEP units, as applicable, that they would otherwise have been entitled to receive.

To elect to receive BEP units, holders of public TERP shares must indicate on the election form an election to receive TerraForm New York class C common stock, and such TerraForm New York class C common stock, subject to the treatment of fractional shares, will automatically exchange into BEP units following completion of the TERP acquisition. Holders of public TERP shares who do not make an election to receive BEP units will be entitled to receive BEPC exchangeable shares following completion of the share exchange. There is no limit on the number of public TERP shares that may be exchanged for BEPC exchangeable shares or BEP units. For a description of the applicable BEP unit election procedures, see the sections entitled “The TERP Acquisition—Exchange of Public TERP Shares in the TERP Acquisition” and “The Reorganization Agreement—Election Procedures.

The Reorganization Agreement does not contain any provision that would adjust the exchange ratio based on fluctuations in the market price of TERP common stock, BEP units or BEPC exchangeable shares. Because of this, the implied value of the TERP acquisition consideration will fluctuate between now and the completion of the TERP acquisition.

Treatment of TERP Equity Awards (See Page 205)

Under the terms of the Reorganization Agreement, upon the completion of the reincorporation merger, all outstanding TerraForm Power RSUs will automatically be converted into TerraForm New York RSUs, on a one-for-one basis. Upon the completion of the share exchange, each outstanding TerraForm New York RSU award will be converted into a time-based restricted stock unit of BEPC with respect to a number of BEPC exchangeable shares (with any fractional shares rounded down to the nearest whole share) equal to the product of (1) the number of shares of TerraForm New York common stock subject to such TerraForm New York RSU immediately prior to the completion of the share exchange and (2) the adjusted exchange ratio, subject to adjustment as provided in the Reorganization Agreement to prevent dilution. Such BEPC restricted stock units will be subject to substantially the same terms and conditions as were applicable to the TerraForm Power RSUs (except that the form of payment upon vesting will be in BEPC exchangeable shares).

Upon the completion of the TERP acquisition, BEPC will assume sponsorship of the TerraForm Power Inc. 2018 Amended and Restated Long-Term Incentive Plan.

Reasons for the Special Committee’s and TerraForm Power Board’s Recommendation (See Page 160)

The TerraForm Power Board (acting on the recommendation of the Special Committee in the case of the Merger Proposal) recommends that you vote your shares:

FOR” the adoption of the Plan of Merger and the approval of the Reorganization Agreement, the reincorporation merger and the share exchange;



 

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FOR” the election of seven directors to serve until the next TerraForm Power annual meeting and until their respective successors are duly elected or appointed and qualified, subject to his or her earlier resignation or removal (including in connection with the completion of the TERP acquisition) or death;

FOR” the ratification of the appointment of Ernst & Young LLP as TerraForm Power’s independent registered public accounting firm for 2020;

FOR” the ratification, on a non-binding, advisory basis, of the compensation paid to TerraForm Power’s named executive officers; and

FOR” the approval of the adjournment of the TERP stockholders meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the Merger Proposal.

In the course of reaching its decision to approve the Plan of Merger, Reorganization Agreement and the transactions contemplated by the Reorganization Agreement, including the reincorporation merger and the share exchange, the TerraForm Power Board (acting on the recommendation of the Special Committee) considered a number of factors in its deliberations. For a more complete discussion of these factors, please see “The TERP Acquisition—Recommendation of the TerraForm Power Board”, “The TERP Acquisition—Reasons for the Special Committee’s Recommendation” and “The TERP Acquisition—Reasons for TerraForm Power Board’s Recommendation”.

Opinions of Financial Advisors to the Special Committee of Terraform Power (See Pages 168 and 181)

Opinion of Morgan Stanley & Co. LLC (See Page 168)

Morgan Stanley & Co. LLC, which we refer to as Morgan Stanley, was retained by the Special Committee to act as its financial advisor in connection with the TERP acquisition. The Special Committee selected Morgan Stanley to act as its financial advisor based on Morgan Stanley’s qualifications, expertise, reputation and knowledge of the industry, business and affairs of TerraForm Power. On March 16, 2020, Morgan Stanley rendered its oral opinion, which was subsequently confirmed in writing, to the Special Committee that, as of that date, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth in its opinion, the consideration to be received by the holders of TERP common stock pursuant to the Reorganization Agreement was fair from a financial point of view to the holders of TERP common stock (other than the Brookfield stockholders, such holders referred to as the unaffiliated TERP stockholders).

The full text of Morgan Stanley’s written opinion to the Special Committee, dated March 16, 2020, is attached to this proxy statement/prospectus as Annex B. TERP stockholders should read the opinion in its entirety for a discussion of the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley in rendering its opinion. This summary is qualified in its entirety by reference to the full text of such opinion. Morgan Stanley’s opinion was addressed to, and rendered for the benefit of, the Special Committee, in its capacity as such, and addressed only the fairness, from a financial point of view, of the consideration to be received by the unaffiliated TERP stockholders pursuant to the Reorganization Agreement as of the date of the opinion and did not address any other aspects or implications of the TERP acquisition. Morgan Stanley was not requested to opine as to, and its opinion does not in any manner address, the relative merits of the transactions contemplated by the Reorganization Agreement as compared to other business or financial strategies that might be, or, at the time the opinion was rendered, might have been available to TerraForm Power, nor does it address the underlying business decision of TerraForm Power to enter into the Reorganization Agreement or the other transaction documents (as defined below) or proceed with any other transaction contemplated by the Reorganization Agreement or the other transaction documents. Morgan Stanley’s opinion was not intended to, and does not, express an opinion or a recommendation as to how TERP stockholders should vote at the TERP stockholders meeting or any adjournment thereof,



 

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make any election with respect to the TERP acquisition or as to any other action that a stockholder should take in relation to the TERP acquisition. In addition, Morgan Stanley expressed no opinion in respect of the special distribution (discussed in further detail in the section entitled “The Special Distribution” in this proxy statement/prospectus).

Opinion of Greentech Capital Advisors Securities, LLC (See Page 181)

The Special Committee of the TERP board retained Greentech Capital Advisors Securities, LLC, referred to as Greentech, to act as a financial advisor in connection with the TERP acquisition. Greentech is an internationally recognized investment banking firm that is regularly engaged in the valuation of businesses and securities in connection with mergers and acquisitions, private placements and valuations for corporate and other purposes. The Special Committee selected Greentech to act as a financial advisor in connection with the TERP acquisition on the basis of Greentech’s experience in transactions similar to the TERP acquisition, its reputation in the investment community and its familiarity with TerraForm Power and TerraForm Power’s business and assets.

On March 16, 2020, at a meeting of the Special Committee held to evaluate the TERP acquisition, Greentech delivered to the Special Committee an oral opinion, which was confirmed by delivery of a written opinion dated March 16, 2020, to the effect that, as of the date of the opinion and subject to the various assumptions made, procedures followed, factors considered, and limitations of the review undertaken, qualifications contained and other matters set forth therein, the exchange ratio of 0.381 was fair, from a financial point of view, to the holders of outstanding shares of TERP common stock, other than shares held in the treasury of TerraForm Power or shares held by the Brookfield stockholders.

The full text of Greentech’s written opinion to the Special Committee, which describes, among other things, the assumptions made, procedures followed, factors considered and limitations on the review undertaken, qualifications contained and other matters set forth therein, is attached to this proxy statement/prospectus as Annex C and is incorporated by reference herein in its entirety. This summary of Greentech’s opinion is qualified in its entirety by reference to the full text of the opinion. Greentech delivered its opinion to the Special Committee for the benefit and use of the Special Committee (in its capacity as such) in connection with and for purposes of its evaluation of the TERP acquisition. Greentech’s opinion does not address any other aspect of the TERP acquisition other than the fairness of the exchange ratio, from a financial point of view, to the holders of the public TERP shares, and no opinion or view was expressed as to the relative merits of the TERP acquisition in comparison to other strategies or transactions that might be available to TerraForm Power, or in which TerraForm Power might engage, or as to the underlying business decision of the TERP board or TerraForm Power to proceed with or effect the TERP acquisition.

Greentech’s opinion does not address any other aspect of the TERP acquisition and does not constitute a recommendation to the Special Committee or the TERP board as to how they should vote on the TERP acquisition or to any holder of TERP common stock as to how any such stockholder should vote at any stockholders’ meeting at which the TERP acquisition is considered, or whether or not any such stockholder should enter into a voting, shareholders’, or affiliates’ agreement with respect to the TERP acquisition or exercise any dissenter’s or appraisal rights that may be applicable to such stockholder.

Regulatory Approvals for the TERP Acquisition (See Page 202)

Completion of the TERP acquisition is conditioned upon the expiration or termination of the waiting period relating to the TERP acquisition under the HSR Act, clearance from the Canadian Competition Bureau and review and authorization by the FERC.



 

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U.S. Antitrust Filing

Pursuant to the requirements of the HSR Act, BAM, BEP and TerraForm Power have filed the requisite notification and report forms under the HSR Act with the Antitrust Division of the Department of Justice and the Federal Trade Commission on May 11, 2020. Early termination of the HSR Act waiting period was granted on May 27, 2020. As a result, the condition related to expiration or termination of the HSR Act waiting period has now been satisfied.

Canadian Antitrust Approvals

On April 7, 2020, BEP filed a request pursuant to the Competition Act for either (a) an advance ruling certificate pursuant to the Competition Act or (b) a no-action letter and waiver from the obligation to notify the Commissioner of Competition of the proposed transaction. On April 21, 2020, the Canadian Competition Bureau issued a no-action letter and waiver. As a result, the condition related to clearance from the Canadian Competition Bureau has now been satisfied.

FERC Filings

The proposed transaction is subject to review and authorization by the FERC, pursuant to Section 203 of the Federal Power Act. (16 U.S.C. § 824b). FERC review is triggered by the submission of a request for authorization for the transaction, commonly referred to as a 203 Application, which is submitted by the FERC-jurisdictional public utility entities of TerraForm Power and/or their upstream holding company affiliates implicated in the transaction. The 203 Application will demonstrate that the transaction does not raise any competitive concerns. FERC typically acts on unopposed applications within 60 to 90 days after submission. On April 24, 2020, BEP and TerraForm Power submitted a 203 Application with respect to the TERP acquisition, which 203 Application is unopposed.

Subject to certain conditions described below, if the TERP acquisition is not completed on or before December 16, 2020 (referred to as the end date) or if a legal restraint preventing the completion of the TERP acquisition becomes final and nonappealable, either BEP or TerraForm Power may terminate the Reorganization Agreement. However, if, on the end date, the condition to the completion of the TERP acquisition set forth in the Reorganization Agreement relating to antitrust and regulatory conditions is not satisfied or waived (except with respect to the receipt of the TERP stockholder approvals condition, which is not waivable), but all other conditions to completion of the TERP acquisition have been satisfied or waived (other than those conditions that by their nature are to be satisfied at the completion of the TERP acquisition), then the end date may be extended by either TerraForm Power or BEP to a date not beyond March 16, 2021. See “The Reorganization Agreement—Termination of the Reorganization Agreement”.

Other Government Approvals

While not a condition to completion of the TERP acquisition, the proposed transaction is subject to review and authorization by the New York State Public Service Commission (the “NYPSC”), pursuant to Section 70 of the New York Public Service Law. NYPSC review was triggered by the submission of a petition on May 4, 2020 requesting that the NYPSC declare that no further review of the proposed transaction is required under Section 70 because no competitive issues are raised by the transaction nor will it cause any harm to the interests of captive utility ratepayers. In the alternative, the petition requested approval of the proposed transaction under Section 70 because the proposed transaction is in the public interest for these same reasons. The NYPSC typically acts on such petitions within 60 to 90 days after submission.

BEP, BEPC and TerraForm Power do not contemplate making any other material governmental filing in relation to the TerraForm Power acquisition. It is presently contemplated that if any additional governmental approvals or actions are required, those approvals or actions will be sought. There can be no assurance, however, that any such additional approvals or actions will be obtained.



 

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Accounting Treatment (See Page 204)

Brookfield (together with the Brookfield stockholders) holds approximately 62% of the outstanding shares of TERP’s common stock as of the date of this proxy statement/prospectus. Brookfield also is able to control the appointment and removal of BEPC’s directors and the directors of BEP’s general partner and, accordingly, exercises substantial influence over BEPC and BEP. Simultaneously with the completion of the TERP acquisition, BEPC intends to enter into voting agreements with BEP and certain indirect subsidiaries of Brookfield to transfer the power to vote their respective shares held of TerraForm Power (or its successor entity) to BEPC. As a result, BEPC (and indirectly BEP) will control and consolidate TERP upon completion of the TERP acquisition. The transfer of control of TerraForm Power to BEPC (and indirectly BEP) is considered to be a transaction between entities under common control and will be valued based on Brookfield’s book value in TerraForm Power, and, after the completion of the TERP acquisition, the results of TerraForm Power and BEPC and BEP will be presented retrospectively on a combined basis for all historical periods they were under common control. The TERP acquisition will be accounted for by BEPC and BEP as an acquisition of non-controlling interest in a subsidiary.

No Solicitation by TerraForm Power of Takeover or Alternative Proposals (See Page 223)

TerraForm Power has agreed, except as otherwise provided in the Reorganization Agreement, not to, and not to authorize or direct any of its subsidiaries or any of its or their respective officers, directors, employees or representatives to, directly or indirectly:

 

   

solicit, initiate, knowingly encourage, knowingly induce or knowingly facilitate, or furnish or disclose non-public information in furtherance of, any TERP Takeover Proposal, or any inquiry or proposal that would reasonably be expected to result in or lead to a TERP Takeover Proposal;

 

   

enter into any agreement with respect to any TERP Takeover Proposal (subject to certain exceptions set forth in the Reorganization Agreement); or

 

   

enter into, participate in or continue any discussions or negotiations with respect to any TERP Takeover Proposal, or furnish or disclose to any person any non-public information regarding TerraForm Power or any of its subsidiaries with respect to any TERP Takeover Proposal or any inquiry or proposal that would reasonably be expected to result in or lead to a TERP Takeover Proposal.

Additionally, TerraForm Power has agreed to (1) immediately cease and cause to be terminated all discussions or negotiations with any person (other than BEP and its representatives) conducted prior to the date of the Reorganization Agreement with respect to a TERP Takeover Proposal or any inquiry or proposal that would reasonably be expected to result in or lead to a TERP Takeover Proposal, (2) promptly request each person (other than BEP and its representatives), if any, that has executed a confidentiality agreement in the last six months to return or destroy all information TerraForm Power or its subsidiaries or representatives have furnished to such person or its representatives and (3) immediately terminate all physical and electronic data room access previously granted to any such person or its representatives (other than BEP and its representatives).

Notwithstanding these restrictions, the Reorganization Agreement provides that at any time prior to obtaining the TERP stockholder approvals, TerraForm Power and its representatives may, in response to a bona fide written TERP Takeover Proposal that the TERP board (acting on recommendation of the Special Committee) determines in good faith (after consultation with its outside legal counsel and financial advisor) constitutes, or could reasonably be expected to result in or lead to, a superior proposal, as defined under “The Reorganization Agreement—No Solicitation by TerraForm of Takeover or Alternative Proposals”, and which did not result from a material breach of the non-solicitation obligations described above, subject to compliance with the provisions of the Reorganization Agreement described in the following paragraph, take the following actions:

 

   

furnish information to the person making such TERP Takeover Proposal and its representatives (provided that all such information has been or is provided to or made available to BEP prior to or substantially concurrent with the time it is provided or made available to such person) pursuant to a confidentiality agreement that meets certain requirements set forth in the Reorganization Agreement; and



 

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participate in discussions or negotiation of such terms with the person making such TERP Takeover Proposal and its representatives,

in each case, if and so long as the TERP board (acting on the recommendation of the Special Committee) determines in good faith after consultation with its outside legal counsel that the failure to provide such information or engage in such negotiations or discussions would be inconsistent with its fiduciary duties under applicable law.

The Reorganization Agreement also requires TerraForm Power to (1) promptly, and in any event within 24 hours, advise BEP of any TERP Takeover Proposal or any request for information or inquiry that would reasonably be expected to result in or lead to a TERP Takeover Proposal, the identity of the person making such TERP Takeover Proposal, request or inquiry and the material terms of such TERP Takeover Proposal, request or inquiry, (2) keep BEP fully informed in on a reasonably current basis of the status, including any change to the terms of such TERP Takeover Proposal, and (3) provide BEP copies of all correspondence and other written material sent or provided to or by TerraForm Power from or to any third party in connection with a TERP Takeover Proposal as soon as practicable after receipt or delivery of the same. Subject to certain exceptions set forth therein, the Reorganization Agreement also prohibits the TerraForm Power Board or Special Committee from making any Company Adverse Recommendation Change (as defined in the Reorganization Agreement).

Completion of the TERP Acquisition Is Subject to Certain Conditions (See Page 230)

The obligations of each of BEP, BEPC and Acquisition Sub, on the one hand, and TerraForm Power and TerraForm New York, on the other, to complete the TERP acquisition are subject to the satisfaction or, to the extent legally permissible (and except with respect to the condition described in the first bullet below, which is not waivable) waiver on or prior to the completion date of the following conditions:

 

   

the receipt of the TERP stockholder approvals;

 

   

the approval for listing of the BEPC exchangeable shares and BEP units constituting the TERP acquisition consideration on the NYSE (subject to official notice of issuance);

 

   

the conditional approval for listing of the BEPC exchangeable shares and the BEP units issuable as TERP acquisition consideration on the TSX (subject to customary conditions);

 

   

the expiration or termination of the applicable waiting period under the HSR Act, receipt of the Competition Act approval and receipt of approval from FERC pursuant to Section 203 of the Federal Power Act, as amended;

 

   

the absence of any legal restraints that prevent, make illegal or prohibit the completion of the transactions contemplated by the Reorganization Agreement;

 

   

declaration by the SEC of the effectiveness of the registration statement filed on Form F-1/F-4 of which this proxy statement/prospectus form a part and of the registration statement on Form F-3 relating to the BEP units that may be issued by BEP or delivered by BEPC to satisfy any exchange of the BEPC exchangeable shares (and the absence of any stop order suspending the effectiveness of such registration statements or any initiated or threatened proceedings seeking such a stop order);

 

   

the filing of the final prospectus relating to the special distribution with the applicable securities authorities in Canada;

 

   

the other parties having performed in all material respects all obligations required to be performed by them under the Reorganization Agreement that are required to be performed on or prior to the completion date; and

 

   

the accuracy of the representations and warranties of the parties made in the Reorganization Agreement, in each case subject to certain exceptions based on materiality qualifiers.



 

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By reason of the commitment of the Brookfield stockholders under the TERP Voting Agreement to vote their TERP common stock in favor of the TERP acquisition, the condition described in the first bullet will be satisfied if the unaffiliated TERP stockholder approval is obtained. The Merger Proposal will not be approved, however, unless the unaffiliated TERP stockholder approval is obtained. For more information on the TERP Voting Agreement, see the section entitled “The TERP Voting Agreement”.

In addition, TerraForm Power’s and TerraForm New York’s obligation to complete the TERP acquisition is further subject to the following conditions:

 

   

receipt of an opinion regarding the reincorporation tax treatment, the 351 tax treatment, the 721 tax treatment and BEP nonrecognition tax treatment, in each case, as defined under “The Reorganization Agreement—Tax Matters”;

 

   

occurrence of the BEP contribution; and

 

   

the special distribution has occurred or that all actions which are reasonably necessary to cause the special distribution to occur substantially simultaneously with, but no later than immediately prior to, the completion of the TERP acquisition have been taken.

Notwithstanding these conditions, the Reorganization Agreement provides that, subject to certain exceptions, if the IRS ruling (as defined under “The Reorganization Agreement—Tax Matters”), which has been received, is retracted on or prior to the completion date, the requirement that the opinion above includes an opinion regarding the 351 tax treatment will be deemed waived.

We cannot be certain when, or if, the conditions to the TERP acquisition will be satisfied or waived (except with respect to the receipt of the TERP stockholder approvals condition, which is not waivable), or that the TERP acquisition will be completed.

Termination of the Reorganization Agreement (See Page 233)

The Reorganization Agreement may be terminated at any time prior to the completion of the TERP acquisition, whether before or after receipt of the TERP stockholder approvals, under the following circumstances:

 

   

by mutual written consent of BEP and TerraForm Power (in the case of TerraForm Power, acting on the recommendation of the Special Committee); or

 

   

by either BEP or TerraForm Power (in the case of TerraForm Power, acting on the recommendation of the Special Committee) in the event that:

 

   

if the TERP acquisition is not completed on or before December 16, 2020 (referred to as the end date), and which may be extended in certain circumstances to March 16, 2021 (provided that a party may not terminate the Reorganization Agreement pursuant to this provision if its failure to fulfill any obligation under the Reorganization Agreement is a principal cause of the failure of the mergers to be consummated on or before such date);

 

   

a legal restraint that prevents, makes illegal or prohibits the completion of the transactions contemplated by the Reorganization Agreement has become final and nonappealable, as long as the terminating party has complied in all material respects with its obligations to use its reasonable best efforts to complete transactions contemplated by the Reorganization Agreement as promptly as practicable (as described above in “The Reorganization Agreement—Efforts to Complete the TERP Acquisition”); or

 

   

unaffiliated TERP stockholders vote on and fail to adopt the Plan of Merger and approve the Reorganization Agreement and the reincorporation merger and the share exchange contemplated thereby at the TERP stockholders meeting;



 

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by BEP in the event that:

 

   

TerraForm Power or TerraForm New York breach or fail to perform any of their covenants or agreements in the Reorganization Agreement, or if the representations or warranties of TerraForm Power or TerraForm New York fail to be true and correct, in either case, such that the applicable conditions to BEP, BEPC and Acquisition Sub’s obligations to complete the TERP acquisition would not then be satisfied and such breach is not capable of being cured by the end date or has not been cured within 30 days after giving written notice to TerraForm Power of such breach, except that BEP may not terminate the Reorganization Agreement for this reason if BEP, BEPC or Acquisition Sub is then in material breach of any covenant or agreement in the Reorganization Agreement or if BEP, BEPC or Acquisition Sub’s representations or warranties are not true and correct such that the applicable conditions to TerraForm Power and TerraForm New York’s obligations to complete the TERP acquisition would not then be satisfied; or

 

   

prior to obtaining the approval of TERP stockholder approvals, the TERP board (or any committee thereof) (1) withholds, withdraws or modifies (in a manner adverse to BEP) or proposes publicly to withhold, withdraw or modify (in a manner adverse to BEP), its recommendation to its stockholders to vote in favor of adopting the Plan of Merger and approving the Reorganization Agreement and the transactions contemplated thereby or (2) approves, recommends or declares advisable or proposes publicly to approve, recommend or declare advisable a TERP Takeover Proposal; or

 

   

by TerraForm Power (acting on the recommendation of the Special Committee) in the event that:

 

   

BEP, BEPC or Acquisition Sub breach or fail to perform any of their covenants or agreements in the Reorganization Agreement, or if the representations or warranties of BEP, BEPC or Acquisition Sub fail to be true and correct, in either case, such that the applicable conditions to TerraForm Power and TerraForm New York’s obligations to complete the TERP acquisition would not then be satisfied and such breach is not capable of being cured by the end date or has not been cured within 30 days after giving written notice to BEP of such breach, except that TerraForm Power may not terminate the Reorganization Agreement for this reason if TerraForm Power or TerraForm New York is then in material breach of any covenant or agreement in the Reorganization Agreement or if TerraForm Power and TerraForm New York’s representations or warranties are not true and correct such that the applicable conditions to BEP, BEPC and Acquisition Sub’s obligations to complete the TERP acquisition would not then be satisfied.

