SunEdison and its subsidiary TerraForm Power introduced their initial public offering today of more than 20 million shares at $25.00 per share. The shares will be used to repay debt and fund more solar projects. The company is trading on NASDAQ under the symbol TERP.
SunEdison has been investigating creating a yieldco to offer shares and finance projects for a while, but this is the first instance in which it’s introduced such an offering. At the offering price TerraForm would yield more than $500 million.
Yieldcos and other types of corporate organizations are starting to change the way solar projects are financed. Traditionally they’ve relied on banks to loan them funds for construction or have created tax-equity funds, but a problem with such funds are quick payback periods and higher interest rates. Stocks offered through yieldcos or securities and bonds can carry longer payback terms and lower interest rates, reducing the costs of solar power projects and making the electricity produced by them less expensive and more competitive with of other forms of electric generation.
The company said it intends to use $371.2 million of the net proceeds as well as $65.0 million from private placement transactions to acquire newly-issued Class A units of TerraForm Power, LLC (Terra). “Terra will use such proceeds, together with the proceeds from a new term loan facility, to repay all outstanding indebtedness (including accrued interest) under its bridge facility, to pay fees and expenses related to to the new term loan and new revolving credit facility, to repay approximately $47.0 million of project-level indebtedness and for general corporate purposes, which may include future acquisitions of solar assets from SunEdison or from unaffiliated third parties,” SunEdison said in a release.
Terra LLC will also acquire and make payments to certain projects in portfolio. It plans to use approximately $86.0 million of the initial offering for that purpose.
TerraForm Power will use $92.8 million to purchase shares of Class A common stock, Class B units of Terra LLC and shares of Class B common stock held by SunEdison or its affiliates, according to SunEdison.
These new types of funding for solar energy are already proving popular. SolarCity has already issued multiple securities offerings and the New York Times observed that NRG’s NRG Yield has faired well with investors, rising in value by 85 percent since launching last year.Tweet