SunEdison and Vivant Solar renegotiate the terms of their merger

Written By: Stratton Report
December 9, 2015

Sunedison

On December 9, SunEdison, Inc. and Vivint Solar, Inc. agreed to amend their merger agreement. SunEdison also announced that 313 Acquisition LLC, the vehicle controlled by private equity funds managed by Blackstone has committed to provide a $250 million credit facility to fund the ongoing growth of SunEdison. The merger is anticipated to close in the first quarter of 2016.

Ahmad Chatila, SunEdison’s chief executive officer.remarked: “SunEdison is very pleased to reach an agreement with Vivint Solar and 313 Acquisition to modify the merger agreement. Given the recent market volatility, we believe the modified agreement is in the best interest of all parties. We look forward to growing our residential and small commercial business with Greg Butterfield and his exceptional team. In addition, we are also delighted to add the Blackstone team as a key new stakeholder and partner.”

Greg Butterfield, Vivint Solar’s chief executive officer commented:”We are excited to join the SunEdison team. We look forward to continuing to strengthen our leading platform in the residential and small commercial space.”

Peter Wallace, Vivint Solar’s board chairman and Blackstone’s senior managing director noted:

“We believe the combined SunEdison and Vivint Solar platform will be well positioned to be the leader in the growing renewable energy space, and we are pleased to see the transaction move forward. Blackstone looks forward to SunEdison’s future success.”

Under the terms of the amended merger agreement, there will be a reduction in the cash merger consideration to be received by Vivint Solar stockholders of $2.00 per share from the original deal and an increase in SunEdison common stock of $0.75 per share. Vivint Solar, with the consent of 313 Acquisition, may elect to have the consideration payable to the Vivint Solar stockholders, other than 313 Acquisition stockholders, to be paid in all cash.

In contrast, 313 Acquisition would receive additional consideration consisting of all of the SunEdison common stock and SunEdison convertible notes that would otherwise have been payable to the public stockholders, and would bear a corresponding reduction in the amount of cash it receives equal to the amount of additional cash that will be paid to the public stockholders.

The amended merger agreement also permits Vivint Solar to solicit competing offers at any time prior to the approval of the merger by a majority of Vivint Solar stockholders. The board of directors of Vivint Solar may accept a competing offer that it determines to be “superior” to the merger with SunEdison, and terminate the merger with SunEdison if the Vivint Solar board determines that its fiduciary obligations require it to do so and if Vivint Solar pays a termination fee to SunEdison of $34 million.

In connection with the amendment of the merger agreement, SunEdison and TerraForm Power, LLC have amended and restated their existing purchase agreement to provide that with the completion of SunEdison’s acquisition of Vivint Solar, TerraForm Power will acquire Vivint Solar’s then-installed rooftop solar portfolio for a purchase price expected to be approximately $799 million.

SunEdison has also entered into a letter agreement with TerraForm Power, pursuant to which SunEdison has agreed, among other things, to use its reasonable best efforts to sell to third-party purchasers certain solar residential systems that it expected to be sold to TerraForm Power pursuant to a take/pay agreement to be entered into as well as purchased subsidiaries to be acquired from Vivint Solar. Upon the completion of the sale of any purchased subsidiary, TerraForm Power will be relieved of its obligation to purchase.
The merger requires the approval of a majority of the Vivint Solar stockholders. 313 Acquisition has entered into an amended and restated voting agreement with SunEdison pursuant to which 313 Acquisition has reaffirmed its agreement to vote in favor of the adoption of the merger agreement or to deliver a written consent, as the holder of a majority of the outstanding shares of Vivint Solar common stock, approving and adopting the merger agreement, subject to certain termination events, including, among others, termination of the merger agreement.

SunEdison intends to fund the cash portion of the merger consideration primarily from the proceeds of a new $300 million secured debt facility described below and the completion of the sale of assets to TerraForm Power.

To support the merger transaction, SunEdison has entered into a second amended and restated commitment letter with Goldman Sachs Bank USA, Barclays Bank PLC, Citigroup Global Markets Inc. and UBS Securities LLC for a $300 million secured term loan facility to be provided to a wholly-owned, indirect subsidiary of SunEdison that will hold certain development assets of the expanded SunEdison residential and small commercial platform following the merger with Vivint Solar.

TerraForm Power has entered into a second amended and restated debt commitment letter with Goldman Sachs Bank USA, Citigroup Global Markets Inc., Barclays Bank PLC and UBS AG, Stamford Branch for a $795 million unsecured bridge facility.