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Yieldco TerraForm Global ( GLBL ) distanced itself late Tuesday from parent SunEdison ( SUNE ), noting “substantial risk” that SunEd might soon file bankruptcy and thereby complicate ongoing negotiations with TerraForm’s creditors. Meanwhile, JPMorgan downgraded sister yieldco TerraForm Power ( TERP ) stock Wednesday, and FBR suspended coverage of “unpredictable” SunEdison stock, which hasn’t updated its financials since Sept. 30. In morning trading on the stock market today , SunEdison stock lit up 8%, but it still trades at just 60 cents. TerraForm Global stock was up 1%, just above 2. TerraForm Power stock was down a fraction, near 8.50. Late Tuesday, TerraForm Global said that it expected to delay its annual 10-K filing beyond the Wednesday deadline. SunEdison and TerraForm Power also have until Wednesday to file their 10-K paperwork, which both have delayed. Both TerraForms rely heavily on parent SunEdison to complete financial reporting. SunEdison first delayed its 10-K during an investigation into its liquidity stance . This month, SunEd said that deficient IT controls had snagged the process. SunEdison might seek bankruptcy protection, TerraForm Global wrote in an 8-K filing. TerraForm Global says that it could operate without SunEdison, but the company’s creditors want its 10-K by Wednesday. “In the event SunEdison seeks bankruptcy protection, TerraForm Global will have sufficient liquidity to support its ongoing operations,” the yieldco wrote in the 8-K filing. “We are in active discussions with our revolving credit lenders to obtain an extension with respect to the required delivery of our Form 10-K.” The company added that SunEd’s potential bankruptcy filing would make TerraForm Global’s negotiations “more difficult and time consuming.” SunEdison, too, is likely in discussions with creditors of $725 million in second-lien loans, according to a Wall Street Journal report. If SunEdison can’t file its 10-K by Wednesday, “their fate lies with the lenders,” S&P Capital Global Market Intelligence analyst Angelo Zino told IBD on Monday. TerraForm Global is largely wrapped in power purchase agreements (PPAs) that wouldn’t allow it to terminate the contracts or accelerate debt maturity if SunEd files bankruptcy. A handful of PPAs in India and South Africa do have provisions in the case of a SunEd bankruptcy. SunEdison is on the hook for 98.9 megawatts in South American and Bora Bora projects. Per the agreement, SunEd must drop the projects to TerraForm Global upon completion or, if they’re not completed by July 31, drop substitute projects of equal value into the yieldco. And several projects in India could sting SunEdison. TerraForm Global prepaid $231 million in November for equity interests in 425-MW projects in India. If SunEd can’t wrap the projects, TerraForm Global says that it will go after the prepayment. Scalper1 News
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