Transaction Overview

  • SunEdison (NYSE: SUNE) acquired a 50% interest in Silver Ridge Power from AES Corporation (NYSE: AES) and entered into an agreement with Riverstone Holdings, the other 50% owner of Silver Ridge Power, to contribute Silver Ridge Power’s 266 MW Mt. Signal solar PV project to SunEdison’s planned YieldCo, TerraForm Power (NYSE: TERP), contingent on the IPO of TerraForm. Riverstone received shares in the YieldCo as consideration for its interest in Mt. Signal.
  • SunEdison also established right of first offer agreements to acquire additional Silver Ridge Power assets, including the 40% interest owned by Silver Ridge Power in the 183 MW Imperial Solar West project and a planned extension of the Mt. Signal project.

Silver Ridge Power Overview

  • Silver Ridge Power is a developer, owner and operator of solar PV projects with 521 MW of assets in the U.S., Puerto Rico, Spain, France, Bulgaria, Greece and India. Silver Ridge Power was founded as a 50/50 joint venture between AES and Riverstone.

Riverstone Holdings Overview

  • Riverstone Holdings is an energy and power-focused private equity firm founded in 2000 with approximately $27B of equity capital raised.
  • The sale of Mt. Signal and the ROFO agreement provided a path to exit for Riverstone from a co-ownership position of a geographically diverse portfolio of assets to a single, strategic long-term owner.
  • By taking consideration in the form of shares of SunEdison’s YieldCo, Riverstone gained significant upside potential, as well as future liquidity in a publicly-listed stock.

SunEdison Overview

  • SunEdison is an integrated solar PV company that manufactures solar technology and develops, finances, installs and operates solar power plants.
  • The transaction allowed SunEdison to gain critical scale of distributable cash flow, as well as operating history and cash flow generation track record through the Mt. Signal asset in support of the launch of SunEdison’s YieldCo, TerraForm Power.
  • Additionally, the ROFO agreement provided a clear path to growth in assets and distributable cash flow for TerraForm.

GCA’S ROLE

  • Silver Ridge Power engaged GCA to evaluate multiple strategic options for its portfolio and for Riverstone’s 50% ownership interest, including an independent view on valuation and evaluation to bridge/ reconcile interests of different parties, and test/ validate transaction alternatives.
  • GCA helped identify the challenges of an independent YieldCo sponsored only by Silver Ridge Power, as well as the potential value in vending key assets into another sponsor’s planned YieldCo.

WHAT THE TRANSACTION MEANS FOR THE RENEWABLE ENERGY ASSET SECTOR

  • Through the structured transaction between SunEdison and Silver Ridge Power, TerraForm achieved critical scale of cash flow available for distribution and identified assets for future growth -— two critical elements of the YieldCo structure. We expect to see other aspiring sponsors pursue similar transactions to conform to criteria required by investors for a robust YieldCo vehicle.
  • YieldCo shares can represent a valuable acquisition currency for asset owners interested in additional upside through a transaction with a well-positioned YieldCo sponsor. By the end of 2014, TerraForm stock was up 24% from the IPO when Riverstone took shares as consideration for its ownership in the Mt. Signal asset.