SunEdison amends Vivint deal, says Blackstone to be key stockholder
Solar on the roof. Author: Marufish. License: Creative Commons, Attribution-ShareAlike 2.0 Generic.
US renewables developer SunEdison Inc (NYSE:SUNE) on Wednesday announced a new investor in the company along with a significant amendment to its existing deal to buy Vivint Solar (NYSE:VSLR).
In a press statement, SunEdison said that 313 Acquisition LLC, a vehicle sponsored by private equity investor Blackstone (NYSE:BX), has committed to become a “leading shareholder” of the company. The entity has pledged to provide a USD-250-million (EUR 228m) credit line to fund the ongoing growth of SunEdison.
As per the Vivint deal, SunEdison has agreed with the board of the residential solar installer to reduce the payable cash consideration by USD 2.00 a share and raise the stock consideration by USD 0.75 a share. More specifically, SunEdison is now supposed to pay USD 7.89 per share in cash without interest, plus the number of common shares agreed in the original deal and USD 3.30 in principal amount of SunEdison convertible notes.
The new agreement also gives Vivint’s public stockholders the chance to receive an all-cash sum and allows for the target to solicit competing offers. A USD-34-million termination fee to SunEdison is also included.
At the same time, SunEdison has also changed the terms of a connected deal with its yieldco TerraForm Power (NASDAQ:TERP). The latter was supposed to buy from SunEdison a rooftop photovoltaic (PV) portfolio installed by Vivint for a purchase price of USD 922 million in cash. Under the new terms, the yieldco will acquire the portfolio for about USD 799 million. The actual price will be based on the actual MW acquired by TerraForm Power, up to 523 MW.
“Given the recent market volatility, we believe the modified agreement is in the best interest of all parties,” said Ahmad Chatila, SunEdison’s CEO. Over the past couple of weeks, activist investor David Tepper and his hedge fund Appaloosa Management LP, which is now a significant shareholder in TerraForm Power, have been attacking the yieldco’s board because they believe its deal with SunEdison for the rooftop solar portfolio benefits only the parent company.
The acquisition of Vivint is expected to be wrapped up during the first quarter of 2016, subject to clearance by a majority of the target’s stockholders. SunEdison plans to finance the cash portion of the transaction primarily from the proceeds of a new USD-300-million debt facility agreed with Goldman Sachs Bank USA, Barclays Bank Plc, Citigroup Global Markets Inc and UBS Securities LLC. Also, it will use the proceeds of the planned sale of assets to TerraForm Power.