If the Reorganization Agreement is terminated, it will become void and have no effect, without any liability or obligation on the part of any party, except in the case of a willful and material breach of the Reorganization Agreement and except that certain provisions of the Reorganization Agreement, including those relating to expenses and expense reimbursement, effect of termination and certain other general provisions, will survive termination.

Expenses and Expense Reimbursement Fee Under the Reorganization Agreement (See Page 234)

Except as described below, each party will pay all fees and expenses incurred by it in connection with the Reorganization Agreement and the transactions contemplated by the Reorganization Agreement.

If the Reorganization Agreement is terminated because the TERP stockholder approvals are not obtained at the TERP stockholders meeting or any adjournment or postponement thereof, BEP will be entitled to receive a fee of $15 million from TerraForm Power.



 

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No Appraisal Rights (See Page 132)

Under Delaware law and New York law, the TERP stockholders will not have appraisal rights or dissenter’s rights in connection with the combination. See the sections entitled “The Reorganization Agreement—Terms of the Reincorporation Merger” and “The Reorganization Agreement—Terms of the Share Exchange”.

Listing of BEPC Exchangeable Shares and BEP Units and Delisting and Deregistration of TERP Common Stock (See Page 206)

Under the terms of the Reorganization Agreement, BEP, BEPC and Acquisition Sub must use reasonable best efforts to cause, on or prior to the completion of the TERP acquisition, the BEPC exchangeable shares and BEP units to be issued as TERP acquisition consideration and units issuable by BEP upon exchange of BEPC exchangeable shares to be approved for listing on the NYSE, subject to official notice of issuance, and conditionally approved for listing on the TSX, subject only to customary conditions. It is a condition to the parties’ obligations to complete the TERP acquisition that such approvals with respect to the BEPC exchangeable shares and BEP units constituting the TERP acquisition consideration are obtained.

In addition, in connection with the special distribution, BEPC has applied to have the BEPC exchangeable shares listed on the NYSE and the TSX, under the symbol “BEPC”. The NYSE has conditionally authorized BEPC to list on the NYSE and the TSX has conditionally approved the listing of these securities. Listing on the NYSE is subject to BEPC fulfilling all of the requirements of the NYSE, and listing on the TSX is subject to BEPC fulfilling all of the requirements of the TSX on or before September 21, 2020, including distribution of BEPC exchangeable shares to a minimum number of public shareholders. It is a condition to the parties’ obligations to complete the TERP acquisition that the special distribution has occurred or that all actions which are reasonably necessary to cause the special distribution to occur substantially simultaneously with, but no later than immediately prior to, the completion of the TERP acquisition have been taken.

If the TERP acquisition is completed, there will no longer be any publicly held shares of TERP common stock. Accordingly, TERP common stock will be delisted from NASDAQ and will be deregistered under the Exchange Act as promptly as practicable following the completion of the TERP acquisition and neither TerraForm Power nor TerraForm New York will be required to file periodic reports with the SEC in respect of TERP common stock.

TERP Voting Agreement (See Page 236)

Concurrently with the execution of the Reorganization Agreement, the Brookfield stockholders entered into the TERP Voting Agreement with TerraForm Power.

Pursuant to the TERP Voting Agreement, the Brookfield stockholders agreed, among other things and upon the terms and subject to the conditions therein, to (i) vote all of their shares of TERP common stock in favor of approving the Reorganization Agreement, the Plan of Merger, the reincorporation merger and the share exchange, and against, among other things, any alternative transaction that may be proposed and (ii) not transfer its shares of TERP common stock unless the transferee enters into a voting agreement on terms substantially identical to the TERP Voting Agreement.

The Brookfield stockholders together beneficially owned shares totaling approximately 62% of the shares of TERP common stock issued and outstanding as of March 13, 2020, being the business day immediately prior to the date of the Reorganization Agreement, and approximately 62% of the shares of TERP common stock issued and outstanding as of the TERP record date.

The TERP Voting Agreement may terminate in certain circumstances, including upon the termination of the Reorganization Agreement in accordance with its terms.



 

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Material Federal Income Tax Consequences (See Pages 459 and 437)

Canada

A TERP stockholder not resident in Canada for purposes of the Tax Act will not be subject to tax under the Tax Act on the disposition of the stockholder’s public TERP shares (or any TerraForm New York class B common stock or TerraForm New York class C common stock into which such public TERP shares are exchanged) unless such shares are “taxable Canadian property” of the stockholder for purposes of the Tax Act at the time of the disposition and the stockholder is not entitled to relief under an applicable income tax convention between Canada and the country in which the stockholder is resident. It is generally not expected that BEPC exchangeable shares received pursuant to the transaction will be “taxable Canadian property” of such stockholder.

Dividends, other than capital gains dividends, paid or credited on the BEPC exchangeable shares or deemed to be paid or credited on the BEPC exchangeable shares to a non-resident holder will be subject to Canadian withholding tax at a rate of 25%, subject to any reduction in the rate of withholding to which the non-resident holder is entitled under any applicable income tax convention between Canada and the country in which the non-resident holder is resident.

A non-resident holder will not be subject to tax under the Tax Act on a disposition or deemed disposition of BEPC exchangeable shares unless the BEPC exchangeable shares are “taxable Canadian property” of the non-resident holder for purposes of the Tax Act at the time of the disposition or deemed disposition and the non-resident holder is not entitled to relief under an applicable income tax convention between Canada and the country in which the non-resident holder is resident.

For a summary of the material Canadian income tax considerations to a non-resident holder owning and disposing BEP units received pursuant to the TERP acquisition, please refer to “Item 10.E—Taxation” of BEP’s Annual Report. See also “Material Canadian Federal Income Tax Considerations”.

United States

The BEPC share exchange is intended to qualify as a transaction described in Section 351 of the Code, generally with no material gain or loss recognition to U.S. holders of public TERP shares, including by reason of the application of Section 367(a) of the Code. However, this tax treatment is not free from doubt, and there are factual and legal uncertainties concerning these conclusions. If the IRS were to challenge this tax treatment and such challenge were to be sustained, a U.S. holder of public TERP shares generally would be required to recognize gain (and might not be allowed to recognize loss) equal to the difference between the amount realized in the BEPC share exchange and such U.S. holder’s adjusted tax basis in the public TERP shares exchanged for BEPC exchangeable shares.

The BEP share exchange is intended to qualify as a contribution described in Section 721(a) of the Code, generally with no material gain or loss recognition to U.S. holders of public TERP shares who elect to receive BEP units as TERP acquisition consideration. However, this tax treatment is not free from doubt. There are factual and legal uncertainties concerning this conclusion, and there is additional uncertainty as to whether steps undertaken by BEP in connection with the TERP acquisition could result in adverse U.S. federal income tax consequences under the rules governing “disguised sales” to partnerships. If the IRS were to challenge this tax treatment and such challenge were to be sustained, a U.S. holder of public TERP shares generally would be required to recognize gain equal to the difference between the amount realized in the BEP share exchange and such U.S. holder’s adjusted tax basis in the public TERP shares exchanged for BEP units.

Non-U.S. holders of public TERP shares generally should not be subject to U.S. federal income tax on any gain realized in the BEPC share exchange or BEP share exchange.



 

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Upon the completion of the TERP acquisition, holders of public TERP shares who elect to receive BEP units as TERP acquisition consideration will be subject to the U.S. federal income tax rules that apply to partners of a partnership. These rules differ materially from the U.S. federal income tax rules that apply to stockholders of a corporation.

Tax matters are complicated, and the tax consequences of the share exchange to holders of public TERP shares may depend on each holder’s particular facts and circumstances. Holders of public TERP shares are urged to consult independent tax advisers to understand fully the tax consequences to them of the transactions. For additional information on the U.S. federal income tax consequences of the transactions to holders of public TERP shares, see “Material United States Federal Income Tax Considerations”.

The Special Distribution (See Page 237)

The special distribution will entitle unitholders of BEP to receive one (1) BEPC exchangeable share for every four (4) BEP units held as of the distribution record date. The special distribution is not conditional on the TERP acquisition and will proceed in the event that the TERP acquisition is not consummated. However, if all of the conditions to the TERP acquisition are satisfied, the intention is for the special distribution to close shortly following the TERP stockholders meeting and in any event on or about the business day prior to the completion of TERP acquisition. In order to achieve this coordinated timing, the special distribution will be declared closer to the date of the TERP stockholders meeting, and the distribution record and payment date will be announced at that time.

BEP believes that certain investors in certain jurisdictions may be dissuaded from investing in BEP because of the tax reporting framework that results from investing in BEP units of a Bermuda-exempted limited partnership. Creating BEPC, a corporation, and distributing BEPC exchangeable shares, with each share structured with the intention of providing an economic return equivalent to one BEP unit is intended to achieve the following objectives:

 

   

Provide investors that would not otherwise invest in BEP with an opportunity to gain access to BEP’s globally diversified portfolio of high-quality renewable power assets.

 

   

Provide investors with the flexibility to own, through the ownership of a BEPC exchangeable share of BEPC, the economic equivalent of a BEP unit because of the ability to exchange into a BEP unit or its cash equivalent and the identical dividends that are expected to be paid on each BEPC exchangeable share.

 

   

Provide investors with a tax reporting framework that may be favored by investors in some jurisdictions over the tax reporting framework provided by an investment in BEP, which BEP believes will attract new investors who will benefit from investing in BEP’s business.

 

   

Create a company that BEP expects to be eligible for inclusion in several indices, which may be attractive to certain investors.

 

   

Provide the Brookfield Renewable group with a greater securityholder base, thereby creating enhanced liquidity for the Brookfield Renewable group’s securityholders.

 

   

Create a company that will provide the Brookfield Renewable group with the ability to access new capital pools.

TERP stockholders will not participate in the special distribution. The special distribution is being effected in a manner that BEP expects will not result in any adverse impact on Brookfield Renewable’s credit rating or its preference shareholders, preferred unitholders, or debtholders. See “The Special Distribution—Background to and Purpose of the Special Distribution” and “BEPC Relationship with Brookfield Renewable—Credit Support” for further details. For additional information regarding Brookfield Renewable, see “Brookfield Renewable Partners L.P.”.



 

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Recent Developments

On March 11, 2020, the World Health Organization declared COVID-19 to be a pandemic. Actions taken globally in response to COVID-19 have significantly interrupted international business activities and contributed to significant volatility in the financial markets. The Brookfield Renewable group is currently monitoring the COVID-19 pandemic. The Brookfield Renewable group has implemented extra safety precautions with respect to its personnel, including remote working, as well as contingency plans with respect to its facilities. Given its assets constitute critical physical infrastructure and substantially all of its generation is sold in advance under contract, the Brookfield Renewable group has not experienced the material impact to its operations, financial condition, cash flows or financial performance that has been experienced by many other businesses. While the Brookfield Renewable group has experienced some supply chain delays and certain of its service providers are experiencing challenges, these developments have not had a material impact on the Brookfield Renewable group’s business to date. Based on the Brookfield Renewable group’s experience to date, it does not expect that its operations, financial condition, cash flows or financial performance will be materially impacted by COVID-19, and does not expect any material changes to its long-term strategies or to longterm demand for critical infrastructure assets such as renewable power as a result of the pandemic. For additional information on potential risks of the COVID-19 pandemic to its business, see “Risk Factors—Risks Relating to BEPC’s Operations and the Renewable Power Industry—Developments associated with the COVID-19 pandemic could have an adverse effect on the Brookfield Renewable group’s business”.

On April 3, 2020, a subsidiary of BEP issued C$350 million aggregate principal amount of medium-term notes, comprised of C$175 million ($124 million) aggregate amount of Series 11 Notes, due January 2029, with an effective interest rate of 3.57% and C$175 million ($124 million) aggregate principal amount of Series 12 Notes, due January 2030, with an effective interest rate of 3.62%.

On June 3, 2020, certain affiliates of BAM, which we refer to as the Selling Securityholders, completed a secondary offering of 10,236,000 BEP units on a bought deal basis to a syndicate of underwriters for distribution to the public. One of the Selling Securityholders has granted the underwriters an over-allotment option to purchase up to an additional 1,535,400 BEP units to be sold pursuant to the offering at the same offering price. The over-allotment option is exercisable for a period of 30 days from June 3, 2020.



 

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Ownership and Organization Structure (See Page 247)

Prior to the completion of the special distribution and the TERP acquisition, BEPC was an indirect subsidiary of BEP. The following diagram provides an illustration of the simplified corporate structure of the Brookfield Renewable group and TerraForm Power immediately prior to completion of the special distribution and the TERP acquisition.

 

LOGO



 

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(1) 

Pursuant to a voting agreement, BRPI has agreed that certain voting rights with respect to BRELP General Partner, BRELP GP LP, and BRELP will be voted in accordance with the direction of BEP.

(2) 

BRPI’s limited partnership interest in BRELP is redeemable for cash or exchangeable for BEP units in accordance with the redemption-exchange mechanism contained in BRELP’s limited partnership agreement, which could result in Brookfield, through its interests in BRPI and BIC, owning approximately 57% of BEP’s issued and outstanding BEP units on a fully-exchanged basis. On a fully-exchanged basis, public holders of BEP units own approximately 42.8% of BEP and BRPI will not hold any limited partnership units of BRELP. BRPI has granted the underwriters an over-allotment option to purchase up to an additional 1,535,400 BEP units in connection with the recently completed secondary offering of BEP units by certain affiliates of BAM. The over-allotment option is exercisable for a period of 30 days from June 3, 2020. See “Summary—Recent Developments.”

(3) 

Brookfield has provided an aggregate of $5 million of working capital to LATAM Holdco through a subscription for preferred shares. In addition, BRPI holds special shares the redemption price of which is tied to the successful development of projects in Brazil.

(4) 

Orion US Holdings 1 L.P. is controlled by Brookfield. Third party investors in Brookfield Infrastructure Fund III indirectly hold an approximate 69.3% interest in Orion US Holdings 1 L.P.

(5) 

BEP holds an approximate 29% economic interest in TERP (through an approximate 14% interest owned through Orion US Holdings 1 L.P. and an approximate 15% interest owned through BBHC Orion Holdco L.P.). The remaining 38% interest is held by public TERP stockholders.

(6)

The Brookfield Renewable group holds its interest in Isagen through a consortium, which holds its interest in Isagen through Hydro Holdings. The consortium holds a 64.8% interest in Hydro Holdings (of which BEP’s share is approximately 24.1%), and third party investors hold a 35.2% interest in Hydro Holdings. The general partner of Hydro Holdings will be a controlled subsidiary of BEPC.

(7)

The Brookfield Renewable group consortium’s current interest in Isagen is 99.6% of which BEP’s share is approximately 24.1%. The Brookfield Renewable group holds BEP’s 24.1% interest through BRE Colombia Holdings Limited and BRE Colombia Co Invest I L.P., which are subsidiaries of BEP, and through an investment in Brookfield Infrastructure Fund III. Brookfield Infrastructure Fund III holds an additional 22.9% interest, and the Brookfield Renewable group consortium’s remaining 52.6% interest is held by third party co-investors. Public shareholders hold a 0.4% interest in Isagen.



 

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The following diagram provides an illustration of the simplified corporate structure of BEPC after completion of the special distribution and the TERP acquisition.

 

LOGO

 

(1) 

Pursuant to a voting agreement, BRPI has agreed that certain voting rights with respect to the general partner of BRELP General Partner, BRELP GP LP and BRELP will be voted in accordance with the direction of BEP.

(2) 

BRPI’s limited partnership interest in BRELP is redeemable for cash or exchangeable for BEP units in accordance with the redemption-exchange mechanism contained in BRELP’s limited partnership agreement, which could result in Brookfield, through its interests in BRPI and BIC, owning approximately 57% of BEP’s issued and outstanding BEP units on a fully-exchanged basis. On a fully-exchanged basis,



 

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public holders of BEP units own approximately 42.8% of BEP and BRPI will not hold any limited partnership units of BRELP. BRPI has granted the underwriters an over-allotment option to purchase up to an additional 1,535,400 BEP units in connection with the recently completed secondary offering of BEP units by certain affiliates of BAM. The over-allotment option is exercisable for a period of 30 days from June 3, 2020. See “Summary—Recent Developments.”

(3) 

Holders of BEPC exchangeable shares hold a 25% voting interest in BEPC. See “Description of BEPC Share Capital—BEPC Exchangeable Shares—Voting”.

(4) 

Immediately following the special distribution, holders of BEP units, other than Brookfield and its affiliates, will hold approximately 42.8% of the issued and outstanding BEPC exchangeable shares (27.9% assuming the TERP acquisition is completed and the TERP acquisition consideration consists solely of BEPC exchangeable shares).

(5) 

Brookfield and its affiliates will hold approximately 57.2% of the issued and outstanding BEPC exchangeable shares (37.4% assuming the TERP acquisition is completed and the TERP acquisition consideration consists solely of BEPC exchangeable shares).

(6) 

Holders of the BEPC class B shares hold a 75% voting interest in BEPC. The BEPC class C shares are non-voting. Brookfield Renewable will hold all of the BEPC class B shares and BEPC class C shares upon completion of the special distribution. “Description of BEPC Share Capital—BEPC Class B Shares—Voting”.

(7)

Brookfield has provided an aggregate of $5 million of working capital to LATAM Holdco through a subscription for preferred shares. In addition, BRPI holds special shares, the redemption price of which is tied to the successful development of projects in Brazil.

(8) 

This organizational chart reflects TERP’s ownership assuming that the TERP acquisition is completed and all public TERP shares are exchanged for BEPC exchangeable shares. Overall, BEP will hold an approximate 67% economic interest in TERP (comprised of an approximate 14% interest owned through its interest in Orion US Holdings 1 LP, an approximate 15% interest owned through BBHC Orion Holdco L.P. and through its ownership in BEPC). BEPC will hold an approximate 38% economic interest in TERP. If the TERP acquisition is completed, Brookfield and Brookfield Renewable intend to enter into voting agreements with a subsidiary of BEPC, giving BEPC voting control over the public TERP shares currently held by BEP and its affiliates. As a result, upon completion of the TERP acquisition, BEPC will control TERP and consolidate TERP from an accounting point of view.

(9) 

Each holder of public TERP shares will be entitled to receive for each public TERP share held by such holder as consideration a number of BEPC exchangeable shares equal to the adjusted exchange ratio or, at the election of such holder, BEP units, in each case as further adjusted to prevent dilution in accordance with the Reorganization Agreement plus any cash paid in lieu of fractional BEP units or BEPC exchangeable shares, as applicable. The adjusted exchange ratio will be determined by multiplying (x) 0.381 by (y) the sum of (i) the number (rounded, if necessary, to three decimal points) of BEPC exchangeable shares to be distributed with respect to each BEP unit upon the consummation of the special distribution and (ii) one. Because holders of BEP units are expected to receive one BEPC exchangeable share for every four BEP units in the special distribution, the adjusted exchange ratio is expected to be equal to 0.47625, in which case holders of public TERP shares will be entitled to receive 0.47625 of a BEPC exchangeable share or BEP unit per public TERP share.

(10) 

Assuming the TERP acquisition is completed and the TERP acquisition consideration consists solely of BEPC exchangeable shares, public TERP stockholders will own an approximate 34.7% economic interest in BEPC. This percentage is subject to adjustment to the extent holders of public TERP shares elect to receive BEP units.

(11) 

The Brookfield Renewable group holds its interest in Isagen through a consortium, which holds its interest in Isagen through Hydro Holdings. The consortium holds a 64.8% interest in Hydro Holdings (of which BEPC’s share is approximately 24.1%), and third party investors hold a 35.2% interest in Hydro Holdings. The general partner of Hydro Holdings will be a controlled subsidiary of BEPC.

(12) 

The Brookfield Renewable group consortium’s current interest in Isagen is 99.6% of which BEPC’s share is approximately 24.1%. The Brookfield Renewable group holds BEPC’s 24.1% interest through BRE Colombia Holdings Limited and BRE Colombia Co Invest I L.P., which are subsidiaries of BEP, and through an investment in Brookfield Infrastructure Fund III. Brookfield Infrastructure Fund III holds an additional 22.9% interest, and the Brookfield Renewable group consortium’s remaining 52.6% interest is held by third party coinvestors. Public shareholders hold a 0.4% interest.



 

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BEPC Management (See Page 348)

Similar to Brookfield Renewable, the Service Providers, being wholly-owned subsidiaries of Brookfield, will provide management services to BEPC pursuant to the BEP Master Services Agreement of Brookfield Renewable. Each of the members of the senior management team that is principally responsible for providing services to Brookfield Renewable has substantial operational and transactional origination and execution expertise, including Sachin Shah, who will serve as BEPC’s Chief Executive Officer, Wyatt Hartley, who will serve as BEPC’s Chief Financial Officer, Ruth Kent, who will serve as BEPC’s Chief Operating Officer and Jennifer Mazin, who will serve as BEPC’s General Counsel. See “BEPC Management and the BEP Master Services Agreement” for further details.

