TerraForm Power, Inc. (TERP)

[odyd 1,293]

I reviewed Appaloosa filing on December 2nd, it contains details of the purchases.

Prior to Nov. 23  (all buys are prior to  and on Nov. 20) Appaloosa owns 700K shares at average of $12.75

Nov. 23 news release is published that TERP BoD is released. Event happening on Nov. 20

Nov. 23 to 24 Appaloosa buys 677K shares, there is no reason to doubt they know of the release of directors, and probably start asking questions to a reason.

Nov. 25 Tepper dates the letter send to TerraForm asking questions about duty of the committee under the rumor of talks about options of VSLR and SUNE merger. He questions duty to protect interest of TERP under any changes, calling original transaction as expensive in his view and not fitting TERP. So he sees opportunity to drop the transaction.

Purchases from Nov. 25 to Dec 1. Stock prices are the lowest ever, 6M shares are bought. 90% what is held

Facts are prices are massively discounted to the 1.4M bought prior to Nov 25. He buys 6M shares at below $7.40 in total including the biggest buy happening on Nov 30, 3.8M at 6.92 average.

51% or 3.8M of 7.4M holding is bought on November 30th. It is 5 days after he questions TERP in a letter and whether they are going to protect shareholders, knowing that on the Nov 27th, TERP releases resignation letters, Nov 27th is Friday and the release happen after hours.

In my opinion Tepper bought more shares of TERP, knowing that board quit and officers of the company got fired as they wanted to change the transaction and not to buy Vivint assets. This was their agreed right. Chatilla broke the agreement and fired them. After Tepper learns about it he adds 3.8M with the lowest buy on Monday. doubling his holdings, fully understanding that two directors could not support shareholders as per their resignation letter. This is done in full disclosure not non-disclosure.

 

[odyd 1,293]

In my opinion On the 30th and December 1st, Tepper probably already knows that Chatila let Zornoza and Hernandez go becasue they wanted to stop the Vivint transaction. 4 members of BoD resign as they are being forced to go with Chatila. 

Generally, If someone gets fired people sign letters of non-disclosure. I doubt we are looking at this here. The language says they were removed. It means they had been walked out, without any compensation. Normally you compensate and in return you get non-disclosure. This opened the door for both to talk to Tepper. Release on 27th opened the door to talk to those two. He buys most of his shares as he seem to capture the reason of firing, considers money can be made if transaction was stopped. Letters fail, amendment comes out sometime in between so he goes with the lawsuit.

 

[pg6solar 85]

Agree.

[odyd 1,293]

this attachment is the document which I have not observed in the amendment filed on the Jan 8th, but was apparently prepared on Jan 1. There is statement about litigation as a potential condition. It does opportunity to consider Tepper's reasons in one place

PURPOSE OF THE DEMAND AND REASONS FOR DOCUMENTS REQUESTED.docx

[odyd 1,293]

Analysis offering calculation of value of Vivint assets. it shows they are overpriced in the transaction, but not as much as some thought. I have not reviewed accuracy of numbers and the calculation itself.

http://seekingalpha.com/article/3874886-sun-edison-valuation-vivint-solar-residential-portfolio-assets

[Jetmoney 23]

In a worst case scenario, if Tepper loses and Terp has to buy Vivint assets, is Terp price now still ok to buy?  If it is still cheap under worst case scenario, then it is safe to hold or even buy more for long term.  If it is not, then one should play safe and not go all in.  I think even Terp has to buy Vivint, its price now is still good long term.  It might have a knee jerk reaction, if Tepper loses. 

[odyd 1,293]

Jet,

This is how I see it. As I watch stock prices melt, I expect that dividend will remain. So I look at my average price and I ask how long it would take to recover just via dividend. I cannot do this with any CN solar.

Vivint if bought will add to CAFD, the same Invenergy will add. So chances are improving that dividend will at least stay the same but it may go up. The price for equity will suffer, but any conclusion will have impact on the equity either way but financially CAFD will remain. I do not like what I see, but I prefer to be in TERP.

[odyd 1,293]

I will be traveling and I will have no access to markets and communications from tomorrow for over a week. This means I will not have a chance witness or and participate in outcome of the hearing.

I think there are a lot of people who think of TERP as a company, which will eliminate dividend to pay debt. I think a lot of people run with this idea seeing market collapsing and all other companies doing so.

My argument for TERP and GLBL is that those are very unique to the fact of their earnings being the most stable out of any energy companies. They are real, electric utilities.

TERP certainly is one of the largest renewable ones. While utilities are up 8% YTD, TERP is 34% down.

TERP's test will not be made in Tepper's lawsuit but the situation how CAFD/dividend will look going forward. 

I thought over what I said about SUNE playing games. They need money from dividends from TERP, and cutting anything will not make benefit for them. If dividend gets affected by games, this is where Tepper would have clear win. So I doubt we are facing this.

