TerraForm Power, Inc. (TERP)

[odyd 1,293]

Access to books by Tepper denied by TERP,

http://www.gurufocus.com/news/382975/terraform-power-rebuffs-teppers-demand-to-see-corporate-books

[odyd 1,293]

Then Tepper send another letter on Jan 7th,

http://www.gurufocus.com/news/382965/david-tepper-doesnt-relent-requests-terraform-books-a-second-time-letter

[odyd 1,293]

To this day I have no idea about penalty to SUNE for cancellation of Vivint transaction. Why SUNE insists on this is beyond me.

[odyd 1,293]

I am reading SA, and some people think that Tepper could force court decision to put transaction on hold. SUNE in turn may use inability to finance acquisition of Vivint's assets from TERP to cancel it.

If Tepper can force a conclusion that TERP purchase is not benefiting the company, which seems very obvious and confirm it is an allowance for SUNE to take Vivint for sole benefit (and questionable at best to SUNE) it maybe enough to kill the transaction.

This would be the best day for TERP market wise.

[explo 617]

Thanks odyd. Looks like we have a good fight here with Tepper as our champion.

 

[zendoc1love 45]

It seems like this would be the logical conclusion from SUNE though it's not clear to me that they are making logical choices.  

Teppers letter reads like a great argument.  I hope this helps to rearrange the C suites in SUNE and Yieldcos.

was the recent capital raise for VSLR acquisition?  They seem to be dead set on getting VSLR.  I hope there is enough push back from Tepper et al to avoid it.  VSLR does not have much liquidity to stay around much longer.  If this goes into a legal battle and there is some foot dragging then the deal might just fall apart.

[odyd 1,293]

In amended agreement I did not see commitment for 5 years of buying assets from Vivint. Is this becasue it was not amended or because it is not part of the agreement any more?

I asked some questions, but reality is only court order can stop the transaction for TERP. Voting would never give a chance to minority ownership. At 48M class B equity this is 480M votes against whatever else.

[odyd 1,293]

Indeed it is good fight to have. I could be wrong but TERP is the largest GW Yield. In December acquisition added 930MW and total stand at 2.8GW. I expect CAFD actually increase and bring the dividend closer to $2 when all is done closer to end of 2016.

If Vivint falls apart, and bridge financing amount is still there, more quality assets can be added, from SUNE.

[odyd 1,293]

Invesco owns 11.3% of the TERP,

http://www.sec.gov/Archives/edgar/data/914208/000091420816000536/SEC13G_Filing.htm

[alex_iff 1]

It seems to me this time is too dangerous to hold any stock long. No matter what current and even future fundamentals the stock presents it will be taken down along with others. I see a lot of advantages holding TERP but it won't help the stock now. It is not an appropriate to discuss share price on this valuable site (rather business), nevertheless I'd like to share my view: if a general and especially oil market turmoil is extended for the next several weeks or a couple of months  we will get a chance to buy prime solar stocks (CSIQ, JKS, FSLR, TERP) 20-30% below their current level.

Since SUNE still has a deep ties with TERP and since SUNE is sooner or later will go under, I expect a certain discount in TERP share price. The only positive momentum can be here if Vivint deal is cancelled. Since SUNE refused to provide access to books I expect that they are cooked to a certain extent. Very interesting development takes place. It looks like a big pressure put on D. Tepper from the WS.      

[odyd 1,293]

According to Avondale's

Avondale's Michael Morosi offered several outcomes related to the report of the suit, suggesting that two of those scenarios could be wins for SunEdison.

"...the most likely scenario is that within the next two weeks SunEdison announces a deal to sell Vivint's operating assets to a third-party institutional investor and outlines its intent to find an offtaker for the development pipeline," Morosi said.

Another option, according to the Avondale analyst, would be an indefinite postponement of the deal until the suit is resolved.

Morosi said (emphasis Benzinga's):

"Depending on the outcome of the lawsuit, SUNE may have grounds to elect a "material adverse change" clause, allowing the company to break the transaction. While this would imply a reduction to run-rate deliveries and cash earnings, given resi's expected positive contribution to corporate average gross margin, note this outcome would have the effect of removing a key overhang for SUNE's shares leading to a potential re-rating of the shares."

This is where both benefit material adverse change, deal is cancelled. Game of nerves starts. TERP is tied into SUNE, I would not expect market to be any smarter than any given time in the past.,

[zendoc1love 45]

An indefinite postponement of the deal until the suit is resolved could result in VSLR needing to raise capital because of their cash burn.

I feel like this action by Tepper will bring more value to TERP.  Morosi's comments affirm my thoughts on this...barring a total market meltdown.

[odyd 1,293]

I have a moment to analyze the situation. Tepper lawsuit is good for TERP as the transaction to buy Vivint assets is not good for TERP. I wrote about it before arguing for the cancellation of the transaction, so I can only applaud Tepper's actions to take the matter to court seeking injunction. Transaction which I hate for the fact that those assets have uncertainty built in them. It simple to understand if you consider that collection of revenue comes from leases from homeowners how unstable those things are.

Stopping this transaction could save the SUNE, if merger is off, while it would make TERP better organization, considering that Tepper could also influence board's composition. Once lack of confidence to the current level of impartiality is argued, if transaction is out, it would be easy to prove board's incompetence and call for a change.

What is depressing that we are in the middle of severe selling. TERP is being sold as it is perceived to be tied to SUNE. Herd-like behavior market once more is unable to deliver sophistication, ironically, naively expected by me as a driving force to avoid current overall turbulence. I am not sure what I was thinking, that strong yield, US based assets, growing and public presence of powerful shareholders' base could make it a sweet separation from the usual Chinese ups and downs. Dumb.

