A bank representing SunEdison Inc. creditors objected to settlement agreements that lay the groundwork for a pair of proposed deals that would allow the renewable energy company to exit bankruptcy. SunEdison is trying to complete transactions in which Brookfield Asset Management Inc. would take over two of its affiliated yieldco holding companies, TerraForm Power Inc. and TerraForm Global Inc. The deals, which would provide SunEdison with more than $800 million in cash and equity, hinge on a federal bankruptcy judge approving settlement agreements that, according to BOKF NA, would shortchange SunEdison's unsecured creditors.
SunEdison's proposal to allocate between $9.4 million and $22.9 million from the yieldco transactions to its administrative, priority and general unsecured creditors does not "fall within the lowest range of reasonableness," BOKF, whose clients hold around $2 billion of SunEdison's unsecured convertible notes, said in a March 28 filing in U.S. Bankruptcy Court for the Southern District of New York.
The proposed allocation is based on SunEdison's assessment of potential claims that it could have made against the TerraForm companies had it not pursued the deals with Brookfield. SunEdison opted against litigation because recovering on the claims would be "speculative" and could be offset by the more than $100 million in claims that the yieldcos brought against their sponsor.
"On the other hand, the economic value that the estates will realize if the Yieldco settlements are approved and the [Brookfield transactions] are consummated is massive, tangible, and real," SunEdison said in a March 24 filing.
BOKF said that throughout the bankruptcy proceeding, SunEdison acted "solely for the benefit of secured lenders, yielding only a pittance, if that, for unsecured creditors."
Brookfield on March 7 said it intends to buy a 51% stake in TerraForm Power and all of the outstanding Class A shares in TerraForm Global. SunEdison created the yieldcos in its heyday to serve as ready buyers of its finished renewable energy projects. If the deals close, SunEdison would be reorganized to collect repatriated cash and manage inventory, equipment, contractual rights, intellectual property and subsidiaries' equity interest, among other assets, according to a March 28 filing.