BEP and BEPC Relationship with Brookfield (See Page 364)

BEPC’s organizational and ownership structure involves a number of relationships that may give rise to conflicts of interest between BEPC and BEPC shareholders, on the one hand, and Brookfield and Brookfield Renewable, on the other hand. For example, BEPC expects that the BEPC board will mirror the board of the general partner of BEP, except that BEPC will add one additional non-overlapping board member to assist BEPC with, among other things, resolving any conflicts of interest that may arise from its relationship with Brookfield Renewable. Eleazar de Carvalho Filho will initially serve as the non-overlapping member of the BEPC board. Mr. de Carvalho Filho has served on the board of directors of the general partner of BEP since November 2011 and will resign from such board of directors prior to the special distribution. If in the 12 months following the special distribution, BEPC considers a related party transaction in which BEP is an interested party within the meaning of MI 61-101, Mr. de Carvalho Filho will not be considered an independent director under MI 61-101 for purposes of serving on a special committee to consider such transaction. In certain instances, the interests of Brookfield or Brookfield Renewable may differ from the interests of BEPC and BEPC’s shareholders. Further, Brookfield may make decisions, including with respect to tax or other reporting positions, from time to time that may be more beneficial to one type of investor or beneficiary than another, or to Brookfield rather than to BEPC and BEPC’s shareholders. See “BEP and BEPC Relationship with Brookfield—Conflicts of Interest and Fiduciary Duties” below for more information.

BEPC Dividend Policy (See Page 241)

The BEPC board may declare dividends at its discretion. However, each BEPC exchangeable share has been structured with the intention of providing an economic return equivalent to one BEP unit and it is expected that dividends on BEPC exchangeable shares will be declared and paid at the same time as distributions are declared and paid on the BEP units and that dividends on each BEPC exchangeable share will be declared and paid in the same amount as are declared and paid on each BEP unit to provide holders of BEPC exchangeable shares with an economic return equivalent to holders of BEP units. BEPC expects to commence paying dividends on BEPC exchangeable shares on the first distribution payment date for the BEP units occurring after the distribution date for the special distribution. Additionally, pursuant to the Equity Commitment Agreement, BEP has agreed that it will not declare or pay any distribution on the BEP units if on such date BEPC does not have sufficient funds or other assets to enable the declaration and payment of an equivalent dividend on the BEPC exchangeable shares. BEP pursues a strategy which the Brookfield Renewable group expects will provide for highly stable, predictable cash flows sourced from predominantly hydroelectric, wind and solar assets ensuring a sustainable distribution yield. The Brookfield Renewable group’s objective is to pay a distribution that is sustainable on a long-term basis and has set its target payout ratio at approximately 70% of Brookfield Renewable’s FFO.

Participants in BEP’s distribution reinvestment plan will automatically receive the special distribution of BEPC exchangeable shares on the same basis as other unitholders of BEP, provided they continue to own such BEP units on the distribution record date. However, participants should be aware that BEPC does not currently



 

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anticipate establishing a similar dividend reinvestment plan for BEPC, and future dividends paid on BEPC exchangeable shares will be paid in cash and not reinvested.

BEPC Capital Structure (See Page 243)

Each BEPC exchangeable share will be structured with the intention of providing an economic return equivalent to one BEP unit (subject to adjustment to reflect certain capital events), including identical dividends on a per share basis as are paid on each BEP unit, and will be exchangeable at the option of the holder for one BEP unit (subject to adjustment to reflect certain capital events) or its cash equivalent (the form of payment to be determined at the election of BEPC), as more fully described in this document. BEP may elect to satisfy its exchange obligation by acquiring such tendered BEPC exchangeable shares for an equivalent number of BEP units (subject to adjustment to reflect certain capital events) or its cash equivalent (the form of payment to be determined at the election of the Brookfield Renewable group). See “Description of BEPC Share Capital—BEPC Exchangeable Shares—Exchange by Holder—Adjustments to Reflect Certain Capital Events”. BEPC and BEP currently intend to satisfy any exchange requests on the BEPC exchangeable shares through the delivery of BEP units rather than cash. BEP therefore expects that the market price of BEPC exchangeable shares will be significantly impacted by the market price of the BEP units and the combined business performance of the Brookfield Renewable group as a whole. However, there are certain material differences between the rights of holders of BEPC exchangeable shares and holders of the BEP units under the governing documents of BEPC and BEP and applicable law, such as the right of holders of BEPC exchangeable shares to request an exchange of their BEPC exchangeable shares for an equivalent number of BEP units or its cash equivalent (the form of payment to be determined at the election of the Brookfield Renewable group) and the redemption right of BEPC. These material differences are described in the section entitled “Comparison of Rights of Holders of BEPC Exchangeable Shares, BEP Units and TERP Common Stock”. In making an investment decision relating to BEP’s securities, you should also carefully consult the documents prepared by BEP and described in the section of this document entitled “Brookfield Renewable Partners L.P.—Information Regarding the BEP Units”.

Further, the BEPC exchangeable shares will be held by public shareholders and Brookfield, and the BEPC class B shares and BEPC class C shares will be held by Brookfield Renewable. Dividends on each BEPC exchangeable share are expected to be declared and paid at the same time and in the same amount per share as distributions on each BEP unit. Brookfield Renewable’s ownership of BEPC class C shares will entitle it to receive dividends as and when declared by the BEPC board. The holders of the BEPC exchangeable shares will be entitled to one vote for each BEPC exchangeable share held at all meetings of BEPC’s shareholders, except for meetings at which only holders of another specified class or series of shares of BEPC are entitled to vote separately as a class or series. The holders of the BEPC class B shares will be entitled to cast, in the aggregate, a number of votes equal to three times the number of votes attached to the BEPC exchangeable shares. Except as otherwise expressly provided in the BEPC articles or as required by law, the holders of BEPC exchangeable shares and BEPC class B shares will vote together and not as separate classes. Holders of BEPC class C shares will have no voting rights. See “Description of BEPC Share Capital”.

BEPC expects to commence paying dividends on the BEPC exchangeable shares on the first distribution payment date for the BEP units occurring after the distribution date for the special distribution.

Comparison of Rights of Holders of BEPC Exchangeable Shares, BEP Units and TERP Common Stock (See Page 400)

TerraForm Power is organized as a Delaware corporation, whereas BEP is organized as an exempted limited partnership under the laws of Bermuda and BEPC is a corporation existing under British Columbia law. There are also differences between the organizational documents of BEP, BEPC and TerraForm Power. Therefore, recipients of BEP units or BEPC exchangeable shares following the TERP acquisition will have different rights



 

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and obligations, including voting rights, from those that they had prior to the TERP acquisition as holders of TERP common stock. See “Comparison of Rights of Holders of BEPC Exchangeable Shares, BEP Units and TERP Common Stock”.

Rights Agreement (See Page 366)

Prior to the distribution date, Wilmington Trust, National Association, or the rights agent, and BAM will enter into a rights agreement, which we refer to as the Rights Agreement, pursuant to which BAM has agreed that, until the seventh anniversary of the distribution date (and as automatically renewed for successive periods of two years, unless BAM provides the rights agent with written notice of termination in accordance with the terms of the Rights Agreement) in the event that, on the applicable specified exchange date with respect to any BEPC exchangeable shares submitted for exchange, (i) BEPC has not satisfied its obligation under BEPC articles by delivering the BEP unit amount or its cash equivalent amount and (ii) Brookfield Renewable has not, upon its election in its sole and absolute discretion, acquired such exchanged BEPC exchangeable shares from the holder thereof and delivered the BEP unit amount, BAM will satisfy, or cause to be satisfied, the obligations pursuant to the BEPC articles to exchange such subject BEPC exchangeable shares for the BEP unit amount or its cash equivalent. The holders of BEPC exchangeable shares have a right to receive the BEP unit amount or its cash equivalent in such circumstances, which we refer to as the secondary exchange rights. BAM currently intends to satisfy any exchange requests on the BEPC exchangeable shares through the delivery of BEP units. After the expiry of the Rights Agreement, holders of BEPC exchangeable shares will continue to have all of the rights provided for in the BEPC articles but will no longer be entitled to rely on the secondary exchange rights.



 

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SUMMARY HISTORICAL FINANCIAL DATA OF TERRAFORM POWER

The following tables present summary consolidated financial data of TerraForm Power prepared in accordance with US GAAP. The summary consolidated statement of operations data for the years ended December 31, 2019, 2018 and 2017 and the summary consolidated balance sheet data as of December 31, 2019 and 2018 are derived from the audited consolidated financial statements of TerraForm Power incorporated herein by reference. The summary consolidated statement of operations data for the years ended December 31, 2016 and 2015 and the summary consolidated balance sheet data as of December 31, 2017, 2016 and 2015 are derived from the audited consolidated financial statements of TerraForm Power not included or incorporated herein by reference. The unaudited summary historical consolidated financial data as of and for the three months ended March 31, 2020 and for the three months ended March 31, 2019 are derived from the unaudited consolidated financial statements of TerraForm Power incorporated herein by reference. The information set forth below is only a summary and is not necessarily indicative of the results of future operations of TerraForm Power, BEP or BEPC, and you should read the following information together with TerraForm Power’s audited consolidated financial statements, TerraForm Power’s unaudited consolidated financial statements, the related notes and the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in TerraForm Power’s Quarterly Report on Form 10-Q for the quarter ended ended March 31, 2020, and its Annual Report on Form 10-K for the year ended December 31, 2019, which are incorporated by reference into this proxy statement/prospectus. For more information, see the section entitled “Where You Can Find More Information”.

 

Statement of operations data   Three Months
Ended March 31,
    Year Ended December 31,  
  2020     2019     2019     2018     2017     2016     2015  
(In millions, except per share data)   (unaudited)                                

Operating revenues, net

  $ 247     $ 225     $ 941     $ 767     $ 610     $ 655     $ 470  

Operating income

    30       29       113       70       41       89       6  

Net (loss)

    (67     (36     (207     (153     (236     (244     (209
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to non-controlling interests

    12       (18     (58     (166     (76     (120     (130
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income attributable to TERP stockholders

    (55     (9     (149     12       (160     (124     (79

Basic and diluted (loss) earnings per share of TERP common stock

    (0.24     (0.04     (0.70     0.07       (1.61     (1.40     (1.24

Distributions declared per share of TERP common stock

    0.2014       0.2014       0.8056       0.7600       1.9400       —         1.0100  

 

Balance sheet data   As of
March 31,

2020
    As of December 31,  
  2019     2018     2017     2016     2015  
(In millions)   (unaudited)                                

Cash and cash equivalents

  $ 249     $ 237     $ 249     $ 128     $ 565     $ 627  

Restricted cash(1)

    141       112       144       97       118       160  

Renewable energy facilities, net

    7,760       7,405       6,470       4,802       4,993       5,834  

Long-term debt and financing lease obligations(2)

    6,763       6,235       5,762       3,599       3,951       4,563  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

    10,635       10,059       9,330       6,387       7,706       8,217  

Total liabilities

    8,173       7,428       6,562       3,965       4,810       5,101  

Redeemable non-controlling interests

    8       23       33       35       166       176  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

    2,454       2,608       2,735       2,388       2,729       2,940  

 

(1)

Restricted cash includes the current and non-current portion.

(2)

Including the current portion.



 

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SUMMARY HISTORICAL FINANCIAL DATA OF THE UNITED STATES, BRAZILIAN AND COLOMBIAN OPERATIONS OF BEP (See Page 284)

The following tables present selected financial data for the operations of the United States, Brazilian and Colombian Operations of BEP and are derived from, and should be read in conjunction with, the unaudited combined carve-out financial statements of the United States, Brazilian and Colombian operations of BEP as of March 31, 2020 and December 31, 2019 and for the three months ended March 31, 2020 and March 31, 2019 and the audited combined carve-out financial statements of the United States, Brazilian and Colombian operations of BEP as of December 31, 2019 and December 31, 2018 and for each of the years in the three years ended December 31, 2019 and the notes thereto, which are included elsewhere in this document. The information included in this section should also be read in conjunction with BEPC’s and BEP’s Unaudited Pro Forma Financial Statements as of and for the three months ended March 31, 2020 and for each of the years in the three years ended December 31, 2019 included elsewhere in this document. Presentation of selected financial information as of December 31, 2017, December 31, 2016 and December 31, 2015 and for the fiscal periods ended December 31, 2016 and December 31, 2015 could not be provided without unreasonable effort or expense.

 

     Three Months
Ended
March 31,
    Year Ended December 31,  
Statement of Income Data    2020     2019     2019      2018      2017  
(In millions)    (unaudited)                      

Revenues

   $ 596     $ 617     $ 2,236      $ 2,164      $ 2,035  

Other income

     5       4       31        16        27  

Direct operating costs

     (213     (204     (801      (816      (832

Management service costs

     (20     (15     (82      (56      (60

Interest expense—borrowings

     (91     (95     (381      (402      (438

Share of earnings from equity accounted investments

     1       3       12        17        5  

Foreign exchange and unrealized financial instrument gain (loss)

     35       7       9        (14      (9

Depreciation

     (128     (128     (509      (531      (559

Other

     (6     1       (21      (48      8  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Income before income tax

     179       190       494        330        177  

Current income tax expense

     (18     (22     (59      (26      (38

Deferred income tax (expense) recovery

     (10     (17     (10      58        (76

Net income

   $ 151     $ 151     $ 425      $ 362      $ 63  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Net income attributable to:

            

Participating non-controlling interests—in operating subsidiaries

   $ 76     $ 84     $ 241      $ 286      $ 69  

Parent company

   $ 75     $ 67     $ 184      $ 76      $ (6

 

     As of
March 31,

2020
     December 31,  
Statement of Financial Position Data    2019      2018  
(In millions)    (unaudited)                

Cash

   $ 152      $ 67      $ 94  

Total assets

     22,097        24,338        23,368  

Non-recourse borrowings

     5,292        5,661        5,543  
  

 

 

    

 

 

    

 

 

 

Equity

        

Participating non-controlling interests—in operating subsidiaries

     6,202        6,994        6,613  

Equity in net assets attributable to parent company

     7,073        7,748        7,683  
  

 

 

    

 

 

    

 

 

 

Total equity in net assets

   $ 13,275      $ 14,742      $ 14,296  
  

 

 

    

 

 

    

 

 

 


 

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SUMMARY HISTORICAL FINANCIAL DATA OF BEP

The following tables present summary consolidated financial data of BEP prepared in accordance with IFRS. The summary consolidated statement of income data for the years ended December 31, 2019, 2018 and 2017 and the summary consolidated statement of financial position data as of December 31, 2019 and 2018 are derived from the audited consolidated financial statements of BEP incorporated by reference in this document. The summary consolidated statement of income data for the years ended December 31, 2016 and 2015 and the summary consolidated statement of financial position data as of December 31, 2017, 2016 and 2015 are derived from the audited consolidated financial statements of BEP not included or incorporated by reference in this document. The unaudited summary historical consolidated financial data as of and for the three months ended March 31, 2020 and for the three months ended March 31, 2019 are derived from the unaudited consolidated financial statements of BEP incorporated by reference in this document. The information set forth below is only a summary and is not necessarily indicative of the results of future operations of BEP, and you should read the following information together with BEP’s unaudited consolidated financial statements, BEP’s audited consolidated financial statements, the related notes and the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in BEP’s Annual Report on Form 20-F for the year ended December 31, 2019, and as exhibit 99.3 to its Form 6-K filed on May 6, 2020, which are incorporated by reference into this proxy statement/prospectus. For more information, see the section entitled “Where You Can Find More Information”.

 

Statement of income data   Three Months
Ended March 31,
    Year Ended December 31,  
  2020     2019     2019     2018     2017     2016     2015  
(In millions, except per unit data)   (unaudited)                                

Revenues

  $ 792     $ 825     $ 2,980     $ 2,982     $   2,625     $ 2,452     $   1,628  

Direct operating costs

    (261     (254     (1,012     (1,036     (978     (1,038     (552

Net income

    120       153       273       403       51       40       103  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income attributable to limited partners’ equity

    10       25       (34     24       (32     (36     2  

Basic and diluted (loss) earnings per BEP unit

    0.06       0.14       (0.19     0.13       (0.18     (0.23     0.01  

Distributions declared per BEP unit

    0.5425       0.515       2.06       1.96       1.87       1.78       1.66  

 

Statement of financial position data   As of
March 31,

2020
    As of December 31,  
  2019     2018     2017     2016     2015  
(In millions)   (unaudited)                                

Total assets

  $ 32,663     $ 35,691     $ 34,103     $ 30,904     $ 27,737     $ 19,507  

Total borrowings

    10,271       11,004       10,718       11,766       10,182       7,338  

Other liabilities

    6,035       6,556       6,179       4,456       4,883       3,406  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-controlling interests

           

Redeemable/exchangeable units held by Brookfield

    2,923       3,315       3,252       2,843       2,680       2,559  

Participating non-controlling interests—in operating subsidiaries

    7,760       8,742       8,129       6,298       5,589       2,587  

General partnership interest in a holding subsidiary held by Brookfield

    60       68       66       58       55       52  

Preferred equity

    551       597       568       616       576       610  

Preferred limited partners’ equity

    1,028       833       707       511       324       128  

Limited partners’ equity

    4,035       4,576       4,484       3,956       3,448       2,827  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and equity

    32,663       35,691       34,103       30,904       27,737       19,507  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


 

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SUMMARY UNAUDITED PRO FORMA FINANCIAL DATA OF BEPC (See Page 252)

The following summary unaudited pro forma condensed combined financial data of BEPC as of and for the three months ended March 31, 2020, and for each of the years in the three-year period ended December 31, 2019 give effect to the Common Control Acquisition (as defined and described under “Unaudited Pro Forma Financial Statements—Unaudited Pro Forma Financial Statements for BEPC”) as if it occurred for the periods under common control. The following summary unaudited pro forma condensed combined statement of financial position data as of March 31, 2020 gives further effect to the special distribution and TERP acquisition as if they had been consummated on March 31, 2020. The following summary unaudited pro forma condensed combined statement of operating results data for the three months ended March 31, 2020 and for the year ended December 31, 2019 gives further effect to the special distribution and TERP acquisition as if they had been consummated on January 1, 2019.

The unaudited pro forma financial statements of BEPC for each of the years in the two-year period ended December 31, 2018 do not give effect for the special distribution or the TERP acquisition.

The following summary unaudited pro forma condensed combined financial information have been prepared using accounting policies that are consistent with IFRS as issued by the IASB. The following summary unaudited pro forma condensed combined financial information is subject to risks and uncertainties, including those discussed in the section of this proxy statement/prospectus entitled “Risk Factors”.

You should also not rely on the following summary unaudited pro forma combined financial data as being indicative of the results or financial condition that would have been achieved had the Common Control Acquisition, the special distribution, the TERP acquisition or the other BEPC Transactions (as defined and described under “Unaudited Pro Forma Financial Statements—Unaudited Pro Forma Financial Statements for BEPC”) been completed during the periods or on the date presented or of the actual future results or financial condition of BEPC to be achieved following the BEPC Transactions. The information set forth below is only a summary and is not necessarily indicative of the results of future operations of BEPC, and you should read the following information together with the unaudited combined carve-out financial statements of the United States, Colombian and Brazilian operations of BEP and the notes thereto, the audited combined carve-out financial statements of the United States, Colombian and Brazilian operations of BEP and the notes thereto, the financial statements of BEPC and notes thereto, TerraForm Power’s unaudited financial statements and the notes thereto, TerraForm Power’s audited consolidated financial statements and the notes thereto, and the more detailed unaudited pro forma condensed combined financial statements of BEPC and the notes thereto, each of which are included elsewhere in this proxy statement/prospectus or incorporated by reference herein. For more information, see the sections entitled “Where You Can Find More Information”, “Unaudited Pro Forma Financial Statements—Unaudited Pro Forma Financial Statements for BEPC”, unaudited financial statements of BEPC and the United States, Colombian and Brazilian operations of BEP included elsewhere in this proxy statement and the audited financial statements of BEPC and the United States, Colombian and Brazilian operations of BEP included elsewhere in this proxy statement/prospectus.

 

Unaudited pro forma statement of operating results data    Three Months
Ended
March 31,

2020
    Year Ended December 31,  
  2019     2018     2017  
(In millions)                         

Revenues

   $ 853     $ 3,227     $ 2,979     $ 2,182  

Direct operating costs

     (278     (1,053     (1,053     (877

Net income

     79       232       594       9  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to:

        

Non-controlling interests

     35       131       518       15  

Parent company

     44       101       76       (6


 

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Unaudited pro forma statement of financial position data    As of
March 31,
 
   2020  
(In millions)       

Cash (including restricted cash)

     713  

Total assets

     34,085  

BEPC exchangeable shares(1)

     3,999  

Non-recourse borrowings

     12,122  

Other liabilities

     5,556  

Equity

  

Participating non-controlling interests—in operating subsidiaries

     8,148  

Participating non-controlling interests—in a holding company

     216  

Equity in net assets attributable to parent company

     4,044  
  

 

 

 

Total equity in net assets

     12,408  
  

 

 

 

 

(1)

Due to the exchange feature of the BEPC exchangeable shares, the BEPC exchangeable shares are classified as financial liabilities in the Unaudited Pro Forma Financial Statements.



 

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SUMMARY UNAUDITED PRO FORMA FINANCIAL DATA OF BEP (See Page 268)

The following summary unaudited pro forma condensed combined financial data of BEP as of and for the three months ended March 31, 2020, and for each of the years in the three-year period ended December 31, 2019 give effect to the Common Control Acquisition (as defined and described under “Unaudited Pro Forma Financial Statements—Unaudited Pro Forma Financial Statements for BEP”) as if it occurred for the periods under common control. The following summary unaudited pro forma condensed combined statement of financial position data as of March 31, 2020 gives further effect to the special distribution and TERP acquisition as if they had been consummated on March 31, 2020. The following summary unaudited pro forma condensed combined statement of operating results data for the three months ended March 31, 2020 and for the year ended December 31, 2019 gives further effect to the special distribution and TERP acquisition as if they had been consummated on January 1, 2019.

The unaudited pro forma financial statements of BEP for each of the years in the two-year period ended December 31, 2018 do not give effect for the special distribution or the TERP acquisition.

The following summary unaudited pro forma condensed combined financial information have been prepared using accounting policies that are consistent with IFRS as issued by the IASB. The following summary unaudited pro forma condensed combined financial information is subject to risks and uncertainties, including those discussed in the section of this proxy statement/prospectus entitled “Risk Factors”.

