TerraForm Power, Inc. (TERP)

[explo 617]

16 minutes ago, odyd said:

I read the same. Did you look at the BS cash?

Look like it will use $327m of the $635m cash it held end of September?

[odyd 1,293]

16 minutes ago, odyd said: I read the same. Did you look at the BS cash?

Look like it will use $327m of the $635m cash it held end of September?

Wasn't bond issue showing in the cash already?

[explo 617]

1 minute ago, odyd said:

Wasn't bond issue showing in the cash already?

Not sure, haven't dug into details. I assumed it was not as it was referred to as "new". I'm talking about the 500m term loan not the 300m note here.

[explo 617]

Tepper wants to see the books: http://finance.yahoo.com/news/hedge-fund-appaloosa-seeks-inspect-143644651.html

 

[odyd 1,293]

Interesting action, judging by SUNE's reaction Tepper has caused drop of the value in SUNE as if exposure by principles of SUNE could show some wrong doing. TERP on the other hand has held well, becasue Tepper owns it. The market assumed that he is protecting TERP cash balances and equity from being played in the VSLR deal.

Invenergy deal is closed, and there is not much word on this. This was mentioned in a first letter. Tepper is trying probably stop the VSLR deal. We talked about it. This would be very good for TERP and probably good for SUNE as well.

However, does Tepper is trully working for larger shareholder population or is trying to cash in somehow.

The stock has been trading with 12 to 13 plus region for a bit. There is also a heavy shorting. SUNE went down a lot today, TERP did not.

[explo 617]

I think the market simply views Tepper's move to become an activist as TERP public shareholders getting a watchdog that makes sure TERP's board does its job properly in its relation to its parent, i.e. that it acts in TERP shareholders' interest and not in SUNE's interest. Thus Tepper's activisms adds value to TERP at the expense of SUNE. There is to my knowledge no relationship between Tepper and TERP other than share ownership so I don't think there is a way Tepper could get the board to act in his interest other than getting it to act in the shareholders interest.

Having a strong and active shareholder in the owner structure is usually a great asset for a company to ensure good stewardship over time.

 

[odyd 1,293]

Looks like 4 insiders bought on Wednesday CEO bought 90K shares 12.66 average.

[Pop2mollys 411]

22 minutes ago, odyd said:

Looks like 4 insiders bought on Wednesday CEO bought 90K shares 12.66 average.

Makes me want to buy a block now.  

[Paybak66 41]

22 minutes ago, odyd said: Looks like 4 insiders bought on Wednesday CEO bought 90K shares 12.66 average.

Makes me want to buy a block now.  

Ditto

[Jetmoney 23]

14 hours ago, Pop2mollys said:

Makes me want to buy a block now.  

TERP is strong today after initial weakness.  Did you get a block?  I hope you joined us.

[odyd 1,293]

Does anyone have an opinion if TERP shares issued in the swap are old ( I believe they were issued already and held in escrow) or new?

[explo 617]

1 hour ago, odyd said:

Does anyone have an opinion if TERP shares issued in the swap are old ( I believe they were issued already and held in escrow) or new?

SUNE holds class B shares (IDR eligible), so how are they paying with class A (not IDR eligible) shares? Will they be reclassified first? If so it is a big positive for us class A holders as IDR cost will go down for TERP.

 

[disdaniel 54]

What I read made it look like these were existing TERP shares held by SUNE that are being given to a creditor in lieu of cash (along with rights to/equity in projects in development).  I saw nothing about class of shares.

[odyd 1,293]

What I read made it look like these were existing TERP shares held by SUNE that are being given to a creditor in lieu of cash (along with rights to/equity in projects in development).  I saw nothing about class of shares.

That is what I read, but original agreement had b class shares. Sun does not hold a class shares, but can turn b I no a. If this turn is right, sune would have less ownership as a result. If not, if they are issued, then sets the bad precedence.

[odyd 1,293]

On 12/31/2015 at 8:11 AM, explo said:

SUNE holds class B shares (IDR eligible), so how are they paying with class A (not IDR eligible) shares? Will they be reclassified first? If so it is a big positive for us class A holders as IDR cost will go down for TERP.

 

I wish to know, I am not sure how they got 12M A shares.

[odyd 1,293]

The agreement is described here. It appears that class B shares were used as a pledge to issue a note and be payable in A class shares and, this is my part cancelled upon such a transaction.

http://www.sec.gov/Archives/edgar/data/945436/000119312515031641/d861104d8k.htm

So in theory those shares have reduced SUNE ownership, the rest of the agreement however reduced interest in plants owned by TERP. 

in my opinion the A plus B is still constant but there are fewer B. To your point Explo fewer B shares cause fewer dividend to SUNE and less IDR. Better for TERP.

I am curious what Tepper has got to say. The original agreement had around 9.7M shares and 34.58 share price. So I guess issuance of 12M reduces SUNE's ownership even further. As long as those are not some extra shares, this would be good.

[odyd 1,293]

Now I start to think since they were called as a collateral, they do not have to be cancelled. It means that B shares would be returned to SUNE upon issuance of A shares. So essentially we are looking at dilution of equity as well as interest in CAFD producing plants.

I am curious then why TERP moved up, barely but did. Is this because SUNE was considered losing ownership?

