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SEC Filings

10-K
TERRAFORM GLOBAL, INC. filed this Form 10-K on 12/21/2016
Entire Document
 

Our subsidiaries incur, and we expect will in the future incur, various types of non-recourse indebtedness. Non-recourse debt is repayable solely from the applicable power plant’s revenues and is secured by the power plant’s physical assets, major contracts, cash accounts and, in many cases, our ownership interest in the project company. Limited recourse debt is debt where we have provided a limited guarantee, and recourse debt is debt where we have provided a full guarantee, which means if our subsidiaries default on these obligations, we will be liable directly to those lenders, although in the case of limited recourse debt only to the extent of our limited recourse obligations. Currently, all of our project level indebtedness is non-recourse, however we may decide to make payments to prevent the lenders to these subsidiaries from foreclosing on the relevant collateral. Such a foreclosure could result in us losing our ownership interest in the subsidiary or in some or all of its assets, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. To prevent a foreclosure, we may be required to use amounts distributed by our other subsidiaries as well as other sources of available cash, reducing our cash available to execute our business plan and pay dividends to holders of our Class A common stock.
If we are unable to renew letter of credit facilities our business, financial condition, results of operations and cash flows may be adversely affected.
Our Revolver includes a letter of credit facility to support project level contractual obligations. This letter of credit facility will expire on August 5, 2019. If we are unable to renew our letters of credit as expected or if we are only able to replace them with letters of credit under different facilities on less favorable terms, we may experience a material adverse effect on our business, financial condition, results of operations and cash flows. Furthermore, the inability to provide letters of credit may constitute a default under certain non-recourse financing arrangements, restrict the ability of certain project companies to make distributions to us and/or reduce the amount of cash available at such project companies to make distributions to us.
Our ability to raise additional capital to fund our operations may be limited.
Our primary business strategy is to own, operate and acquire operational renewable energy assets. We do not always expect to have sufficient amounts of cash on hand to fund all such future acquisition costs. As a result, we will need to arrange additional financing to fund a portion of such acquisitions, potential contingent liabilities and other aspects of our operations. Our ability to arrange additional financing, either at the corporate level or at a project company level, is, and may continue to be, limited. For example, our Revolver currently provides for committed borrowings of $350.0 million; however, the Company has agreed not to borrow or issue any additional letters of credit under the Revolver until March 8, 2017 or, if sooner, such time as SunEdison and its subsidiaries (other than the Company, TerraForm Power, Inc. and their respective subsidiaries) have disposed of all or substantially all of their equity interests in the Company and an offer has been made to repurchase the Senior Notes at a purchase price in cash at least equal to 101% of the applicable principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date (or a binding agreement to make such an offer has been entered into).
In the event that we choose to pursue additional financing, our ability to raise such additional financing, as well as the costs of such financing, will be dependent on numerous factors, including:
general economic and capital market conditions;
credit availability from banks and other financial institutions;
investor confidence in us, our partners, SunEdison, as our principal stockholder (on a combined voting basis) and manager under the MSA and frequently as asset and O&M manager for our projects in the countries in which our power plants are located;
the impact of the SunEdison Bankruptcy;
our financial performance and the financial performance of our subsidiaries;
our level of indebtedness and compliance with covenants in debt agreements;
when we file our Forms 10-Q for the quarters ended March 31, June 30, and September 30, 2016 and obtain project level financial statements;
maintenance of acceptable credit ratings or credit quality, including maintenance of the legal and tax structure of the project company upon which the credit ratings may depend;
our cash flows; and
provisions of tax and securities laws that may impact raising capital.
We may not be successful in obtaining additional financing for these or other reasons. Furthermore, we may be unable to refinance or replace non-recourse financing arrangements or other credit facilities on favorable terms or at all upon the expiration or termination thereof. Our failure, or the failure of any of our power plants, to obtain additional capital or enter into new or replacement financing arrangements when due may constitute a default under such existing indebtedness and may have a material adverse effect on our business, financial condition, results of operations and cash flows.


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