SunEdison Defeats Injunction on TerraForm Deal

A Delaware corporate law judge Thursday refused to block a key piece of SunEdison Inc.'s attempt to finance its takeover of Vivint Solar, the proposed handoff of about $800 million worth of Vivint's residential solar energy assets to TerraForm Power Inc.

Chancellor Andre Bouchard said he found insufficient evidence the deal threatened irreparable harm to TerraForm, which is part of the financial machinery that helped SunEdison boom into a major solar developer. He refused to issue an injunction barring the deal, but didn't leave SunEdison completely in the clear.

SunEdison shares gained 37% to $1.72 Thursday, rallying after Vivint shareholders approved the deal, which was reached last July.

To finance the Vivint Solar takeover, SunEdison needs TerraForm to agree to buy nearly $800 million worth of installed residential rooftop solar assets. SunEdison, a developer, will keep Vivint's development platform. TerraForm bundles long-term contracted operating assets such as solar energy generation systems to generate dividends for investors.

According to people present at the phone hearing where the judge delivered his ruling, Mr. Bouchard left open the possibility of a fast trial in Delaware's Court of Chancery that would be a full test of the merits of a legal challenge brought by investors including a fund managed by David Tepper's hedge fund Appaloosa Management.

In addition to buying $799 million of Vivint Solar's assets from SunEdison, TerraForm is to commit to a "take/pay" arrangement that could mean it will have to buy billions of dollars of additional assets that Appaloosa says are risky, and don't fit TerraForm's portfolio of power investments.

Appaloosa asked for a halt on the deal, on the grounds it threatened to plunge TerraForm into financial trouble, sacrificing it to serve SunEdison's interests. SunEdison has run up a pile of debt that topped $11 billion as of the end of the third quarter last year, and Appaloosa and other investors believe TerraForm needs protection from the financially desperate solar power developer.

Write to Peg Brickley at [e-mail]

(END) Dow Jones Newswires

February 25, 2016 18:55 ET (23:55 GMT)

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