SunEdison and Vivint modify terms of merger


With its stock remaining depressed and under pressure from investors, SunEdison has modified the terms of its controversial acquisition of Vivint Solar.

Under the new deal, SunEdison will offer Vivint Solar shareholders US$2 per share less in cash consideration, but an additional $0.75 per share of Vivint Solar in SunEdison stock. The original $3.31 per share in SunEdison stock and $3.30 in five-year notes will still be supplied.

And if Vivint Solar shareholders feel uncomfortable with SunEdison stock and notes, they can take the whole compensation in cash, courtesy of a vehicle put together by Blackstone. This investment vehicle will accept SunEdison shares and convertible notes in lieu of cash, which it will pay out to Vivint Solar shareholders.

All of these changes will reduce the cash outlay that will be required to acquire Vivint. The market appears to approve, and SunEdison stock jumped from $3.44 last night to above $4 this morning.

"This was not unexpected, but it was a matter of what will the renegotiated terms look like?" Mercom Capital CEO Raj Prabhu told pv magazine. "It’s all about preserving cash."

The lowering of cash compensation will also be important as the $500 million loan that the company had earlier negotiated with Goldman Sachs has transformed into a $300 million loan with a consortium of four banks, led by Goldman Sachs.

Blackstone’s investment vehicle will also supply $250 million in credit to fund SunEdison’s future growth. It is unclear how much of SunEdison the vehicle will own after the deal, but the company notes that it will become a "leading shareholder".

The new agreement leaves a back door open to cancel the deal. SunEdison no longer has to complete the merger by the end of January 2016, and it allows Vivint Solar to solicit and negotiate with other buyers until the company’s stockholders approve the merger. Vivint Solar’s penalty for exiting the deal has also been lowered from $62 million to $34 million.

Finally, the terms of TerraForm Power’s acquisition of Vivint Solar’s portfolio of 523 MW of residential solar assets have been modified. SunEdison has included clauses allowing for the sale of these projects to third parties, and expects to pay up to $799 million for these assets as opposed to the $922 million agreed upon in July.

SunEdison has been selling more projects, and in early October announced that it was halting new drop-downs to its yieldco vehicles.