SunEdison considers MLP structure, announces $750M convertible notes sale

The U.S.-based renewable energy development company has said the GP structure in a MLP is the most "efficient and commonly utilized" structure for yieldcos. It intends to conclude the strategic review before the close of 2015. MLPs are not subject to corporate taxes, with dividends being taxed at the investor level instead.

Commenting, president and CEO of SunEdison, Ahmad Chatila, said, "Given the transformative activities that we have undertaken over the past year, including accelerating the value of SunEdison’s IDRs in TerraForm Power and progress growing the TerraForm platform, a thorough review of the company structure is deemed prudent given our transition into a sponsor of long-term asset ownership vehicles."

The past year has seen a number of yieldco announcements in the solar industry, indicating a growing trend where project developers join forces with independent power producers. Seen as the lowest cost way to raise capital, there are at least eight such partnerships currently in existence, including TerraForm, NextEra Energy Partners, Abengoa Yield and 8point3 Energy Partners. It was also reported yesterday that several Chinese solar companies, including CSI and JinkoSolar, are in the process of forming yieldcos.

In other news, SunEdison has unveiled its intention to sell a total of $750 million convertible senior notes, comprising $375 million aggregate principal amount of convertible senior notes due in 2023, and $375 million aggregate principal amount of convertible senior notes due in 2025. Initial purchasers will be given a 30 day option to purchase a further $150 million in convertible senior notes.

The proceeds will be used, among other things, for funding mergers and acquisitions "to enhance size and value" in SunEdison’s emerging markets yieldco, TerraForm Global Inc., which announced last week its plans for an initial public offering of Class A common stock. The creation of a warehouse facility for future yieldco dropdowns is also on the cards, as is an optimization of SunEdison’s solar materials business.