You should also not rely on the following summary unaudited pro forma combined financial data as being indicative of the results or financial condition that would have been achieved had the Common Control Acquisition, the special distribution, the TERP acquisition or the other BEP Transactions (as defined and described under “Unaudited Pro Forma Financial Statements—Unaudited Pro Forma Financial Statements for BEP”) been completed during the periods or on the date presented or of the actual future results or financial condition of BEP to be achieved following the BEP Transactions. The information set forth below is only a summary and is not necessarily indicative of the results of future operations of BEP, and you should read the following information together with BEP’s unaudited consolidated financial statements and the notes thereto, BEP’s audited consolidated financial statements, TerraForm Power’s unaudited consolidated financial statements and notes thereto, TerraForm Power’s audited consolidated financial statements and the notes thereto, and the more detailed unaudited pro forma condensed combined financial statements of BEP and the notes thereto, each of which are included elsewhere in this proxy statement/prospectus or incorporated by reference herein. For more information, see the sections entitled “Where You Can Find More Information” and “Unaudited Pro Forma Financial Statements—Unaudited Pro Forma Financial Statements for BEP”.

 

Unaudited pro forma statement of operations data    Three Months
Ended March 31,
    Year Ended December 31,  
   2020     2019     2018     2017  
(In millions, except per unit data)                         

Revenues

   $ 1,049     $ 3,971     $ 3,797     $ 2,772  

Direct operating costs

     327       (1,264     (1,273     (1,023

Net income

     63       96       601       6  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to:

        

Non-controlling interests

     60       123       521       10  

Preferred limited partners’ equity

     12       44       38       28  

Limited partners’ equity

     (9     (71     42       (32
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted (loss) earnings per BEP unit

     (0.02     (0.40     0.23       (0.18


 

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Unaudited pro forma financial position data    As of
March 31,
 
   2020  
(In millions)       

Total assets

   $ 43,769  

Total borrowings

     16,794  

Other liabilities

     8,368  
  

 

 

 

Non-controlling interests

     14,173  

Preferred limited partners’ equity

     1,028  

Limited partners’ equity

     3,406  
  

 

 

 

Total equity

     18,596  
  

 

 

 


 

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UNAUDITED COMPARATIVE PER SHARE INFORMATION

The following tables present TerraForm Power’s and BEP’s historical per share/unit data as of and for the three months ended March 31, 2020, as of December 31, 2019 and for each of the years in the three-year period ended December 31, 2019. The following tables also present TerraForm Power and BEP pro forma per share/unit data as of and for the three months ended March 31, 2020 and for each of the years in the three-year period ended December 31, 2019. The pro forma per share/unit data for the three months ended March 31, 2020 and for each of the years in the three-year period ended December 31, 2019 give effect to the Common Control Acquisition as if it occurred for the periods under common control. The pro forma per unit data as of March 31, 2020 gives further effect to the special distribution and TERP acquisition as if they had been consummated on March 31, 2020 and the pro forma per share/unit data for the three months ended March 31, 2020 and for the year ended December 31, 2019 gives further effect to the special distribution and the TERP acquisition as if they had been consummated on January 1, 2019.

The unaudited pro forma financial statements included in this proxy statement/prospectus for each of the years in the two year period ended December 31, 2018 do not give effect for the special distribution or the TERP acquisition.

Except for the historical earnings and dividend information for each of the years in the three-year period ended December 31, 2019, the information provided in the tables below is unaudited.

Historical per share data of TerraForm Power as of and for the three months ended March 31, 2020, were derived from TerraForm Power’s unaudited historical financial statements for such periods. Historical per share data of TerraForm Power as of December 31, 2019 and for each of the years in the three-year period ended December 31, 2019 were derived from TerraForm Power’s historical financial statements for such periods. Historical per unit data of BEP as of and for the three months ended March 31, 2020, were derived from BEP’s unaudited historical financial statements prepared in accordance with IFRS for such period. Historical per unit data of BEP as of December 31, 2019 and for each of the years in the three-year period ended December 31, 2019 was derived from BEP’s historical financial statements prepared in accordance with IFRS for such period. This information should be read together with the historical consolidated financial statements and related notes of TerraForm Power and BEP filed by each with the SEC, and that are incorporated into this proxy statement/prospectus by reference. See “Where You Can Find More Information”.

Unaudited pro forma combined per share/unit data as of and for the three months ended March 31, 2020 and for each of the years in the three-year period ended December 31, 2019 was derived and should be read in conjunction with the unaudited pro forma condensed combined financial data prepared using accounting policies that are consistent with IFRS included under “Unaudited Pro Forma Financial Statements”. The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if any of the BEP Transactions or the BEPC Transactions had been completed as of the beginning or end of the period.

 

     As of and for
the three
months ended
March 31,

2020
     As of and for the year ended December 31,  
     2019     2018      2017  

Historical per BEP Unit Data

          

Basic and diluted earnings

   $ 0.06      $ (0.19   $ 0.13      $ (0.18

Cash dividends declared

     0.5425        2.06       1.96        1.87  

Net book value(1)

     22.54        25.57       N/A        N/A  

 



 

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     As of and for
the three
months ended
March 31,

2020
    As of and for the year ended December 31,  
    2019     2018      2017  

Historical per Share of TERP Common Stock Data

         

Basic and diluted earnings

   $ (0.24   $ (0.70   $ 0.07      $ (1.61

Cash dividends declared

     0.2014       0.8056       0.76        1.94  

Net book value

     8.33       8.84       N/A        N/A  

 

     As of and for
the three
months ended
March 31,

2020
    As of and for the year ended December 31,  
    2019     2018(2)      2017(2)  

Unaudited Pro Forma Combined per BEP Unit Data

         

Basic and diluted earnings

   $ (0.05   $ (0.40   $ 0.23      $ (0.18

Cash dividends declared

     0.43       1.65       1.96        1.87  

Net book value(1)

     19.03       N/A       N/A        N/A  

 

     As of and for
the three
months ended
March 31,

2020(3)
    As of and for the year ended December 31,  
    2019(3)     2018(2)(4)      2017(2)(4)  

Unaudited Pro Forma Combined per TERP Equivalent Share Data

         

Basic and diluted earnings

   $ (0.02   $ (0.19   $ 0.09      $ (0.07

Cash dividends declared

     0.21       0.78       0.75        0.71  

Net book value(1)

     9.06       N/A       N/A        N/A  

 

(1)

Historical net book value per BEP unit data as of March 31, 2020 and December 31, 2019 includes BEP unitholders’ proportionate interest of deferred tax liabilities, net of deferred tax assets of $8.90 and $9.41, respectively, per BEP unit. Unaudited pro forma net book value per BEP unit data as of March 31, 2020 includes BEP unitholders’ proportionate interest of deferred tax liabilities, net of deferred tax assets of $7.12 per BEP unit. Unaudited pro forma net book value per TERP equivalent share data as of March 31, 2020 includes BEP unitholders’ proportionate interest of deferred tax liabilities, net of deferred tax assets of $3.39 per TERP equivalent share. BEP believes that the book value of deferred tax liabilities, net of deferred tax assets is not reflective of BEP’s actual future tax obligations due to the impact of the revaluation model applied to BEP’s property, plant and equipment. See note 12 to BEP’s audited consolidated financial statements for the year ended December 31, 2019, incorporated by reference herein.

(2)

Unaudited pro forma per unit/share data for each of the years in the two year period ended December 31, 2018 do not give effect for the special distribution or the TERP acquisition.

(3)

TERP equivalent per share amounts as of and for the three months ended March 31, 2020 and for the year ended December 31, 2019 were calculated by multiplying the unaudited pro forma combined per BEP unit amounts by an illustrative adjusted exchange ratio of 0.47625 per public TERP share, determined based on the assumption that holders of BEP units receive one BEPC exchangeable share for every four BEP units in the special distribution.

(4)

TERP equivalent per share amounts for each of the years in the two-year period ended December 31, 2018 were calculated by multiplying the unaudited pro forma combined per BEP unit amounts by the exchange ratio of 0.381 per public TERP share.



 

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COMPARATIVE STOCK PRICES AND CASH DIVIDENDS

TerraForm Power’s common stock is listed on NASDAQ under the symbol “TERP”. BEP’s limited partnership units are listed on NYSE under the symbol “BEP” and the TSX under the symbol “BEP.UN”. Historical market price data for BEPC have not been presented because there is currently no established trading market for BEPC exchangeable shares.

The following table presents trading information for BEP units and shares of TERP common stock on March 16, 2020, the last trading day before the public announcement of the execution of the Reorganization Agreement, and June 26, 2020, the latest practicable trading day before the date of this proxy statement/prospectus.

 

     BEP Units      TERP Common Stock  

Date

   High      Low      Close      High      Low      Close  

March 16, 2020

   $ 40.17      $ 36.06      $ 37.69      $ 13.67      $ 12.00      $ 12.01  

June 26, 2020

   $ 48.54      $ 47.14      $ 47.41      $ 18.49      $ 18.01      $ 18.07  

For illustrative purposes, the following table provides TERP equivalent per share information on each of the specified dates, assuming the TERP acquisition consideration consist solely of BEP units and the special distribution has not occurred. TERP equivalent per share amounts are calculated by multiplying BEP per unit amounts by the exchange ratio of 0.381.

 

     BEP Units      TERP Equivalent
Per Share Data
 

Date

   High      Low      Close      High      Low      Close  

March 16, 2020

   $ 40.17      $ 36.06      $ 37.69      $ 15.30      $ 13.74      $ 14.36  

June 26, 2020

   $ 48.54      $ 47.14      $ 47.41      $ 18.49      $ 17.96      $ 18.06  


 

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Market Prices and Dividend Data

The following tables set forth the high and low sales prices of BEP units and shares of TERP common stock, each as reported on the NYSE and NASDAQ, respectively, and the cash dividends by BEP declared with respect to BEP unit and by TERP with respect to shares of TERP common stock.

BEP

 

     High      Low      Dividend
Declared
 

2017

        

First Quarter

   $ 30.69      $ 28.13      $ 0.4680  

Second Quarter

     34.02        29.08        0.4680  

Third Quarter

     36.00        31.60        0.4680  

Fourth Quarter

     35.34        32.11        0.4680  

2018

        

First Quarter

     35.09        29.80        0.4900  

Second Quarter

     31.87        29.57        0.4900  

Third Quarter

     32.09        30.00        0.4900  

Fourth Quarter

     30.85        24.51        0.4900  

2019

        

First Quarter

     31.97        25.90        0.5150  

Second Quarter

     34.77        30.70        0.5150  

Third Quarter

     40.85        34.70        0.5150  

Fourth Quarter

     48.72        40.26        0.5150  

2020

        

First Quarter

     57.67        30.09        0.5425  

Second Quarter (through June 26, 2020)

     51.16        39.92        0.5425  

TerraForm Power

 

     High      Low      Dividend
Declared
 

2017

        

First Quarter

   $ 13.55      $ 10.99      $ 0.0000  

Second Quarter

     12.90        11.63        0.0000  

Third Quarter

     14.00        11.69        0.0000  

Fourth Quarter

     14.20        10.93        1.9400  

2018

        

First Quarter

     12.14        10.02        0.1900  

Second Quarter

     11.89        10.57        0.1900  

Third Quarter

     11.99        9.90        0.1900  

Fourth Quarter

     11.93        10.33        0.1900  

2019

        

First Quarter

     14.21        10.96        0.2014  

Second Quarter

     14.59        13.01        0.2014  

Third Quarter

     18.38        14.18        0.2014  

Fourth Quarter

     18.48        14.80        0.2014  

2020

        

First Quarter

     21.58        11.40        0.2014  

Second Quarter (through June 26, 2020)

     19.29        14.69        0.2014  


 

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The above tables show only historical comparisons. These comparisons may not provide meaningful information to TerraForm Power stockholders in connection with making any decisions with respect to the TerraForm acquisition. TerraForm Power stockholders are urged to obtain current market quotations for TERP common stock and BEP units and to review carefully the other information contained in this proxy statement/prospectus or incorporated herein by reference in making any decisions with respect to the TerraForm acquisition. See the section entitled “Where You Can Find More Information” for instructions on how to obtain the information that has been incorporated by reference.

Historical performance is not necessarily indicative of any performance to be expected in the future. See the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements”.



 

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RISK FACTORS

In addition to the other information included or incorporated by reference into this proxy statement/prospectus, including the matters addressed in the section entitled “Special Note Regarding Forward-Looking Statements”, you should carefully consider the following risks before deciding whether to vote for the Merger Proposal. In addition, you should read and consider the risks associated with each of the businesses of TerraForm Power and BEP, because these risks may also affect the combined company. A description of the material risks can be found in the Annual Report on Form 10-K for the fiscal year ended December 31, 2019, for TerraForm Power and in the Annual Report on Form 20-F for the fiscal year ended December 31, 2019, for BEP, each of which are filed with the SEC and incorporated by reference into this proxy statement/prospectus. See the section entitled “Where You Can Find More Information”.

Risks Relating to the TERP Acquisition

The TERP acquisition is subject to a number of conditions to the obligations of TerraForm Power, BEPC and BEP to complete the TERP acquisition, which, if not fulfilled, or if not fulfilled in a timely manner, may result in termination of the Reorganization Agreement.

The Reorganization Agreement contains a number of conditions to the completion of the TERP acquisition, which must be satisfied, or to the extent legally permissible waived (except with respect to the condition described in the first bullet below, which is not waivable), on or prior to the completion date, including:

 

   

the receipt of the TERP stockholder approvals;

 

   

the approval for listing of BEPC exchangeable shares and BEP units constituting the TERP acquisition consideration on the NYSE (subject to official notice of issuance);

 

   

the conditional approval for listing of BEPC exchangeable shares and BEP units issuable as TERP acquisition consideration on the TSX (subject to customary conditions);

 

   

the expiration or termination of the applicable waiting period under the HSR Act, receipt of the Competition Act approval and receipt of approval from FERC pursuant to Section 203 of the Federal Power Act, as amended;

 

   

the absence of any legal restraints that prevent, make illegal or prohibit the completion of the transactions contemplated by the Reorganization Agreement;

 

   

declaration by the SEC of the effectiveness of the registration statement filed on Form F-1/F-4 of which this proxy statement/prospectus forms a part and of the registration statement on Form F-3 relating to the BEP units that may be issued by BEP or delivered by BEPC to satisfy any exchange of the BEPC exchangeable shares (and the absence of any stop order suspending the effectiveness of such registration statements or any initiated or threatened proceedings seeking such a stop order);

 

   

the filing of the final prospectus relating to the special distribution with the applicable securities authorities in Canada;

 

   

the other parties having performed in all material respects all obligations required to be performed by them under the Reorganization Agreement that are required to be performed on or prior to the completion date; and

 

   

the accuracy of the representations and warranties of the parties made in the Reorganization Agreement, in each case subject to certain exceptions based on materiality qualifiers.

By reason of the commitment of the Brookfield stockholders under the TERP Voting Agreement to vote their TERP common stock in favor of the TERP acquisition, the condition described in the first bullet above will be satisfied if the unaffiliated TERP stockholder approval is obtained. The Merger Proposal will not be approved, however, unless the unaffiliated TERP stockholder approval is obtained.

 

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TerraForm Power’s obligation to complete the TERP acquisition is further subject to the following conditions: (i) receipt of an opinion regarding the reincorporation tax treatment, the 351 tax treatment, the 721 tax treatment and BEP nonrecognition tax treatment, in each case, as defined under “The Reorganization Agreement—Tax Matters”; (ii) occurrence of the BEP contribution; and (iii) the special distribution has occurred or that all actions which are reasonably necessary to cause the special distribution to occur substantially simultaneously with, but no later than immediately prior to, the completion of the TERP acquisition have been taken. Notwithstanding the condition in clause (i), subject to certain exceptions, if the IRS ruling, which has been received, is retracted on or prior to the completion date, the requirement that the opinion above includes an opinion regarding the 351 tax treatment will be deemed waived.

Many of the conditions to completion of the TERP acquisition are not within TerraForm Power’s, BEPC’s or BEP’s control, and none of TerraForm Power, BEPC or BEP can predict when or if these conditions will be satisfied. If any of these conditions are not satisfied or waived (except with respect to the receipt of the TERP stockholder approvals condition, which is not waivable) prior to December 16, 2020 (unless such date is extended in accordance with the terms of the Reorganization Agreement), it is possible that the Reorganization Agreement may be terminated. Although TerraForm Power, BEPC and BEP have agreed in the Reorganization Agreement to use their reasonable best efforts, subject to certain limitations, to complete the TERP acquisition as promptly as practicable, the conditions to the completion of the TERP acquisition may fail to be satisfied. In addition, satisfying the conditions to and completion of the TERP acquisition may take longer, and could cost more, than TerraForm Power, BEPC and BEP expect. See “The Reorganization Agreement—Conditions to the TERP Acquisition” for a discussion of the conditions to completion of the TERP acquisition, and “The Reorganization Agreement—Termination of the Reorganization Agreement” for a discussion of the rights of each of TerraForm Power (acting on the recommendation of the Special Committee) and BEP to terminate the Reorganization Agreement.

The TERP acquisition is subject to the receipt of numerous approvals, including from the TERP stockholders. Failure to obtain these approvals would prevent the completion of the TERP acquisition.

Before the TERP acquisition can be completed, the Plan of Merger must be adopted and the Reorganization Agreement, the reincorporation merger and the share exchange must be approved by (i) the holders of a majority of the outstanding shares of TERP common stock entitled to vote thereon as of the TERP record date and (ii) the holders of a majority of the outstanding shares of TERP common stock entitled to vote as of the TERP record date that are not owned, directly or indirectly, by BEP or its affiliates or any person with whom BEP or its affiliates has formed (and not terminated) a “group” (as defined in the Exchange Act). Although the Brookfield stockholders have agreed under the TERP Voting Agreement to vote their shares of TERP common stock in favor of the TERP acquisition, there can be no assurance that the TERP stockholder approvals will be obtained because even if a majority of the outstanding shares of TERP common stock are voted in favor of the TERP acquisition, the TERP acquisition will not be completed if the unaffiliated TERP stockholder approval is not received. Failure to obtain the required approvals within the expected time frame, or having to make significant changes to the structure, terms or conditions of the TERP acquisition to obtain such approvals, may result in a material delay in, or the abandonment of, the TERP acquisition.

The TERP acquisition may be subject to litigation, which could delay the TERP acquisition and prevent the TERP acquisition from being completed.

BEP, BEPC and TerraForm Power may in the future be party to legal proceedings and claims related to the TERP acquisition. Legal challenges to the TERP acquisition could result in an injunction, preventing or delaying the completion of the TERP acquisition.

 

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The exchange ratio is fixed, subject to adjustment for the special distribution, and will not be adjusted in the event of any change in the market price of TERP common stock, BEP units or BEPC exchangeable shares. Because the market price of such securities may fluctuate, the implied value of the TERP acquisition consideration that unaffiliated TERP stockholders will receive in the TERP acquisition is uncertain.

If the TERP acquisition is completed, each public TERP share will automatically be exchanged into the right to receive consideration consisting of a number of, at the election of the holder of such public TERP shares, 0.381 of a BEPC exchangeable shares or 0.381 BEP unit, in each case, subject to adjustment for the special distribution as described in the section entitled “The Reorganization Agreement—Consideration to Be Received in the TERP Acquisition” and further adjustment to prevent dilution in accordance with the Reorganization Agreement, plus any cash paid in lieu of fractional BEPC exchangeable shares or BEP units, as applicable. Unaffiliated TERP stockholders who do not make an election to receive BEP units prior to the election deadline will be entitled to receive BEPC exchangeable shares as TERP acquisition consideration.

Because the exchange ratio is fixed and will only be adjusted in certain limited circumstances (including for the special distribution and reclassifications, recapitalizations, stock splits or combinations, exchanges, mergers, consolidations or readjustments of shares, or stock dividends or similar transactions or events), the implied premium of the TERP acquisition consideration will depend on the market price of BEPC exchangeable shares and BEP units at the time the TERP acquisition is completed. The exchange ratio will not be adjusted for changes in the market price of BEPC exchangeable shares, BEP units or TERP common stock between the date of signing the Reorganization Agreement and completion of the TERP acquisition. The BEPC exchangeable shares are not currently publicly traded and have no market price. There will be a lapse of time between the date on which the TERP stockholders vote on the Reorganization Agreement, the reincorporation merger and the share exchange at the TERP stockholders meeting and the date on which TERP stockholders entitled to receive the TERP acquisition consideration actually receive such BEPC exchangeable shares or BEP units, as applicable. The implied premium of the TERP acquisition consideration has fluctuated since the date of the announcement of BEP’s proposal to acquire the outstanding public TERP shares and will continue to fluctuate from the date of this proxy statement/prospectus to the date the TERP acquisition is completed and thereafter. At the time of the TERP stockholders meeting, the implied premium of the TERP acquisition consideration will not be known. Equity price changes may result from a variety of factors, including, among others, general market and economic conditions, market volatility and disruption caused by the recent COVID-19 pandemic, changes in BEP’s, BEPC’s and TerraForm Power’s respective operations and prospects, cash flows, and financial position, foreign exchange fluctuations, any potential shareholder litigation related to the TERP acquisition, market assessments of the likelihood that the TERP acquisition will be completed, the timing of the TERP acquisition, regulatory considerations and factors impacting the renewable energy sector generally. TERP stockholders are urged to obtain current market quotations for TERP common stock and BEP units. See “Comparative Stock Prices and Cash Dividends” for the historical high and low closing prices of TERP common stock and BEP units.

The market price of BEP units or BEPC exchangeable shares may decline in the future as a result of the TERP acquisition.

The market price of BEP units and/or BEPC exchangeable shares may decline in the future as a result of the TERP acquisition for a number of reasons, including the possibility of an unsuccessful integration of Brookfield Renewable group and TerraForm Power or the failure of the Brookfield Renewable group to achieve the perceived benefits of the TERP acquisition, including financial results, as rapidly as or to the extent anticipated by financial or industry analysts. These factors are, to some extent, beyond the control of BEP or BEPC.

Certain TERP directors and executive officers may have interests in the TERP acquisition that may be different from, or in addition to, the interests of the TERP stockholders generally.

