SunEdison’s TerraForm Made a big purchase today when it bought Capital Dynamics’ U.S. solar portfolio For $250 million. The purchase consists of 39 solar projects across the U.S., totaling 77.6 megawatts. The projects are in California, Massachusetts, New Jersey, New York and Pennsylvania. On average the projects in the portfolio have power purchase agreements that last for 19 more years.
The sale will allow TerraForm to expand its portfolio solar projects in the U.S. The SunEdison subsidiary was created as a yieldco to offer new avenues for funding solar projects, including using stocks and/or bond offers to finance solar energy projects. TerraForm made its IPO in July 2014 offering more than 20 million shares at 25 per share. Since then it has risen as high as $34.34 per share but opened at $27 per share this morning.
The deal with TerraForm allows Capital Dynamics U.S. Solar Energy Fund investors a chance to monetize their investment. “I am pleased that the sale of our U.S. Solar Fund assets achieves our goal of realizing risk-adjusted returns for our investors and we look forward to working with TerraForm Power on other opportunities in the future,” said Stefan Ammann, CEO of Capital Dynamics.
"This transaction demonstrates TerraForm Power's momentum in delivering on our growth strategy and our ability to execute third-party acquisitions," said Carlos Domenech, TerraForm Power CEO. "These high quality assets are expected to provide TerraForm Power with an attractive levered cash-on-cash return of approximately 9 percent while adding further geographic and cash flow diversification. The transaction continues to cement our leadership position in the fragmented distributed generation marketplace."
The transaction, which is expected to close before the end of 2014. It is expected to provide approximately $21 million in unlevered Cash Available for Distribution (CAFD) in the year following the transaction’s closing, according to TerraForm.
TerraForm Power plans to pay for the purchase through committed debt financing. That will include expanding TerraForm’s existing term loan facility by $275 million. At the same time TerraForm will also increase the size of its existing revolving credit facility to $215 million. "The increase in our secured revolving credit facility highlights TerraForm Power's strong financial position," said Alex Hernandez, TerraForm Power's Chief Financial Officer. "This expanded facility, provided by our bank group, gives us a flexible capital source and additional liquidity to execute our growth strategy.”
The company expects that the capital increases will allow it to fully fund its Hudson Energy acquisition, which was announced in early October. That acquisition consists of 101 projects totaling 25.5 megawatts. In addition Hudson Energy’s 4.5 megawatt project pipeline is being acquired by SunEdison.Tweet