SunEdison has announced that they will form a new $1 billion warehouse investment vehicle that will fund construction costs and acquire operating assets.
The decision comes on the heels of an odd market response to SunEdison’s record second quarter growth. SunEdison, the world’s largest clean energy developer, announced its second quarterly earnings earlier this month, including record growth and 1.9 GW worth of projects currently under construction. Nevertheless, shares fell as a response to the company’s $263 million net loss, as investors were left concerned over SunEdison’s many new acquisitions.
“SunEdison’s new $1 billion warehouse provides incremental capacity for SunEdison to construct and hold assets in advance of drop down to TerraForm Power,” stated Brian Wuebbels, SunEdison chief financial officer. “The WSIP Warehouse expands our capacity beyond our existing $1.5 billion First Reserve Warehouse and the $500 million dollar TerraForm Private Warehouse. Our new warehouse supports SunEdison’s 2016 guidance for growth, reinforces the depth of demand for investor participation in SunEdison’s warehouse platform and provides repeatable and scalable funding for the future.”
This new construction and operating asset warehouse investment vehicle will hopefully allay some investor fears.
The announcement includes involvement with West Street Infrastructure Partners III (WSIP), which will invest $300 million in equity (“subject to certain conditions”), and will be managed by Goldman Sachs. The debt structuring for the vehicle will be led by Bank of America, Morgan Stanley, and Deutsche Bank, and will provide commitments of $700 million of debt in the form of a $500 million, five-year term loan, and a $200 million, four-year revolving credit facility.
SunEdison will be left with the ability to expand the facility by up to $1 billion, to a total of $2 billion, subject to certain conditions, and SunEdison’s initial yieldco, TerraForm Power, will have an exclusive call right over the warehoused assets.
“We are excited to partner with SunEdison as we seek to expand our portfolio of investments in solar and wind projects,” said Edward Pallesen, head of the Infrastructure Investment Group for the Americas within the Merchant Banking Division at Goldman Sachs. “SunEdison and TerraForm Power have a proven track record of delivering high quality renewable energy projects, and we are pleased to be able to support their future growth initiatives.”