Certain TERP directors and executive officers may have interests in the TERP acquisition that may be different from, or in addition to, the interests of the TERP stockholders generally, including that TerraForm

 

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Power’s directors and executive officers are entitled to continued indemnification and, for a period of six years following the completion of the TERP acquisition, insurance coverage through a directors’ and officers’ liability insurance policy purchased or maintained by TerraForm Power or BEP.

You should also be aware of the ownership of BEPC exchangeable shares (following the special distribution) or BEP units by the TERP directors and executive officers, as set forth in the table under “The TERP Acquisition—Interests of Certain TERP Directors and Executive Officers—BEP Units Owned by the TERP Directors and Executive Officers”. Additionally, TerraForm Power’s Chief Executive Officer (John Stinebaugh), Chief Financial Officer (Michael Tebbutt) and General Counsel (William Fyfe), and a majority of the TERP board are designated by BAM and are employed by BAM and its affiliates. See the risk factors under the heading “Risks Related to our Relationship with Brookfield” to TERP’s Form 10-K for the fiscal year ended December 31, 2019, which is incorporated herein by reference.

These interests may cause the directors and executive officers of TerraForm Power to view the proposals relating to the TERP acquisition differently than the TERP stockholders generally may view them. For more information on the interests of TerraForm Power’s directors and executive officers in the TERP acquisition, see “The TERP Acquisition—Interests of Certain TERP Directors and Executive Officers”.

TERP stockholders may lose standing to assert certain derivative claims against certain TERP directors and officers if the TERP acquisition is consummated.

The lawsuit (the “Derivative Litigation”) filed on September 19, 2019, against BAM and certain of its affiliates includes derivative claims against, among other parties, Brian Lawson, Harry Goldgut, Richard Legault, Sachin Shah, and John Stinebaugh for breach of their fiduciary duties in connection with the private placement of TERP common stock to finance TerraForm Power’s acquisition of Saeta Yield S.A. The members of the Special Committee are not named as defendants in the Derivative Litigation. If the TERP acquisition closes, TERP stockholders may lose standing to pursue the claims asserted derivatively in the Derivative Litigation on behalf of TerraForm Power.

The Reorganization Agreement subjects BEP, BEPC and TerraForm Power to restrictions on their respective business activities prior to completion of the TERP acquisition.

The Reorganization Agreement obligates BEP, BEPC and TerraForm Power to generally operate their respective businesses in the ordinary course in all material respects consistent with past practice prior to completion of the TERP acquisition and, subject to certain exceptions, to refrain from certain actions during that time. These restrictions could prevent BEP, BEPC and TerraForm Power from pursuing attractive business opportunities that arise prior to the completion of the TERP acquisition and are outside the ordinary course of business.

The Reorganization Agreement limits the ability of TerraForm Power to pursue alternatives to the TERP acquisition and may discourage other companies from trying to acquire TerraForm Power prior to completion of the TERP acquisition.

The Reorganization Agreement contains provisions that make it more difficult for TerraForm Power to pursue alternatives to the TERP acquisition and limit the ability of TerraForm Power to terminate the Reorganization Agreement prior to completion of the TERP acquisition. These provisions include a general prohibition on TerraForm Power from soliciting alternatives to the TERP acquisition and, subject to certain exceptions, entering into discussions relating to an alternative to the TERP acquisition. The Reorganization Agreement also contains provisions that make it more difficult for the TERP board (acting on the recommendation of the Special Committee) to withhold, withdraw or qualify its recommendation that the TERP stockholders adopt the Plan of Merger and approve the Reorganization Agreement and the transactions contemplated thereby. Subject to certain rights of BEP to agree in writing to changes to the terms of the

 

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Reorganization Agreement, the TERP board (acting on the recommendation of the Special Committee) may withhold or withdraw its recommendation only if the TERP board or the Special Committee determines in good faith after consultation with its outside legal counsel that the failure to withhold or withdraw its recommendations would be inconsistent with its fiduciary duties to the TERP stockholders under applicable law. See “The Reorganization Agreement—No Solicitation by TerraForm Power of Takeover or Alternative Proposals”.

Even if the TERP board (acting on the recommendation of the Special Committee) withholds, withdraws or qualifies its recommendation with respect to the Reorganization Agreement, in accordance with the terms and conditions of the Reorganization Agreement, TerraForm Power will still be required to submit the adoption of the Plan of Merger and the approval of the Reorganization Agreement, the reincorporation merger and the share exchange to a vote by the TERP stockholders at the TERP stockholders meeting, unless the Reorganization Agreement is terminated prior to such meeting date in accordance with its terms.

If the Reorganization Agreement is terminated due to a failure to obtain the TERP stockholder approvals at the TERP stockholders meeting or any adjournment or postponement thereof, TerraForm Power will be required to pay to BEP an expense reimbursement fee of $15 million. See “The Reorganization Agreement—Termination of the Reorganization Agreement” and “The Reorganization Agreement—Expenses and Expense Reimbursement Fee”.

If the Reorganization Agreement is terminated and TerraForm Power determines to seek another business combination, TerraForm Power may not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the TERP acquisition. In addition, because TerraForm Power is controlled by BAM and BEP, an affiliate of BAM, has expressed that it would not support a third party deal at the present time, the ability of TerraForm Power and its stockholders to participate in an alternative transaction is limited.

Failure to complete the TERP acquisition could negatively impact the price of TERP common stock and have an adverse effect on TerraForm Power’s results of operations, cash flows and financial position.

If the TERP acquisition is not completed for any reason, including as a result of failing to obtain the TERP stockholder approvals, the ongoing business of TerraForm Power may be adversely affected and, without realizing any of the benefits of having completed the TERP acquisition, TerraForm Power would be subject to a number of risks, including the following:

 

   

TerraForm Power may experience negative reactions from the financial markets, including negative impacts on the market price of its securities;

 

   

TerraForm Power’s reputation among its customers, regulators and employees may be adversely affected;

 

   

TerraForm Power will be required to pay its costs relating to the TERP acquisition, whether or not the TERP acquisition is completed;

 

   

TerraForm Power may be required to pay BEP a cash expense reimbursement fee of $15 million as prescribed by the Reorganization Agreement;

 

   

the Reorganization Agreement places certain restrictions on the conduct of the business of TerraForm Power prior to completion of the TERP acquisition, which may have prevented TerraForm Power from making certain acquisitions or otherwise pursuing business opportunities outside of the ordinary course between the signing of the Reorganization Agreement and the abandonment of the TERP acquisition;

 

   

matters relating to TERP acquisition preparation (including integration planning) require substantial commitments of time and resources by TerraForm Power management, which may result in the distraction of TerraForm Power’s management from ongoing business operations between the signing of the Reorganization Agreement and the abandonment of the TERP acquisition; and

 

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TerraForm Power may be subject to litigation related to any failure by TerraForm Power to complete the TERP acquisition or related to any enforcement proceeding commenced against TerraForm Power to perform its obligations under the Reorganization Agreement.

If the TERP acquisition is not completed, the risks described above may materialize and they may have an adverse effect on TerraForm Power’s results of operations, cash flows, financial position and stock price.

TerraForm Power may waive one or more conditions to the TERP acquisition without resoliciting the TERP stockholder approvals for the TERP acquisition.

Certain conditions to TerraForm Power’s obligations to complete the TERP acquisition may be waived, in whole or in part, to the extent legally permissible, either unilaterally by the Brookfield Renewable group or by mutual agreement of the parties. In the event that any such waiver does not require resolicitation of the TERP stockholders under applicable law, the parties will have the discretion to complete the TERP acquisition without seeking further stockholder approval. The TERP stockholder approvals condition, however, cannot be waived.

Unaffiliated TERP stockholders as a group will have less influence over BEP and BEPC than their current influence over TerraForm Power.

The BEPC exchangeable shares that may be received by unaffiliated TERP stockholders have subordinate voting rights, and the holder of BEPC class B shares will have the right to cast 75% of the votes on any matter to be approved by the BEPC shareholders. Consequently, unaffiliated TERP stockholders as a group will exercise less influence over the management and policies of BEP and BEPC after the TERP acquisition than they currently exercise over the management and policies of TerraForm Power. In addition, because BEP units do not confer its holders any voting rights, unaffiliated TERP stockholders will have less influence over BEP than they did over TerraForm Power prior to the TERP acquisition.

TerraForm Power is organized as a Delaware corporation, whereas BEP is organized as an exempted limited partnership under the laws of Bermuda and BEPC is a corporation existing under British Columbia law. Therefore, recipients of BEP units or BEPC exchangeable shares following the TERP acquisition will have different rights and obligations, including voting rights, from those that they had prior to the TERP acquisition as holders of TERP common stock. See “Comparison of Rights of Holders of BEPC Exchangeable Shares, BEP Units and TERP Common Stock”.

Financial projections regarding TerraForm Power and BEP may not be realized.

Certain internal financial information and forecasts for TerraForm Power and BEP included in this proxy statement/prospectus include assumptions regarding future operating cash flows, expenditures and income of TerraForm Power and the Brookfield Renewable group. These financial projections were not prepared with a view to public disclosure, are subject to significant economic, competitive, industry and other uncertainties, and may not be achieved in full, at all, or within projected timeframes. The failure of TerraForm Power’s or the Brookfield Renewable group’s businesses to achieve projected results, including projected cash flows, could have an adverse effect on the price of BEP’s units, BEPC’s exchangeable shares or BEP’s and BEPC’s financial position following the completion of the TERP acquisition. The TerraForm Power and BEP forecasts were not prepared with a view toward public disclosure, soliciting proxies, or complying with published guidelines of the SEC regarding financial projections and forecasts, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial projections and forecasts, U.S. GAAP or IFRS. None of TerraForm Power’s independent registered public accounting firm, the independent registered public accounting firms of BEP and BEPC nor any other independent registered public accounting firm has examined, compiled or otherwise performed any procedures with respect to the prospective financial information contained in the TerraForm Power and BEP forecasts and, accordingly, neither TerraForm Power’s independent registered public accounting firm, the independent registered public accounting firms of BEP and BEPC nor any

 

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other independent registered public accounting firm has expressed any opinion or given any other form of assurance on such information or its achievability, and assumes no responsibility for, and disclaims any association with, the TerraForm Power and BEP forecasts or the prospective financial information contained therein.

This proxy statement/prospectus includes unaudited pro forma financial information which is preliminary and the actual results of operations, cash flows and financial position after the special distribution and the TERP acquisition may differ materially.

This proxy statement/prospectus includes unaudited pro forma financial information which is presented for informational purposes only and is not necessarily indicative of the combined financial position or results of operations that would have been realized had the special distribution and TERP acquisition occurred as of the dates indicated, nor is it meant to be indicative of any anticipated combined financial position or future results of operations that BEP and BEPC will experience after the completion of the special distribution and the TERP acquisition. The unaudited pro forma adjustments are based upon the best available information and certain assumptions that TerraForm Power, BEP and BEPC believe to be reasonable. See “Unaudited Pro Forma Financial Statements”.

Uncertainties associated with the TERP acquisition may cause a loss of TerraForm Power’s key employees, which could have an adverse effect on the results of operations, cash flows and financial position of BEP, BEPC and TerraForm Power.

BEP’s success after the completion of the TERP acquisition will depend in part upon its ability to retain key employees of TerraForm Power. The employees of TerraForm Power may experience uncertainty about their roles within BEP following the TERP acquisition, and such uncertainty may inhibit BEP’s ability to retain those key employees following the completion of the TERP acquisition. Accordingly, there can be no assurance that key employees can be retained either prior to or following the completion of the TERP acquisition to the same extent that TerraForm Power has previously been able to attract and retain its employees, which could have an adverse effect on the results of operations, cash flows and financial position of TerraForm Power and, following the TERP acquisition, BEP and BEPC.

The TERP acquisition and the integration of TerraForm Power will involve substantial costs.

BEP, BEPC and TerraForm Power have incurred and expect to continue to incur substantial costs and expenses relating directly to the TERP acquisition, including fees and expenses payable to financial advisors, other professional fees and expenses, insurance premium costs, fees and costs relating to regulatory filings and notices, SEC filing fees, printing and mailing costs and other transaction-related costs, fees and expenses. The Brookfield Renewable group is also expected to incur substantial expenses in connection with the integration of TerraForm Power’s business, policies, procedures, operations, technologies and systems. There are many systems that must be integrated, including management information, purchasing, accounting and finance, sales, billing, payroll and benefits, fixed asset and lease administration systems and regulatory compliance, and there are a number of factors that could affect the total amount or the timing of all of the expected integration expenses. Moreover, many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. These expenses could, particularly in the near term, exceed the savings that the Brookfield Renewable group expects to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings related to the integration of the businesses following the completion of the TERP acquisition.

Following the TERP acquisition, the combined company may be unable to integrate successfully the businesses of TerraForm Power and realize the anticipated benefits of the TERP acquisition.

The combined company will be required to devote significant management attention and resources to integrating the business practices and operations of TerraForm Power. The combined company may fail to realize

 

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some or all of the anticipated benefits of the TERP acquisition if the integration process takes longer than expected or is costlier than expected. Potential difficulties the combined company may encounter in the integration process include the following:

 

   

the inability to successfully combine the businesses of the Brookfield Renewable group and TerraForm Power in a manner that permits the combined company to achieve the cost savings and other benefits anticipated to result from the TERP acquisition, which would result in the anticipated benefits of the TERP acquisition not being realized partly or wholly in the time frame currently anticipated or at all;

 

   

complexities associated with managing the combined company;

 

   

integrating personnel from the two companies;

 

   

creation of uniform standards, controls, procedures, policies and information systems;

 

   

potential unknown liabilities and unforeseen increased expenses, delays or regulatory conditions associated with the TERP acquisition; and

 

   

performance shortfalls as a result of the diversion of management’s attention caused by completing the TERP acquisition and integrating TerraForm Power’s operations.

The future results of the Brookfield Renewable group may suffer if the combined company does not effectively manage its expanded operations following the TERP acquisition.

Following the TERP acquisition, the size of the business of the combined company will increase, and the combined company may continue to expand its operations through additional acquisitions or other strategic transactions. The Brookfield Renewable group’s future success depends, in part, on its ability to manage its expanded business, which may pose substantial challenges for management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. There can be no assurances that the combined company will be successful or that it will realize the expected economies of scale, cost savings, and other benefits currently anticipated from the TERP acquisition or anticipated from any additional acquisitions or strategic transactions.

Risks Relating to BEPC

Each BEPC exchangeable share has been structured with the intention of providing an economic return equivalent to one BEP unit and therefore BEPC expects that the market price of BEPC exchangeable shares will be significantly impacted by the market price of the BEP units and the combined business performance of the Brookfield Renewable group as a whole.

Each BEPC exchangeable share has been structured with the intention of providing an economic return equivalent to one BEP unit and, in addition to contemplating identical dividends to the distributions paid on the BEP units, each BEPC exchangeable share is exchangeable at the option of the holder for one BEP unit (subject to adjustment to reflect certain capital events) or its cash equivalent (the form of payment to be determined at the election of the Brookfield Renewable group). See “Description of BEPC Share Capital—BEPC Exchangeable Shares—Exchange by Holder—Adjustments to Reflect Certain Capital Events”. BEPC and BEP currently intend to satisfy any exchange requests on the BEPC exchangeable shares through the delivery of BEP units rather than cash. As a result, the business operations of Brookfield Renewable, and the market price of the BEP units, are expected to have a significant impact on the market price of the BEPC exchangeable shares, which could be disproportionate in circumstances where the business operations and results of BEPC on a standalone basis are not indicative of such market trends. BEPC exchangeable shareholders will have no ability to control or influence the decisions or business of Brookfield Renewable. You should therefore also carefully consider the risk factors applicable to Brookfield Renewable’s business and an investment in BEP units, as described in BEP’s Annual Report, which is incorporated by reference in this document. For additional information regarding Brookfield Renewable, see “Brookfield Renewable Partners L.P.

 

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BEPC is a newly formed corporation with no separate operating history and the historical and pro forma financial information included herein does not reflect the financial condition or operating results BEPC would have achieved during the periods presented, and therefore may not be a reliable indicator of BEPC’s future financial performance.

BEPC was formed on September 9, 2019 and has only recently commenced its activities. Although BEPCs assets and operating businesses have been under Brookfield Renewable’s control prior to the formation of BEPC, their combined results have not previously been reported on a stand-alone basis and the historical and pro forma financial statements included in this document may not be indicative of BEPC’s future financial condition or operating results and will make it difficult to assess BEPC’s ability to operate profitably and pay dividends to BEPC’s shareholders. BEPC has not yet acquired its assets and operating businesses from Brookfield Renewable and will do so prior to the special distribution. A failure by BEPC to acquire its assets and operating businesses from Brookfield Renewable would represent a material change from the business, assets, revenues and operations of BEPC presented in this document.

BEPC is a holding company and its material assets consist solely of interests in BEPC’s operating subsidiaries.

BEPC has no independent means of generating revenue. BEPC depends on distributions and other payments from BEPCs operating businesses to provide BEPC with the funds necessary to meet its financial obligations. BEPCs operating businesses are legally distinct from BEPC and some of them are or may become restricted in their ability to pay dividends and distributions or otherwise make funds available to BEPC pursuant to local law, regulatory requirements and their contractual agreements, including agreements governing their financing arrangements. BEPCs operating businesses will generally be required to service their debt obligations before making distributions to BEPC.

A significant portion of BEPC’s assets is located in South America. Changes in regulatory, political, economic and social conditions in South America could adversely affect BEPC’s business, results of operations, financial condition and prospects.

BEPCs financial performance may be negatively affected by regulatory, political, economic and social conditions in South American countries in which BEPC operations or projects are located. In many of these jurisdictions, BEPC is exposed to various risks such as potential renegotiation, nullification or forced modification of existing contracts, expropriation or nationalization of property, foreign exchange controls, changes in local laws, regulations and policies, political instability, bribery, extortion, corruption, civil strife, acts of war, guerilla activities and terrorism. BEPC also faces the risk of having to submit to the jurisdiction of a foreign court or arbitration panel or having to enforce a judgment against a sovereign nation within its own territory. Actual or potential political or social changes and changes in economic policy may undermine investor confidence, which may hamper investment and thereby reduce economic growth, and otherwise may adversely affect the economic and other conditions under which BEPC operates in ways that could have a materially negative effect on BEPCs business.

Further, governments in South America may impose new taxes, raise existing taxes, reduce tax exemptions and benefits, request or force renegotiation of tax stabilization agreements or change the basis on which taxes are calculated in a manner that is unfavorable to BEPC. Governments that have committed to provide a stable taxation or regulatory environment may alter those commitments or shorten their duration. The imposition of or increase in such taxes or charges can significantly increase the risk profile and costs of operations in those jurisdictions. BEPC may also be subject to rising trends of resource nationalism in certain countries in which BEPC operates that can result in constraints on BEPCs operations, increased taxation or even expropriations and nationalizations.

 

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BEPC is expected to be a “foreign private issuer” under U.S. securities law. Therefore, BEPC will be exempt from requirements applicable to U.S. domestic registrants listed on the NYSE.

Although BEPC will be subject to the periodic reporting requirement of the Exchange Act, the periodic disclosure required of foreign private issuers under the Exchange Act is different from periodic disclosure required of U.S. domestic registrants. Therefore, there may be less publicly available information about BEPC than is regularly published by or about other companies in the United States. BEPC is exempt from certain other sections of the Exchange Act to which U.S. domestic issuers are subject, including the requirement to provide BEPC’s shareholders with information statements or proxy statements that comply with the Exchange Act. In addition, insiders and large shareholders of BEPC are not obligated to file reports under Section 16 of the Exchange Act, and BEPC and BEP will be permitted to follow certain home country corporate governance practices (being Bermuda and British Columbia for BEP and BEPC, respectively) instead of those otherwise required under the NYSE Listed Company Manual for domestic issuers. BEPC currently intends to follow the same corporate practices as would be applicable to U.S. domestic companies under the U.S. federal securities laws and NYSE corporate governance standards; however, as BEPC will be externally managed by the Service Providers pursuant to the BEP Master Services Agreement, BEPC will not have a compensation committee. However, BEPC may in the future elect to follow BEPC’s home country law for certain of BEPC’s other corporate governance practices, as permitted by the rules of the NYSE, in which case BEPC’s shareholders would not be afforded the same protection as provided under NYSE corporate governance standards to U.S. domestic registrants. Following BEPC’s home country governance practices as opposed to the requirements that would otherwise apply to a U.S. domestic company listed on the NYSE may provide less protection than is accorded to investors of U.S. domestic issuers.

BEPC’s operations in the future may be different from BEPC’s current business.

Brookfield Renewable’s operations today include hydroelectric, wind and solar power generation (including the Business) and biomass power generation, cogeneration and storage businesses in North and South America, Europe and Asia Pacific. BEPC’s current operations consist of hydroelectric, wind, storage and ancillary power generation assets across Brazil, Colombia and the United States. BEPC may own interests in other renewable power operations, and BEPC may seek to divest of certain of BEPCs existing operations in the future. In addition, pursuant to the Brookfield Relationship Agreement with Brookfield, Brookfield may (but is not required to) offer BEPC or Brookfield Renewable the opportunity to acquire: (i) an integrated utility even if a significant component of such utility’s operations consist of a non -renewable power generation operation or development, such as a power generation operation that uses coal or natural gas, (ii) a portfolio of power operations, even if a significant component of such portfolio’s operations consist of non-renewable power generation, or (iii) renewable power generation operations or developments that comprise part of a broader enterprise. The risks associated with the operations of Brookfield Renewable, or BEPC’s future operations, may differ from those associated with the Business.

The completion of new acquisitions can have the effect of significantly increasing the scale and scope of BEPC’s operations, including operations in new geographic areas and industry sectors, and the Service Providers may have difficulty managing these additional operations. In addition, acquisitions involve risks to BEPC’s business.

A key part of the Brookfield Renewable group’s strategy will involve seeking acquisition opportunities upon Brookfield’s recommendation and allocation of opportunities to BEPC. Acquisitions, such as the TERP acquisition, may increase the scale, scope and diversity of BEPCs operating businesses. BEPC depends on the diligence and skill of Brookfield’s and BEPCs professionals to effectively manage BEPC, integrating acquired businesses with BEPCs existing operations. These individuals may have difficulty managing additional acquired businesses and may have other responsibilities within Brookfield’s asset management business. If any such acquired businesses are not effectively integrated and managed, BEPC’s existing business, financial condition and results of operations may be adversely affected.

