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SEC Filings

10-K
TERRAFORM GLOBAL, INC. filed this Form 10-K on 06/15/2017
Entire Document
 

In addition, certain of our stockholders may file litigation seeking to enjoin or delay the completion of the Brookfield Transaction. We may be required to expend significant resources, including legal fees and the time and attention of our senior management, defending any such litigation. The completion of the Brookfield Transaction may be delayed pending the resolution of any such litigation and an adverse ruling in any such lawsuit may prevent the Brookfield Transaction from being consummated. We cannot assure you that a challenge to the Brookfield Transaction will not be made or that, if a challenge is made, it will not succeed.
The Merger Agreement contains provisions that limit the Company’s ability to pursue alternatives to the Brookfield Transaction, which could discourage third parties from making a competing transaction proposal.
The Merger Agreement contains provisions that make it more difficult for us to sell our business to a party other than Brookfield during the period between the execution of the Merger Agreement and the closing of the Brookfield Transaction, which may discourage competing offers for a higher price or premium. These provisions include the general prohibition on our soliciting any alternative acquisition proposal or offer for a competing transaction, the requirement that we pay a termination fee of $30.0 million if the Merger Agreement is terminated in specified circumstances and the requirement that we submit the Merger Agreement to a vote of the Company’s stockholders even if our Board changes its recommendation, subject to certain exceptions. Additionally, in certain circumstances if the Brookfield Transaction is not completed, we may be required to pay Brookfield an expense reimbursement fee of $8.0 million.
The pendency of the Brookfield Transaction and related uncertainty could cause disruptions in our business, which could have an adverse effect on our business and financial results and the price of our Class A common stock.
We have important counterparties at every level of operations, including offtakers under our PPAs, corporate and project-level lenders, project-level minority equity investors, suppliers and other service providers. Uncertainty about the closing, timing and effect of the Brookfield Transaction may negatively affect our relationships with these counterparties due to concerns about the impact of the Brookfield Transaction on our business. These concerns may cause a counterparty to be more likely to reduce utilization of our services (or the provision of supplies or services to us) where the counterparty has flexibility in volume or duration or otherwise seek to change the terms on which it does business with us. These concerns may also cause our existing or potential new counterparties to be less likely to enter into new agreements or cause them to demand more expensive or onerous terms, credit support, collateral or other conditions. Damage to our relationships with our existing or potential new counterparties may materially and adversely affect our business, financial condition and results of operations, including the price of our Class A common stock.
In addition, as a result of the announcement and pendency of the Brookfield Transaction, current and prospective employees could experience uncertainty about their future with the Company. These uncertainties may impair our ability to retain, recruit or motivate key personnel and other employees, negatively impact the productivity of our employees and result in an increase in retention costs.
The Merger Agreement contains provisions that limit our ability to take certain actions during the pendency of the Brookfield Transaction without the consent of Brookfield. These provisions include limitations on our ability to pursue strategic transactions, undertake project acquisitions, undertake certain financing transactions and capital expenditures, enter into material contracts, settle litigation with payments above certain thresholds, and other interim covenant restrictions. These limitations may materially and adversely affect our business, financial condition and results of operations and prevent us from taking advantage of otherwise beneficial opportunities.
As a result of the announcement of the Brookfield Transaction, our Class A common stock has been trading within a narrow price range, which could limit possible returns on any new investment in our Class A common stock.
Beginning with the first trading date following the announcement of the Brookfield Transaction, March 7, 2017, and continuing through June 13, 2017 our Class A common stock has traded within a narrow price range between $4.65 on April 18 and 19, 2017 and $5.10 on June 7, 2017. This constricted trading range is typical with respect to proposed transactions such as the Brookfield Transaction, where the trading market may perceive that the risk of one or more competing offers to purchase the Company is low and the likelihood of legal or regulatory impediments to the transaction is also low. There is a risk that our Class A common stock will continue to be impacted by the pendency of the Brookfield Transaction and may continue to trade within a narrow range until the closing of the Brookfield Transaction. Such a narrow trading range would likely limit the returns, if any, on any investment in our Class A common stock until the closing of the Brookfield Transaction or termination or expiration of the Merger Agreement.


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