I would like to fully understand this.

[explo 617]

Odyd, I don't get why TERP would issue new shares.

[odyd 1,293]

Conceptually, every B class share had already issued A class share. If you are to use B class security as a pledge for exchangeable note,  i imagine that security is "cancelled" into A class int this conversion. I am looking for black an white confirmation of it Explo. I m asking the same on SA, and one knowledgeable guy seem to think iit is SUNE shares, so no impact on TERP.

[odyd 1,293]

Explo this is the quotation of the original transaction. I highlighted relationships to B an A class shares 

On January 29, 2015, a wholly-owned subsidiary of SunEdison issued $337 million aggregate principal amount of 3.75% Guaranteed Exchangeable Senior Secured Notes due 2020 (the “Exchangeable Notes”) in a private placement pursuant to an indenture agreement (the “Exchangeable Notes Indenture”) among the subsidiary, SunEdison, as guarantor, and Wilmington Trust, N.A., as exchange agent, registrar, paying agent and collateral agent (the “Exchangeable Notes Trustee”). In connection with the issuance of the Exchangeable Notes, the subsidiary also entered into a pledge agreement with the Exchangeable Notes Trustee, in its capacity as collateral agent, providing for the pledge of shares of TERP Class B common stock and Terra LLC’s Class B units held by the subsidiary (the “Class B Securities”) as described below.
The proceeds of the Exchangeable Notes made up a portion of SunEdison’s upfront consideration for the acquisition of First Wind. The Exchangeable Notes bear interest at a rate of 3.75% per annum and mature on January 15, 2020. Interest on the Exchangeable Notes is payable semiannually in arrears to holders of record at the close of business on January 1 or July 1 immediately preceding the interest payment date on January 15 and July 15 of each year, commencing on July 15, 2015.

The Exchangeable Notes are secured by a first priority lien on the Class B Securities, which were transferred by SunEdison to the subsidiary upon issuance of the Exchangeable Notes, equal to the number of shares of TERP Class A Common Stock initially issuable upon exchange of the Exchangeable Notes, including the maximum number of shares of TERP Class A Common Stock to be issued upon exchange in connection with a make-whole fundamental change. SunEdison will transfer to the subsidiary, and the subsidiary will pledge, on a first priority basis, additional shares of the Class B Securities in connection with any adjustment to the exchange rate, so that, at all times, the Class B Securities equal to the full number of shares of TERP Class A Common Stock issuable upon exchange of the Exchangeable Notes shall be held by the subsidiary and subject to such first priority lien. The Exchangeable Notes are fully and unconditionally guaranteed by SunEdison. The Exchangeable Notes and the guarantees are pari passu in right of payment to the SunEdison’s obligations under its outstanding convertible debt.

[explo 617]

Sounds complex. I wish too that someone would clarify the net result of outstanding TERP shares and IDR rights after this transaction.

 

[odyd 1,293]

The answer lies in the recent agreement

each Buyer shall instruct its custodian or nominee holding the Exchangeable Notes to deliver its consent to the release of the Pledged Collateral in accordance with the procedures of the Depositary, and will take any other actions necessary to cause the effectiveness of the Noteholder Consent as promptly as reasonably practicable, (ii) once the Noteholder Consent is effective, all of the Pledged Collateral shall be irrevocably released and, at the instruction of the Holders, delivered by the Note Trustee to the Transfer Agent, (iii) Note Issuer irrevocably agrees to cause the Transfer Agent, upon the receipt by the Transfer Agent of the Pledged Collateral, to promptly issue in restricted book-entry form the 12,161,844 TERP Class A Shares (the “Initial TERP Class A Shares”) issuable in exchange for the Pledged Collateral in the amounts and in the names of the persons listed on Schedule 2.01(b), in accordance with the procedures set forth on Schedule 2.01(b), and (iv) upon the receipt by each Buyer of its pro rata share of the Initial Class A TERP Shares in accordance with Schedule 2.01(b), such Buyer irrevocably agrees to deliver or cause to be delivered on behalf of Note Issuer, through the facilities of the Depositary, Exchangeable Notes in an aggregate principal amount equal to such Buyer’s pro rata share of $121,470,000.

[odyd 1,293]

It sounds to me that in fact B class shares are transferred into A class shares.  There are some restrictions on sales and some execution clauses that help this number down, returning number of  shares to SUNE based on milestones. I think the number would be around 10M fairly quick and if shares themselves show performance improvement, their number would be reduced.

 

 

[explo 617]

19 minutes ago, odyd said:

It sounds to me that in fact B class shares are transferred into A class shares.  There are some restrictions on sales and some execution clauses that help this number down, returning number of  shares to SUNE based on milestones. I think the number would be around 10M fairly quick and if shares themselves show performance improvement, their number would be reduced.

 

 

I hope this is the case. What complicates things is that SUNE owns Class B stock in TERP and Class B units and IDRs in LLC. All should be converted to Class A shares I hope, thus eliminating some of SUNE's IDRs.

 

[explo 617]

I'm still a bit confused. Class B shares have no economical interest, class B units and IDRs have. I think class B units and IDRs should be linked to class B shares and thus seize if the shares seize, but I'm not sure.