Macquarie Capital, John Hancock, Morgan Stanley, Citi, and Goldman Sachs lead structuring of Terraform Private Warehouse for 521 MW of wind assets

Written By: Tracy Dawson Roses
June 29, 2015

Terraform

Macquarie Capital, John Hancock, Morgan Stanley, Citi, and Goldman Sachs lead structuring of Terraform Private Warehouse for 521 MW of wind assets

On June 29, SunEdison, Inc. and its yieldco, TerraForm Power, Inc., announced both the closing of its acquisition of Atlantic Power’s 521-megawatt portfolio of operating wind power plants, and that SunEdison has formed its second warehouse facility, named TerraForm Private Warehouse, to hold the acquired operating assets from Atlantic Power for a maximum period of 7 years.

TerraForm Power has an exclusive call right over the warehoused operating assets, and expects to add them to the company’s portfolio over time beginning with drop downs in the second half of 2016.

TerraForm Private Warehouse is $525 million in aggregate size, with equity provided by leading infrastructure investors Macquarie Capital, John Hancock, and SunEdison. Morgan Stanley, Citi, and Goldman Sachs led the structuring of TerraForm Private Warehouse and provided debt in the form of a 7-year term loan.

The acquired wind power plants are located in Idaho and Oklahoma, and are contracted under long term power purchase agreements with investment grade utilities with a weighted-average credit rating of A3. The PPAs have a weighted-average remaining life of approximately 18 years. The portfolio is expected to generate average annual adjusted EBITDA of approximately $56 million and average annual cash available for distribution of $44 million over the next 10 years.

Brian Wuebbels, SunEdison’s chief financial officer remarked: “We’re pleased to complete the closing of Atlantic Power’s operating assets utilizing TerraForm Private Warehouse, our new operating asset warehouse facility. This warehouse is integral to securing the future growth of the SunEdison-TerraForm platform, and provides repeatable and scalable funding. Based on the success of our first and second warehouses, we anticipate adding additional warehouse vehicles to address future acquisition opportunities.”

Carlos Domenech, TerraForm Power’s chief executive officer. “TerraForm Private Warehouse creates a storage tank of growth supported by long-term, contracted operating assets which are expected to generate $44 million of annual cash flow. TerraForm Power’s ability to exclusively call these operating assets for drop down will support our intention to provide predictable CAFD and dividend growth for our shareholders for years to come.”

SunEdison Services will perform operation and maintenance for three of the five wind power plants in this transaction.

At the same time, Atlantic Power announced that in connection with the asset sale, that it had also deconsolidated approximately $249 million of project debt and $229 million of noncontrolling interest related to tax equity interests at Canadian Hills and the minority ownership interests at Rockland and Canadian Hills.

Atlantic Power also announced that it has called for redemption all of its outstanding 9.0 percent Senior Unsecured Notes due November 2018. The outstanding principal amount to be redeemed is approximately $310.9 million. The Notes will be redeemed in approximately thirty days at a redemption price equal to 104.50 percent of the principal amount thereof, plus accrued interest.

James J. Moore, Jr., President and Chief Executive Officer of Atlantic Power explained:

“The sale of our wind projects and the redemption of our Senior Unsecured Notes achieve two major components of our plan – cost reduction, including interest expense, and debt reduction. The combined impact is cash flow positive on an annualized basis,” said. “These actions also strengthen our balance sheet by reducing our leverage and improve our medium-term debt maturity profile. We are continuing to explore other opportunities to reshape our remaining corporate debt with a goal of further improving our creditworthiness.”