TerraForm’s Vivint Deal a ‘Breach’ of Governance, Appaloosa Says
Appaloosa Management LP, the hedge fund founded by billionaire David
Tepper, is calling for TerraForm Power Inc. to “resist” its role in the
pending acquisition of Vivint Solar Inc.
“The Vivint transaction
poses a serious threat to the company’s prospects and should be
vigorously resisted by you, as CEO, and the governance and conflicts
committee, as the unaffiliated shareholders’ advocate,” Appaloosa Senior
Partner James Bolin wrote in a letter to TerraForm Chief Executive
Officer Brian Wuebbels released Tuesday.
TerraForm is a
clean-power yieldco, a holding company formed by a developer to own and
operate power plants, and Appaloosa is adding to investors’ growing concerns about whether these yieldcos are sufficiently independent of their parents. The hedge fund kicked off its critique of TerraForm and the relationship with its corporate parent with a similar letter Dec. 1.
The
new letter was part of a filing that also showed that Appaloosa has
increased its stake in TerraForm to 9.5 percent, from the 9.25 percent
stake disclosed Dec. 2, making the Short Hills, New Jersey-based hedge
fund the second-biggest owner.
TerraForm and its parent SunEdison Inc. announced in July a $2.2 billion deal
for Vivint, a developer of residential and commercial solar projects.
As part of the transaction, TerraForm will acquire Vivint’s portfolio of
operating rooftop power systems.
“The effective purchase price,
approaching $1.84 per watt including transaction costs, is high by
market standards of last July and even higher by today’s
standards,” Bolin wrote. The deal “serves only to benefit” SunEdison and
is a “breach” of governance standards for TerraForm.
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