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SunEdison Bankruptcy Threatens Dividends at TerraForm Units

SunEdison Inc.’s bankruptcy threatens the dividend payments of the two TerraForm yieldcos it formed and controls, according to Moody’s Investors Service.

While the yieldcos haven’t been dragged into SunEdison’s bankruptcy proceedings, as many as 10 of TerraForm Power Inc.’s wind and solar farms and five of TerraForm Global Inc.’s face defaults because they have project-level debt with clauses linked to the health of the parent company, according to a report by Moody’s analyst Swami Venkataraman.

These cross-default clauses reveal the complicated and interrelated structure of SunEdison, the world’s biggest clean-energy developer, and the two TerraForm companies it formed to buy power plants, along with the many wind and solar farms that typically are structured as their own corporate entities.

“There might be a price to pay, and possibly a stoppage of distribution from these projects to the yieldcos,” Venkataraman said in an interview. “They will need some sort of settlement.” He estimates that the risk affects less than half of the cash flow at TerraForm Power because many of its projects have no...


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