I would be very surprised if dividend is the same and most likely increased that equity would remain flat at this price.

[pg6solar 85]

Thank you, Odyd, for sharing your view. With markets imploding, hopefully they'll leave alone our triplets and instead concentrate of bloated valuations like TSLA just to name one among many. 

[odyd 1,293]

PG do you own SUNE now?

[odyd 1,293]

I am seeing on yahoo people writing about MLPs comparing them to yieldcos. Yieldcos in solar and wind are not susceptible to commodity prices as all energy MLPs known to date. Even some yieldcos in our listing here have other sources of electricity generation, like gas plants or pipelines.  TERP does not have those and it does not have FiT arrangements. 

Yes, a commodity based MLP like oil based ones, will have hard time to obtain financing when oil is really cheap. They will cut dividends, as their income depends on pricing of oil. I feel like many people do not have slightest clue yet print stuff with authority mixing those ideas. Holum is one of those and some people on Yahoo try to scare each other to selling by quoting those comparisons.

Generation of solar energy is extremely cheap after initial cost, the revenue can fluctuate based on generation but such a generation is only reduced by the degradation not market prices. PPAs protect the pricing mechanism.  Revenue is the safest one can imagine.  There is no way that need for electricity will ever reduce, not in the age of electric car are carbon tax.

TERP has been affected by another ludicrous  assumption of SUNE insolvency fears. There are people out there think that TERP assets are SUNE's. Enough said.

I am preparing for my trip. I will be watching the last session of the market tomorrow, all the best whatever your position.

[Jetmoney 23]

Odyd, thank you for sharing your thoughts.  Thank you for keeping us informed on complicated matters.  Have a safe and productive trip.  Hoping for brighter days ahead for the stock market as a whole and particularly for Terp.  Good luck.  

[odyd 1,293]

Thanks Jet,

I was just checking the institutional ownership and see that Vanguard Group shows 5.3M shares for Q4 in TERP. Still Invesco and BlueMountain shows each over 9M shares as of December.

[saush11 38]

Reports on 2/24, after the bell

[pg6solar 85]

Is it "official"? Still no PR nor any info on their web.

[saush11 38]

16 minutes ago, pg6solar said:

Is it "official"? Still no PR nor any info on their web.

No.  By IR phone.

[pg6solar 85]

OK, so far these are the "expected" dates - TERP on 2/24, GLBL on 2/25 and SUNE on 2/22. All after market. None officially announce yet.

[saush11 38]

53 minutes ago, pg6solar said:

OK, so far these are the "expected" dates - TERP on 2/24, GLBL on 2/25 and SUNE on 2/22. All after market. None officially announce yet.

No, Glbl at 7:30 AM

[Jetmoney 23]

No news is a good news I think.  Here hoping that they are negotiating.  Too bad this happens during the market run up.  We are missing out all the good fun.

[zendoc1love 45]

The case is under advisement (the judge is considering the merits of each side's argument)

https://www.euroinvestor.dk/debat/post-59413-369365-3614899/retsdrama-sunedison-vs-david-tepper-sune

[disdaniel 54]

TERP is starting to climb today.  Wonder if SUNE decided to deal once judge didn't immediately toss the case...

[zendoc1love 45]

It is unclear to me how long it could take for the judge to deliberate the outcome of the case.  I was hoping for this to be a reasonably expeditious process, but I feel positive that the case continues to be thought about by the judge potentially because he knows of the disastrous outcome if he rules against SUNE.  Perhaps there are multiple matters in this case that will be discussed separately in the decision and that is what is taking so long.

I guess we shall see when it's been decided upon by the judge.

[Jetmoney 23]

Agreed.  Like I said, with the outcome not forthcoming, that might mean that the case is not thrown out and they are negotiating.  This bodes well for TERP if there is any kind of negotiating.  Only that we are missing some upswing the market is experiencing.

[disdaniel 54]

From the little I found about the case and arguments online, I continue to think SUNE will settle this with TERP asap.  I saw their lawyer said something like we are prepared to take this to trial and open our books to the judge to prove this is a fair deal.

I take this as posturing/bluffing 1) that is what lawyers do, 2) because going to trial takes months, not days and they want to close this deal within weeks, and 3) no impartial person looking at the deal today will say the deal looks completely fair (given all that has transpired since--including boardroom shenanigans).

Given how dicey the SUNE situation is, I wonder why they are taking so long to reach an agreement with TERP.  They must have believed their own BS that the judge would toss the case out--otherwise they would have some sensible proposals ready to go.  I hope Tepper is willing to be reasonable...

[odyd 1,293]

I see both Madison and Shaw now showing each 6M shares, Adage filed owing over 7M shares as well. All dated yesterday.