 

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Future acquisitions will likely involve some or all of the following risks, which could materially and adversely affect BEPC’s business, financial condition or results of operations: the difficulty of integrating the acquired operations and personnel into BEPC’s current operations; potential disruption of BEPC’s current operations; diversion of resources, including Brookfield’s time and attention; the difficulty of managing the growth of a larger organization; the risk of entering markets in which BEPC has little experience; the risk of becoming involved in labor, commercial or regulatory disputes or litigation related to the new enterprise; risk of environmental or other liabilities associated with the acquired business; and the risk of a change of control resulting from an acquisition triggering rights of third parties or government agencies under contracts with, or authorizations held by the operating business being acquired. While it is BEP’s practice to conduct extensive due diligence investigations into businesses being acquired, it is possible that due diligence may fail to uncover all material risks in the business being acquired, or to identify a change of control trigger in a material contract or authorization, or that a contractual counterparty or government agency may take a different view on the interpretation of such a provision to that taken by BEPC and BEP, thereby resulting in a dispute.

BEPC may acquire distressed companies and these acquisitions may subject BEPC and BEP to increased risks, including the incurrence of additional legal or other expenses.

As part of BEPC’s acquisition strategy, BEPC may acquire distressed companies. This could involve acquisitions of securities of companies in event-driven special situations, such as acquisitions, tender offers, bankruptcies, recapitalizations, spinoffs, corporate and financial restructurings, litigation or other liability impairments, turnarounds, management changes, consolidating industries and other catalyst-oriented situations. Acquisitions of this type involve substantial financial and business risks that can result in substantial or total losses. Among the problems involved in assessing and making acquisitions in troubled issuers is the fact that it frequently may be difficult to obtain information as to the condition of such issuer. If, during the diligence process, BEPC fails to identify issues specific to a company or the environment in which BEPC operates, BEPC may be forced to later write down or write off assets, restructure its operations, or incur impairment or other charges that may result in other reporting losses.

As a consequence of BEPC’s role as an acquirer of distressed companies, BEPC may be subject to increased risk of incurring additional legal, indemnification or other expenses, even if BEPC is not named in any action. In distressed situations, litigation often follows when disgruntled shareholders, creditors and other parties seek to recover losses from poorly performing investments. The enhanced litigation risk for distressed companies is further elevated by the potential that Brookfield or BEPC may have controlling or influential positions in these companies.

Government policies providing incentives for renewable energy could change at any time.

Development of new renewable energy sources and the overall growth of the renewable energy industry has generally been supported by state or provincial, national, supranational and international policies. Some of BEPC’s projects benefit from such incentives. The attractiveness of renewable energy to purchasers of renewable assets, as well as the economic return available to project sponsors, is often enhanced by such incentives. Particularly in light of political changes in the United States and other jurisdictions in which BEPC currently or may in the future operate, there is a risk that regulations that provide incentives for renewable energy could change or expire in a manner that adversely impacts the market for renewables generally. Any political changes in the jurisdictions in which BEPC operates may impact the competitiveness of renewable energy generally and the economic value of certain of BEPC projects in particular.

 

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BEPC uses leverage and such indebtedness may result in BEPC or BEPC’s operating businesses being subject to certain covenants that restrict BEPC’s ability to engage in certain types of activities or to make distributions to equity.

Many of BEPC’s operating subsidiaries have entered into or will enter into credit facilities or have incurred or will incur other forms of debt, including for acquisitions. The total quantum of exposure to debt within BEPC is significant, and BEPC may become more leveraged in the future.

Leveraged assets are more sensitive to declines in revenues, increases in expenses and interest rates, and adverse economic, market and industry developments. A leveraged company’s income and net assets also tend to increase or decrease at a greater rate than would otherwise be the case if money had not been borrowed. As a result, the risk of loss associated with a leveraged company, all other things being equal, is generally greater than for companies with comparatively less debt. In addition, the use of indebtedness in connection with an acquisition may give rise to negative tax consequences to certain investors. Leverage may also result in a requirement for short-term liquidity, which may force the sale of assets at times of low demand and/or prices for such assets. This may mean that BEPC is unable to realize fair value for the assets in a sale.

BEPC’s credit facilities also contains, and may contain in the future, covenants applicable to the relevant borrower and events of default. Covenants can relate to matters including limitations on financial indebtedness, dividends, acquisitions, or minimum amounts for interest coverage, adjusted EBITDA, cash flow or net worth. If an event of default occurs, or minimum covenant requirements are not satisfied, this can result in a requirement to immediately repay any drawn amounts or the imposition of other restrictions including a prohibition on the payment of distributions to equity.

Changes in BEPC’s credit ratings may have an adverse effect on BEPC’s financial position and ability to raise capital.

BEPC cannot assure you that any credit rating assigned to BEPC or any of BEPC’s operating subsidiaries or their debt securities or Brookfield Renewable will remain in effect for any given period of time or that any rating will not be lowered or withdrawn entirely by the relevant rating agency. A lowering or withdrawal of such ratings may have an adverse effect on BEPC’s financial position and ability to raise capital.

BEPC is not, and does not intend to become, regulated as an investment company under the Investment Company Act of 1940, or the Investment Company Act (and similar legislation in other jurisdictions) and, if BEPC were deemed an “investment company” under the Investment Company Act, applicable restrictions could make it impractical for BEPC to operate as contemplated.

The Investment Company Act (and similar legislation in other jurisdictions) provides certain protections to investors and imposes certain restrictions on companies that are required to be regulated as investment companies. Among other things, such rules limit or prohibit transactions with affiliates, impose limitations on the issuance of debt and equity securities and impose certain governance requirements. BEPC has not been and does not intend to become regulated as an investment company and BEPC intends to conduct its activities so it will not be deemed to be an investment company under the Investment Company Act (and similar legislation in other jurisdictions). In order to ensure that BEPC is not deemed to be an investment company, BEPC may be required to materially restrict or limit the scope of BEPC’s operations or plans. BEPC will be limited in the types of acquisitions that it may make, and BEPC may need to modify its organizational structure or dispose of assets which BEPC would not otherwise dispose of. Moreover, if anything were to happen which would cause BEPC to be deemed an investment company under the Investment Company Act, it would be impractical for BEPC to operate as contemplated. Agreements and arrangements between and among BEPC and Brookfield would be impaired, the type and number of acquisitions that BEPC would be able to make as a principal would be limited and BEPC’s business, financial condition and results of operations would be materially adversely affected. Accordingly, BEPC would be required to take extraordinary steps to address the situation, such as the

 

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amendment or termination of the BEP Master Services Agreement, the restructuring of BEPC and BEPC’s operating subsidiaries, the amendment of BEPC’s governing documents or the dissolution of BEPC, any of which could materially adversely affect the value of BEPC exchangeable shares.

BEPC’s failure to maintain effective internal controls could have a material adverse effect on BEPC’s business in the future and the price of BEPC exchangeable shares.

As a public company, BEPC will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and stock exchange rules promulgated in response to the Sarbanes-Oxley Act. A number of BEPC’s current operating subsidiaries are and potential future acquisitions will be private companies and their systems of internal controls over financial reporting may be less developed as compared to public company requirements. Any failure to maintain adequate internal controls over financial reporting or to implement required, new or improved controls, or difficulties encountered in their implementation, could cause material weaknesses or significant deficiencies in BEPC’s internal controls over financial reporting and could result in errors or misstatements in BEPC’s consolidated financial statements that could be material. If BEPC or its independent registered public accounting firm were to conclude that BEPC’s internal controls over financial reporting were not effective, investors could lose confidence in BEPC’S reported financial information and the price of BEPC exchangeable shares could decline. BEPC’S failure to achieve and maintain effective internal controls could have a material adverse effect on BEPC’s business, BEPC’s ability to access capital markets and investors’ perception of BEPC. In addition, material weaknesses in BEPC’s internal controls could require significant expense and management time to remediate.

Risks Relating to the BEPC Exchangeable Shares

BEPC may redeem the BEPC exchangeable shares at any time without the consent of the holders.

The BEPC board, in its sole discretion and for any reason, and without the consent of holders of BEPC exchangeable shares, may elect to redeem all of the then outstanding BEPC exchangeable shares at any time upon sixty (60) days’ prior written notice, including without limitation following the occurrence of any of the following redemption events: (i) the total number of BEPC exchangeable shares outstanding decreases by 50% or more over any twelve-month period; (ii) a person acquires 90% of the BEP units in a take-over bid (as defined by applicable securities law); (iii) unitholders of BEP approve an acquisition of BEP by way of arrangement or amalgamation; (iv) unitholders of BEP approve a restructuring or other reorganization of BEP; (v) there is a sale of all or substantially all of BEP’ assets; (vi) there is a change of law (whether by legislative, governmental or judicial action), administrative practice or interpretation, or a change in circumstances of BEPC and BEPCs shareholders, that may result in adverse tax consequences for BEPC or BEPs shareholders; or (vii) the BEPC board, in its sole discretion, concludes that the unitholders of BEP or holders of BEPC exchangeable shares are adversely impacted by a fact, change or other circumstance relating to BEPC. For greater certainty, unitholders of BEP do not have the ability to vote on such redemption and the boards decision to redeem all of the then outstanding BEPC exchangeable shares will be final. In addition, the holder of BEPC class B shares may deliver a notice to BEPC specifying a redemption date upon which BEPC shall redeem all of the then outstanding BEPC exchangeable shares, and upon sixty (60) days’ prior written notice from BEPC to holders of the BEPC exchangeable shares and without the consent of holders of BEPC exchangeable shares, BEPC shall be required to redeem all of the then outstanding BEPC exchangeable shares on such redemption date. In the event of such redemption, holders of BEPC exchangeable shares will no longer own a direct interest in BEPC and will become unitholders of BEP, even if such holders desired to remain holders of BEPC exchangeable shares. Such redemption could occur at a time when the trading price of the BEPC exchangeable shares is greater than the trading price of the BEP units, in which case holders would receive BEP units with a lower trading price. See “Description of BEPC Share Capital—BEPC Exchangeable Shares—Redemption by Issuer”.

In the event that a BEPC exchangeable share held by a holder is redeemed by BEPC or exchanged by the holder, the holder will be considered to have disposed of such BEPC exchangeable share for Canadian income tax purposes. See “Material Canadian Federal Income Tax Considerations” for more information.

 

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Holders of BEPC exchangeable shares do not have a right to elect whether to receive cash or BEP units upon a liquidation or exchange event. Rather, the Brookfield Renewable group has the right to make such election in its sole discretion.

In the event that (i) there is a liquidation, dissolution or winding up of BEPC or BEP, (ii) BEPC or BEP exercises its right to redeem (or cause the redemption of) all of the then outstanding BEPC exchangeable shares, or (iii) a holder of BEPC exchangeable shares requests an exchange of BEPC exchangeable shares, holders of BEPC exchangeable shares shall be entitled to receive one BEP unit per BEPC exchangeable share held (subject to adjustment to reflect certain capital events described in this document and certain other payment obligations in the case of a liquidation, dissolution or winding up of BEPC or BEP) or in the case of (i) and (iii), its cash equivalent. The form of payment will be determined at the election of the Brookfield Renewable group so a holder will not know whether cash or BEP units, as applicable, will be delivered in connection with any of the events described in clauses (i) and (iii) above. BEPC and BEP currently intend to satisfy any exchange requests on the BEPC exchangeable shares through the delivery of BEP units rather than cash. See “Description of BEPC Share Capital—BEPC Exchangeable Shares”.

Any holder requesting an exchange of their BEPC exchangeable shares for which BEPC or BEP elects to provide BEP units in satisfaction of the exchange amount may experience a delay in receiving such BEP units, which may affect the value of the BEP units the holder receives in an exchange.

Each BEPC exchangeable share will be exchangeable at the option of the holder for one BEP unit (subject to adjustment to reflect certain capital events) or its cash equivalent (the form of payment to be determined at the election of the Brookfield Renewable group). See “Description of BEPC Share Capital—BEPC Exchangeable Shares—Exchange by Holder—Adjustments to Reflect Certain Capital Events”. In the event cash is used to satisfy an exchange request, the amount payable per BEPC exchangeable share will be equal to the NYSE closing price of one BEP unit on the date that the request for exchange is received by the transfer agent. As a result, any decrease in the value of the BEP units after that date will not affect the amount of cash received. However, any holder whose BEPC exchangeable shares are exchanged for BEP units will not receive such BEP units for up to ten (10) business days after the applicable request is received. During this period, the market price of BEP units may decrease. Any such decrease would affect the value of the BEP unit consideration to be received by the holder of BEPC exchangeable shares on the effective date of the exchange.

BEP will be required to maintain an effective registration statement in the United States in order to exchange any BEPC exchangeable shares for BEP units. If a registration statement with respect to the BEP units issuable upon any exchange, redemption or purchase of BEPC exchangeable shares (including in connection with any liquidation, dissolution or winding up of BEPC) is not current or is suspended for use by the SEC, no exchange or redemption of BEPC exchangeable shares for BEP units may be effected during such period.

The BEPC exchangeable shares may not trade at the same price as the BEP units.

Although the BEPC exchangeable shares are intended to provide an economic return that is equivalent to the BEP units, there can be no assurance that the market price of BEPC exchangeable shares will be equal to the market price of BEP units at any time. If BEPC redeems the BEPC exchangeable shares (which can be done without the consent of the holders) at a time when the trading price of the BEPC exchangeable shares is greater than the trading price of the BEP units, holders will receive BEP units with a lower trading price. Factors that could cause differences in such market prices may include:

 

   

perception and/or recommendations by analysts, investors and/or other third parties that these securities should be priced differently;

 

   

actual or perceived differences in distributions to holders of BEPC exchangeable shares versus holders of BEP units, including as a result of any legal prohibitions;

 

   

business developments or financial performance or other events or conditions that may be specific to only Brookfield Renewable or BEPC; and

 

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difficulty in the exchange mechanics between BEPC exchangeable shares and BEP units, including any delays or difficulties experienced by the transfer agent in processing the exchange requests.

If a sufficient amount of BEPC exchangeable shares are exchanged for BEP units, then the BEPC exchangeable shares may be de-listed.

Upon completion of the special distribution, the BEPC exchangeable shares are expected to commence trading on the NYSE and the TSX. However, if a sufficient amount of BEPC exchangeable shares are subsequently exchanged for BEP units , or BEPC exercises its redemption right at any time including if the total number of BEPC exchangeable shares decreases by 50% or more over any twelve-month period, BEPC may fail to meet the minimum listing requirements on the NYSE and the TSX, and the NYSE or the TSX may take steps to de-list the BEPC exchangeable shares. Though holders of BEPC exchangeable shares will still be entitled to exchange each such share at any time for one BEP unit (subject to adjustment to reflect certain capital events described in this document), or its cash equivalent (the form of payment to be determined at the election of the Brookfield Renewable group), a de-listing of the BEPC exchangeable shares would have a significant adverse effect on the liquidity of the BEPC exchangeable shares, and holders thereof may not be able to exit their investments in the market on favorable terms.

The BEPC exchangeable shares have never been publicly traded and an active and liquid trading market for BEPC exchangeable shares may not develop.

There has not been a market for BEPC exchangeable shares and BEPC cannot predict the extent to which investor interest will lead to the development of an active and liquid trading market for BEPC exchangeable shares or, if such a market develops, whether it will be maintained. BEPC cannot predict the effects on the price of BEPC exchangeable shares if a liquid and active trading market for BEPC exchangeable shares does not develop. In addition, if such a market does not develop, relatively small sales of BEPC exchangeable shares may have a significant negative impact on the price of BEPC exchangeable shares. A number of factors, principally factors relating to BEPC but also including factors specific to Brookfield Renewable and its business, financial condition and liquidity, economic and financial market conditions, interest rates, availability of capital and financing sources, volatility levels and other factors could lead to a decline in the value of BEPC exchangeable shares and a lack of liquidity in any market for BEPC exchangeable shares.

The market price of the BEPC exchangeable shares and BEP units may be volatile, and holders of BEPC exchangeable shares and/or BEP units may lose a significant portion of their investment due to drops in the market price of BEPC exchangeable shares and/or BEP units.

The market price of the BEPC exchangeable shares and the BEP units may be volatile and holders of such securities may not be able to resell their securities at or above the implied price at which they acquired such securities due to fluctuations in the market price of such securities, including changes in market price caused by factors unrelated to BEPC or Brookfield Renewable’s operating performance or prospects. Specific factors that may have a significant effect on the market price of the BEPC exchangeable shares and the BEP units:

 

   

changes in stock market analyst recommendations or earnings estimates regarding the BEPC exchangeable shares or BEP units, other companies and partnerships that are comparable to BEPC or Brookfield Renewable or are in the industries that they serve;

 

   

with respect to the BEPC exchangeable shares, changes in the market price of the BEP units, and vice versa;

 

   

actual or anticipated fluctuations in BEPC and BEP’s operating results or future prospects;

 

   

reactions to public announcements by BEPC and Brookfield Renewable;

 

   

strategic actions taken by BEPC or Brookfield Renewable;

 

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adverse conditions in the financial market or general U.S. or international economic conditions, including those resulting from pandemic, war, incidents of terrorism and responses to such events; and

 

   

sales of such securities by BEPC, Brookfield Renewable or significant stockholders.

Exchanges of BEPC exchangeable shares for BEP units may negatively affect the market price of the BEP units, and additional issuances of BEPC exchangeable shares would be dilutive to the BEP units.

Each BEPC exchangeable share will be exchangeable by the holder thereof for one BEP unit (subject to adjustment to reflect certain capital events) or its cash equivalent (the form of payment to be determined at the election of the Brookfield Renewable group). See “Description of BEPC Share Capital—BEPC Exchangeable Shares—Exchange by Holder—Adjustments to Reflect Certain Capital Events”. If the Brookfield Renewable group elects to deliver BEP units in satisfaction of any such exchange request, a significant number of additional BEP units may be issued from time to time which could have a negative impact on the market price for BEP units. Additionally, any BEPC exchangeable shares issued by BEPC in the future will also be exchangeable for BEP units, and, accordingly, any future exchanges satisfied by the delivery of BEP units would dilute the percentage interest of existing holders of the BEP units and may reduce the market price of the BEP units.

BEPC or BEP may issue additional shares or BEP units in the future, including in lieu of incurring indebtedness, which may dilute holders of BEPC’s and BEP’s equity securities. BEPC or BEP may also issue securities that have rights and privileges that are more favorable than the rights and privileges accorded to BEPC’s and BEP’s equity holders.

Subject to the terms of any of BEPC’s securities then outstanding, BEPC may issue additional securities, including BEPC exchangeable shares, BEPC class B shares, BEPC class C shares, preference shares, options, rights and warrants for any purpose and for such consideration and on such terms and conditions as the BEPC board may determine. Subject to the terms of any of BEPC’s securities then outstanding, the BEPC board will be able to determine the class, designations, preferences, rights, powers and duties of any additional securities, including any rights to share in BEPC’s profits, losses and dividends, any rights to receive BEPC’s assets upon BEPC’s dissolution or liquidation and any redemption, conversion and exchange rights. Subject to the terms of any of BEPC’s securities then outstanding, the BEPC board may use such authority to issue such additional securities, which would dilute holders of such securities, or to issue securities with rights and privileges that are more favorable than those of the BEPC exchangeable shares.

Similarly, under BEP’s limited partnership agreement, subject to the terms of any preferred units then outstanding, BEP’s general partner may issue additional partnership securities, including BEP units, preferred units, options, rights, warrants and appreciation rights relating to partnership securities for any purpose and for such consideration and on such terms and conditions as the board of BEP’s general partner may determine. Subject to the terms of any of BEP securities then outstanding, the board of BEP’s general partner will be able to determine the class, designations, preferences, rights, powers and duties of any additional partnership securities, including any rights to share in BEP’s profits, losses and dividends, any rights to receive BEP’s assets upon its dissolution or liquidation and any redemption, conversion and exchange rights. Subject to the terms of any of BEP securities then outstanding, the board of BEP’s general partner may use such authority to issue such additional partnership securities, which would dilute holders of such securities, or to issue securities with rights and privileges that are more favorable than those of the BEP units.

The sale or issuance of a substantial number of BEPC exchangeable shares, the BEP units or other equity securities of BEPC or BEP in the public markets (and including in connection with the TERP acquisition), or the perception that such sales or issuances could occur, could depress the market price of BEPC exchangeable shares and impair BEPC’s ability to raise capital through the sale of additional BEPC exchangeable shares. BEPC cannot predict the effect that future sales or issuances of BEPC exchangeable shares, BEP units or other equity securities would have on the market price of BEPC exchangeable shares. Subject to the terms of any of BEPC’s

 

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securities then outstanding, holders of BEPC exchangeable shares will not have any pre-emptive right or any right to consent to or otherwise approve the issuance of any securities or the terms on which any such securities may be issued.

BEPC cannot assure you that it will be able to pay dividends equal to the levels currently paid by BEP and holders of BEPC exchangeable shares may not receive dividends equal to the distributions paid on the BEP units and, accordingly, may not receive the intended economic equivalence of those securities.

The BEPC exchangeable shares are intended to provide an economic return per BEPC exchangeable share equivalent to one BEP unit (subject to adjustment to reflect certain capital events). See “Description of BEPC Share Capital—BEPC Exchangeable Shares—Exchange by Holder—Adjustments to Reflect Certain Capital Events”. Pursuant to the equity commitment, BEP has agreed that it will not declare or pay any distribution on the BEP units if on such date BEPC does not have sufficient funds or other assets to enable the declaration and payment of an equivalent dividend on the BEPC exchangeable shares. However, dividends are at the discretion of the BEPC board of directors and unforeseen circumstances (including legal prohibitions) may prevent the same dividends from being paid on each security. Accordingly, there can be no assurance that dividends and distributions will be identical for each BEPC exchangeable share and BEP unit, respectively, in the future, which may impact the market price of these securities. Dividends on BEPC exchangeable shares may not equal the levels currently paid by BEP for various reasons, including, but not limited to, the following:

 

   

BEPC may not have enough unrestricted funds to pay such dividends due to changes in BEPC’s cash requirements, capital spending plans, cash flow or financial position;

 

   

decisions on whether, when and in which amounts to make any future dividends will be dependent on then-existing conditions, including BEPC’s financial conditions, earnings, legal requirements, including limitations under British Columbia law, restrictions on BEPC’s borrowing agreements that limit its ability to pay dividends and other factors BEPC deems relevant; and

 

   

BEPC may desire to retain cash to improve BEPC’s credit profile or for other reasons.