I would be a buyer at this level, however as someone aptly put elsewhere, I am out of fingers to catch the continuously falling knife. So now I am watching what happens next.

[zendoc1love 45]

From Yahoo message boards:

Tuesday, 2 p.m. Wilmington, motion to enforce hearing before Chancellor Bouchard, Appaloosa Investment Limited Partnership I v. SunEdison, et al.

From Motley Fool:

Why SUNE Inc shouls drop the Vivint deal:

http://www.fool.com/investing/general/2016/01/15/will-sunedison-still-be-forced-out-of-vivint-solar.aspx?source=eogyholnk0000001&utm_source=yahoo&utm_medium=feed&utm_campaign=article

[odyd 1,293]

Fairly quick decision on Tuesday. If judge blocks the transaction looks to hot action following. SUNE and TERP should be up.

[zendoc1love 45]

My understanding is that a "motion to enforce" is used when a party is not honoring a previously agreed upon court mandate.  In this particular instance I am not sure what has already been determined by the court if my interpretation of this is correct.

If it is a "motion to enforce" then I wouldn't expect that it would take long to make a determination and that we may hear something early next week.

The evidence that has been available to the public certainly points in the favor of Tepper's position with regard to the Vivint deal AND to the bigger issue of corporate governance:

1.  Vivint deal.  It certainly seems that these assets are of lower quality than what was previously held by Terra Forma.  In addition there is a general distrust for the solar lease/residential model.  With there being significant amount of uncertainty surrounding this in the US markets.  With NV recent ruling it is unclear how other states and utilities will proceed.  Utilities will make it difficult for this model to work.  Though I am a believer in the economics of residential panels (and have a 3kW system myself) I think that there are too many uncertainties in residential to want to be invested in a company whose objectives are in that direction.

I feel that TERP will most likely be protected in this deal.  And SUNE will most likely benefit unless they are somehow forced to take VSLR.  I'm not sure why SUNE couldn't back out of this deal, but up to this point they haven't backed out of this deal (which most people feel is disadvantageous to them) and therefor my conclusion is that there is something binding them in this deal OR they have horrible leadership.

2.  Governance of TERP.  This is where I think there are more egregious concerns.   Multiple TERP board members resigned stating that they didn't feel that they could any longer look out for the best interest of the stockholders.  This speaks for itself. 

From this process will come a rearranging of the governance of TerraForma that most likely will result in their independence...which will be phenomenally good for TERP.

These are just my thoughts on this.

Please let me know if there are any big holes in my thesis as I don't want to get flushed on this my largest position.

 

[odyd 1,293]

I am reading with great interest SUNE's thread on yahoo. I caught one post of someone who claims to be a lawyer, declaring that Tepper lawsuit is not going to succeed.

Well, I am not a lawyer. What I know is that Tepper is suing SunEdison, in this condition I understand suing as bringing in front of the judge a request to halt selling of assets of Vivint to TERP at $795M due to merger between SUNE and Vivint.

In the filing he seeks only "immediate injunctive  relief"  or a decision which will produce injunction ruling.  That ruling means freeze to any action leading to TERP buying those assets.

The lawyer argues that Tepper needs to prove fraud to stop it. I think he is confused. This is why. TERP is an independent entity under the security law. The fact that someone brings potential doubt that transaction may cause that independence to be in jeopardy can get easily injunction, if temporary one, to halt the purchase of those assets until the matter is argued. I would note that SUNE can proceed with the merger as it likes but cannot make TERP to buy them, under such injunction ruling.

The fact that BOD has changed and there was clear turmoil at the helm of the TERP, ending with replacement of the the board with all SUNE employees proves a reasonable doubt that transaction is self-dealing. Such a doubt alone could construct basis of the order. Further what Tepper is trying to get and prove, that there was no due diligence over the purchase of assets, instead, It was a force of majority ownership to fund the acquisition.

In majority decision, without proper due diligence, it is easy for court, to assume need to argue the case in front of the judge as there is a possibility of self-benefit.

I believe that Tepper can get the injunction.

 

[odyd 1,293]

An excellent post Zendoc

[zendoc1love 45]

Thanks Odyd.

I appreciate your viewpoint on this.  I have been compelled to read further in the Yahoo message board.

I am not a lawyer so I can't weigh in on this from an expert's viewpoint, however, I feel that there is enough damning evidence for the judge to at least want to take a further look at the documents.

Even if the final agreement does not find in favor of Tepper, I believe that there is enough concern that the judge will allow for a review of all the requested documents.

There is no doubt that something happened which catalyzed board members to resign because they did not feel that the stockholders best interest could be upheld.

I guess we shall see.

 

[odyd 1,293]

Any updates from the court?

[saush11 38]

Case Number:

CA#11898-CB

No information yet

 

[Pop2mollys 412]

SunEdison Confirms In 8-K That Appaloosa Investment Filed A Derivative Complain In The Court Of Chancery In The State Of Delaware Against SunEdison And Three TerraForm Power Directors

1/19/16, 4:56 PM

Appaloosa Believes SunEdison Breached Fiduciary Duties To TerraForm Power

[kknd1234 92]

 

Detail of the lawsuit

 

http://www.streetinsider.com/dr/news.php?id=11229884

[odyd 1,293]

They want to stop it or get paid when it goes through.

[Pop2mollys 412]

18 minutes ago, odyd said:

They want to stop it or get paid when it goes through.

Best thing they could do is pay whatever amount to shut deal down.  TERP/SUNE would most likely surge then.  But if deal goes through not only do they make a bad deal in markets eyes they have to pay millions in lawsuit to Appaloosa.  Most likely on top of that Tepper would liquidate holdings. They need to shut this deal down at whatever cost.