SunEdison is one of the world’s largest solar companies, installing residential and commercial solar power across the world. Now SunEdison may raise capital to support new projects by spinning off some of its other projects in a new subsidiary company.
The company is looking to create a subsidiary called SunEdison Yield Co., according to Reuters, which broke the story. The news service said the company could raise up to $300 million in project finance capital and be valued at between $800 million to $1 billion.
The subsidiary would own certain SunEdison projects in the U.S., Canada, Chile, Japan, Mexico, and the U.K. The unit would offer shareholders quarterly returns, SunEdison Chief Operating Officer Brian Wuebbels told Reuters. The first payout would be in the quarter following the initial public offering (IPO). The company also is looking at creating a similar spin-off unit in Asia—either in Singapore or Hong Kong.
"We will get 70 to 80 percent of dividends every quarter from that vehicle and what that will create for the parent company is a very stable cash and profit stream into the future at a very low cost of capital," Wuebbels told Reuters. The low cost of capital will make it easier for SunEdison to invest in new projects and attract more capital to invest in projects. By lowering the cost of capital it makes the projects (whether on a house, building or field) less expensive and producing PV power for less money.
The company intends to launch the IPO in the second quarter of 2014, according to the news service. The IPO in Asia could follow several months later.
If the spin-offs are successful, they’ll give SunEdison a bigger pool of money with which to invest in projects. This could mean that projects like the 50.7 megawatt San Andreas PV project in Chile’s Atacama region could be financed more internally. But last week, SunEdison announced that it closed on $100.4 million in project financing for the project with the Overseas Private Investment Corporation (OPIC) in the U.S. and the IFC, a member of the World Bank Group and the largest global development institution focused exclusively on the private sector. Under the agreement, OPIC will provide $62.9 million of debt.
The IFC is providing a parallel loan of $37.5 million and Rabobank is providing a local Chilean Peso VAT facility for the equivalent of $25.6 million, according to SunEdison. The project is significant in that it will go to Chile’s grid and it is currently the largest merchant-owned solar plant in Latin America. "When completed, San Andres will be the one of the first merchant PV plants and will demonstrate that solar photovoltaic is already a competitive energy source in countries like Chile,” said Pancho Perez, SunEdison President for Europe, Middle East, Africa and Latin America. “This project reinforces SunEdison's leadership in the Latin American renewable energy market and reaffirms our commitment to clean energy industry development in Chile.” The project will come online in 2014.