Non-U.S. shareholders will be subject to foreign currency risk associated with BEPC’s dividends.

A significant number of BEPC’s shareholders will reside in countries where the U.S. dollar is not the functional currency. BEP’s dividends are denominated in U.S. dollars but are settled in the local currency of the shareholder receiving the dividend. For each non-U.S. shareholder, the value received in the local currency from the dividend will be determined based on the exchange rate between the U.S. dollar and the applicable local currency at the time of payment. As such, if the U.S. dollar depreciates significantly against the local currency of the non-U.S. shareholder, the value received by such shareholder in its local currency will be adversely affected.

U.S. investors in BEPC’s exchangeable shares may find it difficult or impossible to enforce service of process and enforcement of judgments against BEPC and the BEPC board and the Service Providers.

BEPC was established under the laws of the Province of British Columbia, Canada, and a significant number of BEPC’s subsidiaries are organized in jurisdictions outside of the United States. In addition, BEPC’s executive officers and the experts identified in this document are located outside of the United States. Certain of BEPC’s directors and officers and the Service Providers reside outside of the United States. A substantial portion of BEPC’s assets are, and the assets of BEPC’s directors and officers and the Service Providers and the experts identified in this document may be located outside of the United States. It may not be possible for investors to effect service of process within the United States upon BEPC’s directors and officers and the Service Providers or the experts identified in this document. It may also not be possible to enforce against BEPC, the experts identified in this document, or BEPC’s directors and officers and the Service Providers, judgments obtained in U.S. courts predicated upon the civil liability provisions of applicable securities law in the United States.

 

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As a result of the FPA and FERC’s regulations in respect of transfers of control, absent prior authorization by FERC, an investor in BEPC will generally not be permitted to obtain a direct and/or indirect voting interest of 10% or more in BEPC, and a violation of this limitation could result in civil or criminal penalties under the FPA and possible further sanctions imposed by FERC under the FPA.

Some of BEPC’s U.S. operating subsidiaries are “public utilities” (as defined in the FPA) and, therefore, subject to FERC’s jurisdiction under the FPA. As a result, the FPA requires BEPC to (i) obtain prior authorization from FERC to transfer an amount of issued and outstanding voting securities sufficient to convey direct or indirect control over any of BEPC’s public utility subsidiaries or (ii) qualify for a blanket authorization granted under or an exemption from FERC’s regulations in respect of transfers of control.

Similar restrictions apply to purchasers of BEPC exchangeable shares who are a “holding company” under the Public Utility Holding Company Act of 2005, or “PUHCA,” in a holding company system that includes a transmitting utility or an electric utility, or an “electric holding company” regardless of whether BEPC exchangeable shares are received pursuant to the special distribution, the TERP acquisition, subsequent offerings, in open market transactions or otherwise. A purchaser of BEPC exchangeable shares would be a “holding company” under the PUHCA and an electric holding company if the purchaser acquired direct or indirect control over BEPC exchangeable shares which would give such purchaser a 10% or more voting interest in BEPC or if FERC otherwise determined that the purchaser could directly or indirectly exercise control over BEPC’s management or policies (e.g., as a result of contractual board or approval rights). Under the PUHCA, a “public-utility company” is defined to include an “electric utility company,” which is any company that owns or operates facilities used for the generation, transmission or distribution of electric energy for sale. Accordingly, absent prior authorization by FERC or a general increase to the applicable percentage ownership under a blanket authorization, for the purposes of sell-side transactions by BEPC and buy-side transactions involving purchasers of BEPC exchangeable shares that are electric holding companies, no purchaser can acquire such number of BEPC exchangeable shares that would give such purchaser a 10% or more voting interest in BEPC. A violation of these regulations by BEPC, as seller, or an investor, as a purchaser of BEPC exchangeable shares, could subject the party in violation to civil or criminal penalties under the FPA, including civil penalties of up to $1 million per day per violation and other possible sanctions imposed by FERC under the FPA.

As a result of the FPA and FERC’s regulations in respect of transfers of control, and consistent with the requirements for blanket authorizations granted thereunder or exemptions therefrom, absent prior authorization by FERC, whether BEPC exchangeable shares are received pursuant to the special distribution, the TERP acquisition, subsequent offerings, in open market transactions or otherwise, no investor will be permitted to receive or purchase such number of BEPC exchangeable shares that would cause such investor and its affiliate and associate companies to collectively hold a 10% or more voting interest in BEPC. Additionally, investors should manage their investment in BEPC in a manner consistent with FERC’s regulations in respect of obtaining direct or indirect “control” of BEPC. Accordingly, following the completion of the special distribution, absent prior authorization by FERC, investors in BEPC exchangeable shares that are electric holding companies are advised not to acquire such number of BEPC exchangeable shares that would give such investor a 10% or more voting interest in BEPC.

The BEPC articles and BEP’s limited partnership agreement provide (or will provide) that the federal district courts of the United States of America are the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the U.S. Securities Act. This choice of forum provision could limit BEPC’s shareholders and BEP’s unitholders ability to obtain a favorable judicial forum for disputes with directors, officers or employees.

The BEPC articles provide, and BEP’s limited partnership agreement will be amended on the closing of the special distribution to provide, that, unless BEPC or BEP consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the

 

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U.S. Securities Act. In the absence of these provisions, under the U.S. Securities Act, U.S. federal and state courts have been found to have concurrent jurisdiction over suits brought to enforce duties or liabilities created by the U.S. Securities Act. This choice of forum provision will not apply to suits brought to enforce duties or liabilities created by the Exchange Act, which already provides that such federal district courts have exclusive jurisdictions over such suits. Additionally, investors cannot waive BEPC and BEP’s compliance with federal securities laws of the United States and the rules and regulations thereunder.

The choice of forum provision contained (or that will be contained) in BEPC’s articles and BEP’s limited partnership agreement may limit a BEPC shareholder’s or BEP unitholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with BEPC, BEP or their directors, officers or other employees, which may discourage such lawsuits against BEP, BEPC and their directors, officers and other employees. However, the enforceability of similar choice of forum provisions in other companies’ governing documents has been challenged in recent legal proceedings, and it is possible that a court in the relevant jurisdictions with respect to BEP and BEPC could find the choice of forum provision contained (or that will be contained) in BEPC’s articles and BEP’s limited partnership agreement to be inapplicable or unenforceable. While the Delaware Supreme Court ruled in March 2020 that U.S. federal forum selection provisions purporting to require claims under the U.S. Securities Act be brought in a U.S. federal court are “facially valid” under Delaware law, there can be no assurance that the courts in Canada (including in the Province of British Columbia) and Bermuda, and other courts within the United States, reach a similar determination regarding the choice of forum provision contained (or that will be contained) in BEPC’s articles and BEP’s limited partnership agreement. If the relevant court were to find the choice of forum provision contained (or that will be contained) in BEPC’s articles or BEP’s limited partnership agreement to be inapplicable or unenforceable in an action, BEP and BEPC may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect their business, financial condition and operating results.

The BEPC exchangeable shares are not BEP units and will not be treated as BEP units for purposes of the application of applicable Canadian or U.S. rules relating to takeover bids, issuer bids and tender offers.

BEP units and BEPC exchangeable shares are not securities of the same class. As a result, holders of BEPC exchangeable shares will not be entitled to participate in an offer or bid made to acquire BEP units, and holders of BEP units will not be entitled to participate in an offer or bid made to acquire BEPC exchangeable shares. In the event of a takeover bid for BEP units, a holder of BEPC exchangeable shares who would like to participate would be required to tender his or her BEPC exchangeable shares for exchange, in order to receive a BEP unit, or the cash equivalent, at the election of the Brookfield Renewable group, pursuant to the exchange right. If an issuer tender offer or issuer bid is made for the BEP units at a price in excess of the market price of the BEP units and a comparable offer is not made for the BEPC exchangeable shares, then the conversion factor for the BEPC exchangeable shares may be adjusted. See “Description of BEPC Share Capital — BEPC Exchangeable Shares — Exchange by Holder — Adjustments to Reflect Certain Capital Events” for more information on the circumstances in which adjustments may be made to the conversion factor.

The Rights Agreement may terminate on the seventh anniversary of the distribution date.

The Rights Agreement will automatically renew for successive periods of two years following the seventh anniversary of the distribution date, unless Brookfield provides the rights agent with written notice of termination in accordance with the terms of the Rights Agreement or the Rights Agreement is otherwise terminated pursuant to its terms. Consequently, after such date, holders of BEPC exchangeable shares may no longer have the benefit of protections provided for by the Rights Agreement and will be reliant on the rights provided for in the BEPC articles. In the event that BEPC or BEP fails to satisfy a request for exchange after the expiry of the Rights Agreement, a tendering holder will not be entitled to rely on the secondary exchange rights. See “Description of BEPC Share Capital — BEPC Exchangeable Shares — Exchange by Holder” and “Relationship with Brookfield — Rights Agreement”.

 

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Risks Relating to BEPC’s Operations and the Renewable Power Industry

Changes to hydrology at BEPC’s hydroelectric facilities, wind conditions at BEPC’s wind energy facilities, irradiance at BEPC’s solar facilities or weather conditions generally, as a result of climate change or otherwise, at any of BEPC’s facilities could materially adversely affect the volume of electricity generated.

The revenues generated by BEPC’s facilities are correlated to the amount of electricity generated, which in turn is dependent upon available water flows and upon wind, irradiance and weather conditions generally. Hydrology, wind, irradiance and weather conditions have natural variations from season to season and from year to year and may also change permanently because of climate change or other factors.

If one or more of BEPC’s generation facilities were to be subject in the future to flooding, extreme weather conditions (including severe droughts), fires, natural disasters, or if unexpected geological or other adverse physical conditions were to develop at any of BEPC’s generation facilities, the generation capacity of that facility could be significantly reduced or eliminated. For example, BEPC’s hydroelectric facilities depend on the availability of water flows within the watersheds in which BEPC operates and could be materially impacted by changes to hydrology patterns, such as droughts. In the event of severe flooding, BEPC’s hydrology facilities may be damaged. Wind energy and solar energy are highly dependent on weather conditions and, in particular, on wind conditions and irradiance, respectively. The profitability of a wind farm depends not only on observed wind conditions at the site, which are inherently variable, but also on whether observed wind conditions are consistent with assumptions made during the project development phase or when a given project was acquired. Similarly, projections of solar resources depend on assumptions about weather patterns, shading and irradiance, which are inherently uncertain and may not be consistent with actual conditions at the site. A sustained decline in water flow at BEPC’s hydroelectric facilities or in wind conditions at BEPC’s wind energy facilities could lead to a material adverse change in the volume of electricity generated, revenues and cash flow.

Climate change may increase the frequency and severity of severe weather conditions and may have the long-term effect of changing weather patterns, which could result in more frequent and severe disruptions to BEPC’s generation facilities. In addition, customers’ energy needs generally vary with weather conditions, primarily temperature and humidity. To the extent weather conditions are affected by climate change, customers’ energy use could increase or decrease depending on the duration and magnitude of changing weather conditions, which could adversely affect BEPC’s business, results of operations and cash flows.

Supply and demand in the energy market is volatile and such volatility could have an adverse impact on electricity prices and a material adverse effect on BEPC’s assets, liabilities, business, financial condition, results of operations and cash flow.

A portion of BEPC’s revenues are tied, either directly or indirectly, to the wholesale market price for electricity in the markets in which BEPC operates. Wholesale market electricity prices are impacted by a number of factors including: the price of fuel (for example, natural gas) that is used to generate electricity; the management of generation and the amount of excess generating capacity relative to load in a particular market; the cost of controlling emissions of pollution, including the cost of emitting carbon dioxide; the structure of the electricity market; and weather conditions (such as extremely hot or cold weather) that impact electrical load. More generally, there is uncertainty surrounding the trend in electricity demand growth, which is influenced by: macroeconomic conditions; absolute and relative energy prices; and energy conservation and demand-side management. Correspondingly, from a supply perspective, there are uncertainties associated with the timing of generating plant retirements—in part driven by environmental regulations—and with the scale, pace and structure of replacement capacity, again reflecting a complex interaction of economic and political pressures and environmental preferences. This volatility and uncertainty in the power market generally, including the non-renewable power market, could have a material adverse effect on BEPC’s assets, liabilities, business, financial condition, results of operations and cash flow.

 

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As BEPC’s contracts expire, it may not be able to replace them with agreements on similar terms.

Certain PPAs in BEPC’s portfolio will be subject to re-contracting in the future. If the price of electricity in power markets is declining at the time of such re-contracting, it may impact BEPC’s ability to re-negotiate or replace these contracts on terms that are acceptable to BEPC, or at all. In addition, a concentrated pool of potential buyers for electricity generated by BEPC’S renewable energy facilities in certain jurisdictions may restrict BEPC’s ability to negotiate favorable terms under new PPAs or existing PPAs that are subject to re-contracting. BEPC cannot provide any assurance that it will be able to re-negotiate or replace these contracts once they expire, and even if it is able to do so, BEPC cannot provide any assurance that it will be able to obtain the same prices or terms it currently receives. If BEPC is unable to re-negotiate or replace these contracts, or unable to secure prices at least equal to the current prices it receives, its business, financial condition, results of operation and prospects could be adversely affected.

Increases in water rental costs (or similar fees) or changes to the regulation of water supply may impose additional obligations on BEPC.

Water rights are generally owned or controlled by governments that reserve the right to control water levels or impose water-use requirements as a condition of license renewal that differ from those arrangements in place today. BEPC is required to pay taxes, make rental payments or pay similar fees for use of water and related rights once BEPC’s hydroelectric projects are in commercial operation. Significant increases in water rental costs or similar fees or changes in the way that governments regulate water supply could, if imposed at a material number of BEPC assets in BEPC’s portfolio, have a material adverse effect on BEPC’s assets, liabilities, business, financial condition, results of operations and cash flow.

Advances in technology could impair or eliminate the competitive advantage of BEPC projects.

Technology related to the production of renewable power and conventional power generation are continually advancing, resulting in a gradual decline in the cost of producing electricity. If advances in technology further reduce the cost of producing power, the competitive advantage of BEPC’s existing projects may be significantly impaired or eliminated and BEPC’s assets, liabilities, business, financial condition, results of operations and cash flow could be materially and adversely affected as a result.

The amount of uncontracted generation in BEPC’s portfolio may increase.

As at March 31, 2020, approximately 72% of the Brookfield Renewable group’s generation (on a proportionate basis) was contracted over the following five years under long-term, fixed price contracts with creditworthy counterparties. In 2018 and 2019, approximately 90% of the Brookfield Renewable group’s generation (on a proportionate basis) was contracted in each of those calendar years. The portion of the Brookfield Renewable group’s portfolio that is uncontracted may increase over time which would increase BEPC’s exposure to variability in power prices, which could, in certain circumstances, have an adverse effect on BEPC’s business, financial condition, results of operations and cash flows.

There are general industry risks associated with the power markets in which BEPC operates.

BEPC’s operating subsidiaries currently operate in power markets in the United States and South America, each of which is affected by competition, price, supply of and demand for power, the location of import/export transmission lines and overall political, economic and social conditions and policies. BEPC’s operations are also concentrated in three countries, and accordingly are exposed to country-specific risks (such as weather conditions, local economic conditions or political/regulatory environments) that could disproportionately affect them. A general and extended decline in the North American or South American economies, or in the economies of the Brazil, Colombia and the United States, or sustained conservation efforts to reduce electricity consumption, could have the effect of reducing demand for electricity and could thereby have an adverse effect on BEPC’s business, financial condition, results of operations and cash flows.

 

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The MRE could be terminated or changed or BEPC’s reference amount revised downward.

In Brazil, hydroelectric power generators have access to the MRE, which seeks to stabilize hydrology by assuring that all participant plants in the MRE receive a reference amount of electricity, approximating long-term average regardless of the actual volume of energy generated. Substantially all BEPC’s assets in Brazil are part of that pool. In cases of nationwide drought, when the pool as a whole is in shortfall relative to the long-term average, an asset can expect to share the nationwide shortfall pro-rata with the rest of the pool. In addition, specific rules provide the minimum percentages of the reference amount of electricity that must be actually generated each year for assuring participation in the MRE. The energy reference amount is assessed yearly according to the criteria of such regulation and can be adjusted positively or negatively. For example, the energy reference amount of plants with installed capacity above 50 MW is assessed every five years, and can be adjusted positively or negatively. For plants with installed capacity of 50 MW or lower, the energy reference amount is assessed annually and is subject to similar adjustments. The regulations establishing the assessments of energy reference amounts for plants with installed capacity of 50 MW or lower were challenged by certain energy producers in Brazil and are currently suspended. If BEPC’s reference amount is revised, BEPC’S share of the balancing pool could be reduced. If the MRE is terminated or changed, BEPC’s financial results would be more exposed to variations in hydrology at certain hydroelectric facilities in Brazil. In either case, this could have an adverse effect on BEPC’s results of operations and cash flows.

BEPC’s operations are highly regulated and may be exposed to increased regulation, which could result in additional costs to BEPC.

BEPC’s generation assets are subject to extensive regulation by various government agencies and regulatory bodies in different countries at the federal, regional, state, provincial and local level. As legal requirements frequently change and are subject to interpretation and discretion, BEPC may be unable to predict the ultimate cost of compliance with these requirements or their effect on its operations. Any new law, rule or regulation could require additional expenditure to achieve or maintain compliance or could adversely impact BEPC’s ability to generate and deliver energy. Also, operations that are not currently regulated may become subject to regulation, which could result in additional cost to its business. Further, changes in wholesale market structures or rules, such as generation curtailment requirements or limitations to access the power grid, could have a material adverse effect on BEPC’s ability to generate revenues from BEPC facilities. For example, in North America, many of BEPC’s assets are subject to the operating and market-setting rules determined by independent system operators. These independent system operators could introduce rules that adversely impact BEPC operations. With an increasing global focus and public sensitivity to environmental sustainability and environmental regulation becoming more stringent, BEPC could also be subject to increasing environmental related responsibilities and more onerous permitting requirements. These changes may result in increased costs to BEPC’s operations.

A significant portion of BEPC’s current operations and related assets are subject to foreign laws and regulations, and it may pursue acquisitions in new markets that are subject to foreign laws or regulations that are more onerous or uncertain than the laws and regulations BEPC is currently subject to.

A significant portion of BEPC’s current operations and related assets are in Brazil and Colombia, and BEPC may pursue acquisitions in new foreign markets that are regulated by foreign governments and regulatory authorities and subject to foreign laws. Foreign laws or regulations may not provide for the same type of legal certainty and rights in connection with their contractual relationships in such countries as are afforded to projects in, for example, the United States, which may adversely affect their ability to receive revenues or enforce their rights in connection with their foreign operations. In addition, the laws and regulations of some countries may limit BEPC’s ability to hold a majority interest in some of the projects that it may develop or acquire, thus limiting its ability to control the development, construction and operation of such projects. Any existing or new operations may be subject to significant political, economic and financial risks, which vary by country, and may include: (i) changes in government policies, including protectionist policies, or personnel; (ii) changes in general

 

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economic conditions; (iii) restrictions on currency transfer or convertibility; (iv) changes in labor relations; (v) political instability and civil unrest; (vi) regulatory or other changes in the local electricity market; (vii) less developed or efficient financial markets than in North America; (viii) the absence of uniform accounting, auditing and financial reporting standards, practices and disclosure requirements; (ix) less government supervision and regulation; (x) a less developed legal or regulatory environment; (xi) heightened exposure to corruption risk; (xii) political hostility to investments by foreign investors; (xiii) less publicly available information in respect of companies; (xiv) adversely higher or lower rates of inflation; (xv) higher transaction costs; (xvi) difficulty in enforcing contractual obligations, breach or repudiation of important contractual undertakings by governmental entities and expropriation and confiscation of assets and facilities for less than fair market value; and (xvii) fewer investor protections.

There is a risk that BEPC concessions and licenses will not be renewed.

BEPC holds concessions and licenses and it has rights to operate its facilities which generally include rights to the land and water required for power generation and which are subject to renewal at the end of their terms. BEPC generally expects that its concessions and licenses will be renewed. However, if it is not granted renewal rights, or if its concessions or licenses are renewed subject to conditions which impose additional costs or impose additional restrictions such as setting a price ceiling for energy sales, BEPC’s profitability and operational activity could be adversely impacted.

BEPC’s use and enjoyment of real property rights for its wind and solar renewable energy facilities may be adversely affected by the rights of lienholders and leaseholders that are superior to those of the grantors of those real property rights to BEPC.

Wind and solar renewable energy facilities generally are and are likely to be located on land occupied by the facility pursuant to long-term easements and leases. The ownership interests in the land subject to these easements and leases may be subject to mortgages securing loans or other liens (such as tax liens) and other easement and lease rights of third parties (such as leases of oil or mineral rights) that were created prior to the facility’s easements and leases. As a result, the facility’s rights under these easements or leases may be subject, and subordinate, to the rights of those third parties. Although BEPC takes certain measures to protect itself against these risks, such measures may, however, be inadequate to protect BEPC against all risk of loss of its rights to use the land on which its wind and solar renewable energy facilities are located, which could have an adverse effect on BEPC’s business, financial condition and results of operations.

The cost of operating BEPC plants could increase for reasons beyond its control.

While BEPC currently maintains an appropriate and competitive cost position, there is a risk that increases in its cost structure that are beyond its control could materially adversely impact its financial performance. Examples of such costs include compliance with new conditions imposed during a relicensing process, municipal property taxes, water rental fees and the cost of procuring materials and services required for its maintenance activities.

BEPC may fail to comply with the conditions in, or may not be able to maintain, its governmental permits.

