BETHESDA, Md., Feb. 07, 2018 (GLOBE NEWSWIRE) -- TerraForm Power, Inc. (Nasdaq:TERP), an owner and operator of 2,600 megawatts of renewable power assets, today announces that it has launched a voluntary tender offer to acquire 100% of the outstanding shares of Saeta Yield, S.A., a leading, publicly-listed European owner and operator of wind and solar assets, located primarily in Spain. TerraForm Power has secured irrevocable commitments from shareholders, who together own more than a 50% interest, to tender their shares in Saeta under the offer.

“With the Saeta acquisition, we are excited to significantly grow our portfolio of high-quality wind and solar assets and expand our geographic footprint with a scale position in Western Europe,” said John Stinebaugh, Chief Executive Officer of TerraForm Power. “With Brookfield as our sponsor, we believe this transaction demonstrates our ability to originate acquisitions of high-quality assets on a value basis that are highly accretive to our shareholders.”

Transaction highlights

• Highly accretive transaction. The acquisition is highly accretive to TerraForm Power, with CAFD accretion of 24% on a pro forma basis and returns on equity in excess of TerraForm Power’s target.
• High quality asset base in attractive target market. Saeta’s portfolio is comprised of 100% owned, recently constructed assets primarily in Western Europe, including 778 megawatts of onshore wind and 250 megawatts of concentrated solar, with an average age of six years and a remaining useful life in excess of 25 years.
• Assets with stable and predictable cash flows. 100% of Saeta’s revenues are generated under stable frameworks with investment grade counterparties. Over 80% of Saeta’s revenues are regulated under the Spanish renewable power regime with limited resource and market price risk. The remaining 20% of revenues are under long term power purchase or concession agreements. Saeta’s revenues have an average remaining regulatory/contractual term of 15 years.
• Multiple value levers. TerraForm Power will have the opportunity to implement multiple value enhancing initiatives that can improve the overall cost profile of the business along with optimizing its capital structure.
• Accelerates deleveraging of TerraForm Power’s balance sheet. The acquisition furthers TerraForm Power’s long-term plan to establish an investment grade balance sheet and accelerates deleveraging of its corporate debt to cash flow ratio towards its 4.0x to 5.0x target.

Transaction Terms

TerraForm Power’s offer is €12.20 in cash per share of Saeta. The aggregate value of the irrevocable commitments, representing more than a 50% interest in Saeta, is approximately $600 million. If TerraForm Power successfully acquires all of the remaining Saeta shares in the tender offer, the total purchase price will be approximately $1.2 billion.

Due to the accretion of the transaction, TerraForm Power has increased its dividend to $0.76 per share (on an annual basis), a 6% increase over its previous target of $0.72 per share, and reconfirms its dividend growth target of 5-8% per annum.

Funding

Prior to funding the transaction, TerraForm Power has over $1 billion of liquidity under committed facilities, including $500 million under its corporate credit facility, which has been upsized to $600 million, and $500 million under the sponsor line with Brookfield.

Assuming a $1.2 billion purchase price, TerraForm Power intends to execute a funding plan comprised of the following sources:

• A $400 million equity offering, which Brookfield has agreed to backstop in order to provide a minimum issuance price equal to TerraForm Power’s 5-day VWAP immediately prior to announcement of the transaction¹;
• The remaining $800 million will be financed with available liquidity, which TerraForm Power intends to refinance with a combination of project financings of its unencumbered assets and cash to be released from Saeta’s assets.

Timing

The tender offer is expected to be completed in the second quarter of 2018, subject to certain closing conditions including obtaining regulatory approvals. TerraForm Power will be able to acquire 100% of the shares of Saeta provided that at least 90% of the shares are tendered in the offer.

The transaction has been approved by the Board of Directors of TerraForm Power.

Additional information with respect to the transaction has been posted on our website at www.terraformpower.com under Events and Presentation.

Announcement of Quarterly Dividend

TerraForm Power today announced that, on February 6, 2018, its Board declared a quarterly dividend with respect to TerraForm Power’s Class A common stock of $0.19 per share. The dividend is payable on March 30, 2018, to shareholders of record as of February 28, 2018. This dividend represents TerraForm Power’s first dividend payment under Brookfield’s sponsorship.

About TerraForm Power

TerraForm Power owns and operates a best-in-class renewable power portfolio of solar and wind assets located primarily in the U.S., totaling more than 2,600 megawatts of installed capacity. TerraForm Power has a mandate to acquire operating solar and wind assets in North America and Western Europe. TerraForm Power is listed on the Nasdaq stock exchange (Nasdaq:TERP). It is sponsored by Brookfield Asset Management, a leading global alternative asset manager with ~ US$265 billion of assets under management.

For more information about TerraForm Power, please visit: www.terraformpower.com.