TerraForm’s Vivint Deal a ‘Breach’ of Governance, Appaloosa Says

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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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