BEPC’s generation assets and construction projects are, and any assets which it may acquire will be, required to comply with numerous supranational, federal, regional, state, provincial and local statutory and regulatory standards and to maintain numerous licenses, permits and governmental approvals required for operation. Some of the licenses, permits and governmental approvals that have been issued to BEPC operations contain conditions and restrictions, or may have limited terms. If BEPC fails to satisfy the conditions or comply with the restrictions imposed by its licenses, permits and governmental approvals, or the restrictions imposed by any statutory or regulatory requirements, BEPC may become subject to regulatory enforcement or be subject to fines, penalties or additional costs or revocation of regulatory approvals, permits or licenses. In addition, if BEPC

 

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is not able to renew, maintain or obtain all necessary licenses, permits and governmental approvals required for the continued operation or further development of its projects, the operation or development of its assets may be limited or suspended. BEPC’s failure to renew, maintain or obtain all necessary licenses, permits or governmental approvals may have a material adverse effect on its assets, liabilities, business, financial condition, results of operations and cash flow.

BEPC may experience equipment failure, including failures relating to wind turbines and solar panels.

BEPC generation assets may not continue to perform as they have in the past and there is a risk of equipment failure due to wear and tear, latent defect, design error, operator error or early obsolescence, among other things, which could have a material adverse effect on its assets, liabilities, business, financial condition, results of operations and cash flow. Wind turbines and solar panels have shorter lifespans than hydroelectric assets. Spare parts for wind turbines and solar panels and key pieces of equipment may be difficult to acquire as a result of a limited number of suppliers of solar panels, modules, turbines, towers and other system components and equipment associated with wind and solar power plants. Any resulting delay in replacing equipment could result in significant delays in returning facilities to full operation, which could adversely impact BEPC’s business and financial condition. Equipment failure at BEPC generation assets could also result in significant personal injury or loss of life, damage to and destruction of property, plant and equipment and contamination of, or damage to, the environment and suspension of operations. The occurrence of any one of these events may result in BEPC being named as a defendant in lawsuits asserting claims for substantial damages, including for environmental cleanup costs, personal injury and property damage and fines and/or penalties.

The occurrence of dam failures could result in a loss of generating capacity and damage to the environment, third parties or the public, which could require BEPC to expend significant amounts of capital and other resources and expose BEPC to significant liability.

The occurrence of dam failures at any of BEPC hydroelectric generating stations or the occurrence of dam failures at other generating stations or dams operated by third parties whether upstream or downstream of its hydroelectric generating stations could result in a loss of generating capacity until the failure has been repaired. If the failure is at one of BEPC’s facilities, repairing such failure could require BEPC to expend significant amounts of capital and other resources. Such failures could result in damage to the environment or damages and harm to third parties or the public, which could expose BEPC to significant liability. A dam failure at a generating station or dam operated by a third party could result in new and potentially onerous regulations that could impact BEPC facilities. Any such new regulations could require material capital expenditures to maintain compliance and BEPC’s financial position could be adversely affected.

BEPC may be exposed to force majeure events.

The occurrence of a significant event that disrupts the ability of BEPC generation assets to produce or sell power for an extended period, including events which preclude customers from purchasing electricity, could have a material adverse effect on its assets, liabilities, business, financial condition, results of operations and cash flow. In addition, force majeure events affecting its assets could result in damage to the environment or harm to third parties or the public, which could expose BEPC to significant liability. BEPC generation assets could be exposed to severe weather conditions, natural disasters and potentially catastrophic events. An assault or an act of malicious destruction, cyber-attacks, sabotage or terrorism committed on BEPC generation assets could also disrupt its ability to generate or sell power. In certain cases, there is the potential that some events may not excuse BEPC from performing its obligations pursuant to agreements with third parties and therefore may expose BEPC to liability. In addition, many of BEPC generation assets are located in remote areas which may make access for repair of damage difficult.

 

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Developments associated with the COVID-19 pandemic could have an adverse effect on the Brookfield Renewable group’s business.

The rapid spread of the COVID-19 virus, which was declared by the World Health Organization to be a pandemic on March 11, 2020, and actions taken globally in response to COVID-19, have significantly disrupted international business activities. In addition, the Brookfield Renewable group’s business relies, to a certain extent, on free movement of goods, services, and capital from around the world, which has been significantly restricted as a result of COVID-19. For example, we have experienced some supply chain delays and certain of our service providers are experiencing challenges. The Brookfield Renewable group has implemented a response plan to maintain its operations despite the outbreak of the virus, including extra safety precautions with respect to our personnel and contingency plans with respect to our facilities. However, the Brookfield Renewable group may experience direct or indirect impacts from the pandemic, including delays in development or construction activities in its business and has some risk that its contract counterparties could fail to meet their obligations.

To date, the Brookfield Renewable group has not experienced the material impact to its operations, financial condition, cash flows or financial performance that has been experienced by many other businesses. However, given the ongoing and dynamic nature of the circumstances surrounding COVID-19, it is difficult to predict how significant the impact of COVID-19, including any responses to it, will be on the global economy and the business of the Brookfield Renewable group or for how long any disruptions are likely to continue. The extent of such impact will depend on future developments, which are highly uncertain, rapidly evolving and difficult to predict, including new information which may emerge concerning the severity of COVID-19 and additional actions which may be taken to contain COVID-19. Such developments could have an adverse effect on the Brookfield Renewable group’s assets, liabilities, business, financial condition, results of operations and cash flow.

BEPC may be exposed to uninsurable losses and may become subject to higher insurance premiums.

While BEPC maintains certain insurance coverage, such insurance may not continue to be offered on an economically feasible basis, may not cover all events that could give rise to a loss or claim involving BEPC’s assets or operations, and may not cover all of its assets. If BEPC’s insurance coverage is insufficient and it is forced to bear such losses or claims, its financial position could be materially and adversely affected. In addition, BEPC participates in certain shared insurance arrangements with Brookfield, allowing BEPC to benefit from lower premiums and other economies of scale. In particular, BEPC shares third party excess liability, crime, employee dishonesty, director and officer, and errors and omissions insurance coverage. Under such shared policies, claim limits may also be shared between BEPC and Brookfield meaning that any claim by one insured party in a given year reduces the amount that each other insured party can claim. Consequently, there is a risk that BEPC’s ability to claim in a given year could be eroded by claims made by Brookfield affiliates who are also covered by a shared policy but that are not part of BEPC, which could have an adverse effect on BEPC’s financial position. BEPC’s insurance policies may cover losses as a result of certain types of natural disasters or sabotage, among other things, but such coverage is not always available in the insurance market on commercially reasonable terms and is often capped at predetermined limits that may not be adequate. BEPC’s insurance policies are subject to review by its insurers and may not be renewed on similar or favorable terms or at all.

BEPC is subject to foreign currency risk, which may adversely affect the performance of its operations and its ability to manage such risk depends, in part, on BEPC’s ability to implement an effective hedging strategy.

A substantial portion of BEPC’s current operations are in countries where the U.S. dollar is not the functional currency. These operations pay distributions in currencies other than the U.S. dollar, which BEPC must convert to U.S. dollars prior to making such distributions. A significant depreciation in the value of such foreign currencies, including the Brazilian real and the Colombia peso, measures introduced by foreign governments to control inflation or deflation, currency exchange or export controls may have a material adverse effect on BEPC’s business, financial condition, results of operations and cash flows. When managing BEPC’s exposure to currency risks, BEPC uses foreign currency forward contracts and other strategies to mitigate currency risk and there can be no assurances that these strategies will be successful.

 

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The ability to deliver electricity to BEPC’s various counterparties requires the availability of and access to interconnection facilities and transmission systems.

BEPC’s ability to sell electricity is impacted by the availability of, and access to, the various transmission systems to deliver power to its contractual delivery point and the arrangements and facilities for interconnecting the generation projects to the transmission systems. The absence of this availability and access, BEPC’s inability to obtain reasonable terms and conditions for interconnection and transmission agreements, the operational failure or decommissioning of existing interconnection facilities or transmission facilities, the lack of adequate capacity on such interconnection or transmission facilities, curtailment as a result of transmission facility downtime, or the failure of any relevant jurisdiction to expand transmission facilities, may have a material adverse effect on BEPC’s ability to deliver electricity to its various counterparties or the requirement of counterparties to accept and pay for energy delivery, which could materially and adversely affect BEPC’s assets, liabilities, business, financial condition, results of operations and cash flow.

BEPC’s operations are exposed to health, safety, security and environmental risks.

The ownership, construction and operation of BEPC generation assets carry an inherent risk of liability related to health, safety, security and the environment, including the risk of government-imposed orders to remedy unsafe conditions and/or to remediate or otherwise address environmental contamination or damage. BEPC could also be exposed to potential penalties for contravention of health, safety, security and environmental laws and potential civil liability. In the ordinary course of business, BEPC incurs capital and operating expenditures to comply with health, safety, security and environmental laws, to obtain and comply with licenses, permits and other approvals and to assess and manage related risks. The cost of compliance with these laws (and any future laws or amendments enacted) may increase over time and result in additional material expenditures. BEPC may become subject to government orders, investigations, inquiries or other proceedings (including civil claims) relating to health, safety, security and environmental matters as a result of which its operations may be limited or suspended. The occurrence of any of these events or any changes, additions to or more rigorous enforcement of health, safety, security and environmental laws could have a material and adverse impact on operations and result in additional material expenditures. Additional environmental, health and safety issues relating to presently known or unknown matters may require unanticipated expenditures, or result in fines, penalties or other consequences (including changes to operations) that may be material and adverse to BEPC’s business and results of operations.

BEPC may be involved in disputes, governmental and regulatory investigations and possible litigation.

In the normal course of BEPC operations, BEPC is involved in various legal actions that could expose it to liability for damages and potential negative publicity associated with such legal actions. The outcome with respect to outstanding, pending or future actions cannot be predicted with certainty and may be adverse to BEPC and as a result could have a material adverse effect on BEPC’s assets, liabilities, business, financial condition, results of operations, cash flow and reputation. BEPC and its affiliates are subject to governmental or regulatory investigations from time to time. Governmental and regulatory investigations, regardless of its outcome, are generally costly, divert management attention, and have the potential to damage BEPC’s reputation. The unfavorable resolution of any governmental or regulatory investigation could result in criminal liability, fines, penalties or other monetary or non-monetary remedies and could materially affect BEPC’s business or results of operations.

Counterparties to BEPC contracts may not fulfill its obligations.

If, for any reason, any of the purchasers of power under BEPC PPAs, are unable or unwilling to fulfill its contractual obligations under the relevant PPA or if they refuse to accept delivery of power pursuant to the relevant PPA, BEPC’s assets, liabilities, business, financial condition, results of operations and cash flow could be materially and adversely affected as BEPC may not be able to replace the agreement with an agreement on

 

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equivalent terms and conditions. External events, such as a severe economic downturn, could impair the ability of some counterparties to the PPAs or some customers to pay for electricity received. In addition, inadequate performance by counterparties to operation and maintenance contracts related to certain of its assets or investments may increase the risk of operational or mechanical failures of such facilities.

Seeking to enforce a contract through the courts may take significant amounts of time and expense with no certainty of success.

BEPC’s business could be adversely affected if it is required to enforce contracts through the courts and it is unsuccessful or incurs significant amounts of time and expenses seeking to do so. High litigation costs and long delays make resolving commercial disputes in court time consuming and expensive. Such costs can be difficult to calculate with certainty. In addition, in certain jurisdictions in which BEPC currently conducts business or may seek to conduct business in the future, there can be uncertainty regarding the interpretation and application of laws and regulations relating to the enforceability of contractual rights.

The operation of BEPC generating facilities could be affected by local communities.

BEPC may become impacted by the interests of local communities and stakeholders, including in some cases, Indigenous peoples, that affect the operation of its facilities. Certain of these communities may have or may develop interests or objectives which are different from or even in conflict with its objectives, including the use of BEPC’s project lands and waterways near BEPC facilities. Any such differences could have a negative impact on the successful operation of BEPC facilities. As well, disputes surrounding, and settlements of, Indigenous land claims regarding lands on or near BEPC generating assets could interfere with operations and/or result in additional operating costs or restrictions, as well as adversely impact the use and enjoyment of BEPC’s real property rights with respect to its generating assets.

The Brookfield Renewable group may suffer a significant loss resulting from fraud, bribery, corruption, other illegal acts, inadequate or failed internal processes or systems, or from external events.

The Brookfield Renewable group may suffer a significant loss resulting from fraud, bribery, corruption, other illegal acts, inadequate or failed internal processes or systems, or from external events, such as security threats affecting its ability to operate. The Brookfield Renewable group operates in multiple jurisdictions and it is possible that its operations will expand into new jurisdictions. Doing business in multiple jurisdictions requires the Brookfield Renewable group to comply with the laws and regulations of the U.S. government as well as those of various non-U.S. jurisdictions. These laws and regulations may apply to BEPC, BEPC’s Service Provider, BEPC’s subsidiaries, individual directors, officers, employees and third-party agents. In particular, BEPC’s non-U.S. operations are subject to U.S. and foreign anti-corruption laws and regulations, such as the Foreign Corrupt Practices Act of 1977, as amended, or the FCPA. The FCPA, among other things, prohibits companies and their officers, directors, employees and third-party agents acting on their behalf from corruptly offering, promising, authorizing or providing anything of value to foreign officials for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. BEPC and its officers, directors, employees and third-party agents regularly deal with government bodies and government owned and controlled businesses, the employees and representatives of which may be considered foreign officials for purposes of the FCPA. Also, as BEPC makes acquisitions, it may expose itself to the FCPA or other corruption related risks if its due diligence processes are unable to uncover or detect violations of applicable anti-corruption laws.

BEPC relies on its infrastructure, controls, systems and personnel, as well as central groups focusing on enterprise-wide management of specific operational risks such as fraud, trading, outsourcing, and business disruption, to manage the risk of illegal and corrupt acts or failed systems. BEPC also relies on its employees and certain third parties to comply with its policies and processes as well as applicable laws. Specific programs, policies, standards, methodologies and training have been developed to support the management of these risks

 

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and, as BEPC expands into new markets and makes new investments, it updates and implements its programs, policies, standards, methodologies and training to address the risks that it perceives. The failure to adequately identify or manage these risks could result in direct or indirect financial loss, regulatory censure and/or harm to the reputation of BEPC. The acquisition of businesses with weak internal controls to manage the risk of illegal or corrupt acts may create additional risk of financial loss, regulatory censure and/or harm to the reputation of BEPC. In addition, programs, policies, standards, methodologies and training, no matter how well designed, do not provide absolute assurance of effectiveness.

BEPC relies on computerized business systems, which could expose BEPC to cyber-attacks.

BEPC’s business relies on information technology. In addition, its business relies upon telecommunication services to remotely monitor and control BEPC’s assets and interface with regulatory agencies, wholesale power markets and customers. The information and embedded systems of key business partners, including suppliers of the information technology systems on which they rely, and regulatory agencies are also important to its operations. In light of this, BEPC may be subject to cyber security risks or other breaches of information technology security intended to obtain unauthorized access to BEPC proprietary information and that of its business partners, destroy data or disable, degrade, or sabotage these systems through the introduction of computer viruses, fraudulent emails, cyber attacks and other means, and such breaches could originate from a variety of sources including BEPC’s own employees or unknown third parties. There can be no assurance that measures implemented to protect the integrity of these systems will provide adequate protection, and any such breach of BEPC’s information technology could go undetected for an extended period of time. A breach of BEPC’s cyber security measures or the failure or malfunction of any of its computerized business systems, associated backup or data storage systems could cause BEPC to suffer a disruption in one or more parts of its business and experience, among other things, financial loss, a loss of business opportunities, misappropriation or unauthorized release of confidential or personal information, damage to its systems and those with whom it does business, violation of privacy and other laws, litigation, regulatory penalties and remediation and restoration costs as well as increased costs to maintain its systems. Cyber-security breaches or failures of BEPC’s information technology systems could have a material adverse effect on BEPC’s business operations, financial reporting, financial condition and results of operations, and result in reputational damage.

There can be no guarantee that newly developed technologies that BEPC invests in will perform as anticipated.

BEPC may invest in and use newly developed, less proven, technologies in its development projects or in maintaining or enhancing its existing assets. There is no guarantee that such new technologies will perform as anticipated. The failure of a new technology to perform as anticipated may materially and adversely affect the profitability of a particular development project or existing asset.

Performance of BEPC operating entities may be harmed by future labor disruptions and economically unfavorable collective bargaining agreements.

Certain of BEPC subsidiaries are parties to collective agreements that expire periodically and those subsidiaries may not be able to renew its collective agreements without a labor disruption or without agreeing to significant increases in cost. In the event of a labor disruption such as a strike or lock-out, the ability of BEPC generation assets to generate electricity may be impaired and its results from operations and cash flow could be materially and adversely affected.

 

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Some of the Brookfield Renewable group’s transactions and current operations are structured as joint ventures, partnerships and consortium arrangements, including its interest in Isagen, and the Brookfield Renewable group intends to continue to operate in this manner in the future, which may reduce Brookfield’s and the Brookfield Renewable group’s influence over the Brookfield Renewable group’s operating subsidiaries and may subject the Brookfield Renewable group to additional obligations.

Some of the Brookfield Renewable group’s transactions and current operations are structured as joint ventures, partnerships and consortium arrangements, including its interest in Isagen. An integral part of the Brookfield Renewable group’s strategy is to participate with institutional investors in Brookfield-sponsored or co-sponsored consortiums for single asset acquisitions and as a partner in or alongside Brookfield-sponsored or co-sponsored partnerships that target acquisitions that suit the Brookfield Renewable group’s profile. These arrangements are driven by the magnitude of capital required to complete acquisitions of generating assets, strategic partnering arrangements to access operating expertise, and other industrywide trends that the Brookfield Renewable group believes will continue. Such arrangements involve risks not present where a third party is not involved, including the possibility that partners or co-venturers might become bankrupt or otherwise fail to fund its share of required capital contributions. Additionally, partners or co-venturers might at any time have economic or other business interests or goals different from the Brookfield Renewable group and Brookfield.

While the Brookfield Renewable group’s strategy is to structure these arrangements to afford the Brookfield Renewable group certain protective rights in relation to operating and financing activities, joint ventures, partnerships and consortium investments may provide for a reduced level of influence over an acquired company because governance rights are shared with others. Accordingly, decisions relating to the underlying operations and financing activities, including decisions relating to the management and operation, the investment of capital within the arrangement, and the timing and nature of any exit, will be made by a majority or supermajority vote of the investors or by separate agreements that are reached with respect to individual decisions. For example, although BEPC owns a controlling stake in Brookfield Renewables interest in Isagen, the arrangements in place with Brookfield Renewable consortium partners require that certain actions with respect to their investment in Isagen and the Brookfield Renewable groups influence over business operations require supermajority approval of the consortium. In addition, the Brookfield Renewable groups ability to continue to exercise control over Isagen depends on Brookfield (including the Brookfield Renewable group) meeting certain ownership thresholds in the entity entitled to appoint the Isagen board of directors. See “BEPC BusinessCurrent OperationsColombia”. As a further example, when the Brookfield Renewable group participates with institutional investors in Brookfield-sponsored or co-sponsored consortiums for asset acquisitions and as a partner in or alongside Brookfield-sponsored or co-sponsored partnerships, there is often a finite term to the investment or a date after which partners are granted liquidity rights, which may lead to the investment being sold prior to the date the Brookfield Renewable group would otherwise choose. In addition, such operations may be subject to the risk that other investors may make business, financial or management decisions with which the Brookfield Renewable group does not agree, or the management of the applicable company may take risks or otherwise act in a manner that does not serve the Brookfield Renewable group’s interests. Because the Brookfield Renewable group may have a reduced level of influence over such operations, the Brookfield Renewable group may not be able to realize some or all of the benefits that it believes will be created from the Brookfield Renewable group’s and Brookfield’s involvement. If any of the foregoing were to occur, the Brookfield Renewable group’s business, financial condition and results of operations could suffer as a result.

In addition, because some of the Brookfield Renewable group’s transactions and current operations are structured as joint ventures, partnerships or consortium arrangements, including its interest in Isagen, the sale or transfer of interests in some of the Brookfield Renewable group’s operations are or may be subject to rights of first refusal or first offer, tag along rights or drag along rights and some agreements provide for buy-sell or similar arrangements. Such rights may be triggered at a time when the Brookfield Renewable group may not want them to be exercised and such rights may inhibit the Brookfield Renewable group’s ability to sell its interest in an entity within the Brookfield Renewable group’s desired time frame or on any other desired basis.

 

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Risks Relating to BEPC’s Relationship with Brookfield and Brookfield Renewable

Brookfield exercises substantial influence over the Brookfield Renewable group and it is highly dependent on the Service Providers.

Brookfield will, directly and indirectly, hold approximately 57.2% of BEPC exchangeable shares immediately upon completion of the special distribution (37.4% assuming the TERP acquisition is completed and the TERP acquisition consideration consists solely of BEPC exchangeable shares). In addition, Brookfield Renewable, which itself is controlled by Brookfield, holds all of the issued and outstanding BEPC class B shares, having a 75% voting interest, and BEPC class C shares. Through their ownership of BEPC exchangeable shares and BEPC class B shares, Brookfield and Brookfield Renewable will collectively hold an approximate 89.3% voting interest in BEPC (84.3% assuming the TERP acquisition is completed and the TERP acquisition consideration consists solely of BEPC exchangeable shares). As a result, Brookfield is able to control the appointment and removal of BEPC directors and the directors of BEP’s general partner and, accordingly, exercise substantial influence over the Brookfield Renewable group. In addition, the Service Providers, which include wholly-owned subsidiaries of Brookfield, provide management and administration services to the Brookfield Renewable group pursuant to the BEP Master Services Agreement. With the exception of the Brookfield Renewable group’s operating subsidiaries, the Brookfield Renewable group generally does not have any employees and depends on the management and administration services provided by the Service Providers. The partners, members, shareholders, directors, officers and employees of Brookfield, or Brookfield Personnel, and support staff that provide services to the Brookfield Renewable group are not required to have as its primary responsibility the management and administration of the Brookfield Renewable group or to act exclusively for the Brookfield Renewable group. Any failure to effectively manage the Brookfield Renewable group’s current operations or to implement its strategy could have a material adverse effect on the Brookfield Renewable group’s business, financial condition and results of operations.

Brookfield has no obligation to source acquisition opportunities for the Brookfield Renewable group and the Brookfield Renewable group may not have access to all renewable power acquisitions that Brookfield identifies.

The Brookfield Renewable groups ability to grow through acquisitions depends on Brookfield’s ability to identify and present the Brookfield Renewable group with acquisition opportunities. Brookfield established the Brookfield Renewable group to hold and acquire, directly or i