In addition, TerraForm Power and SunEdison also amended the terms of the contemplated take/pay agreement for the future acquisition of residential solar systems by TerraForm Power from SunEdison so that TerraForm Power’s obligation to purchase the cash equity interest in residential solar systems from SunEdison has been reduced to 400 MW in 2016 and 450 MW for each of the four years thereafter (the “Take/Pay agreement”). Those sources of funding, and $799 million in asset purchases being dropped down to TerraForm Power, should get the deal done.
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The Vivint deal capped a multi-billion-dollar SunEdison buying spree this year.
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Also SunEdison and Vivint are not subject to many performance standards and could even fail to deliver the contracted assets as of the effective date under the terms of the current agreement. Currently, SunEdison Inc has an average volume of 44.79M.
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So what: Vivint solar agreed to take $2 less per share in cash than originally agreed upon from SunEdison, now down to $7.89 per share.
Under the revised deal, the consideration paid will be calculated based on the number of megawatts of installed solar system in the acquired portfolio multiplied by $1.70 per watt, rather than the previously contemplated pre-set amount of $922 million before fees, Bethesda, Maryland-based TerraForm said in a statement on Wednesday.
According to the letter, Vivint’s rooftop assets are forced upon TerraForm and are “inferior” while coming at an “inflated price” for the goal of subsidizing SunEdison’s costs in acquiring Vivint. About 94.68M shares traded hands or 55.98% up from the average.
Furthermore, the disappointing third-quarter results by SunEdison’s YieldCos have raised investors’ concerns.
RBC Capital analyst Mahesh Sanganeria commented, “Based on SUNE closing price of $3.45/share as of Dec 8, 2015, we estimate the new offer is approximately $12.35 for each VSLR share, representing about $4.15/share savings from the original offer of ~$16.50/share”.
Both the YieldCos lost over 61% and 38% value, respectively, since the results were released. The 52-week high of the share price is $16 and the 52-week low is $6.59. The shares has received an average rating of 3 from 2 brokerage firms. If investors already hold the stock and experience a price gap up, then its usually a good idea to hold the stock for a stronger up move.
Although slashing its offer price to acquire Vivint Solar by one-fourth is a positive, we believe that much needs to be done to improve SunEdison’s liquidity position. “SunEdison’s solar solutions are far superior to anything else we have seen in the marketplace, and they have the track record to make sure these systems are cared for over their entire life”.
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