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SEC Filings

10-K
TERRAFORM GLOBAL, INC. filed this Form 10-K on 06/15/2017
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In the event that the Settlement Agreement is terminated, the Company would be forced to continue to litigate its claims in the SunEdison Bankruptcy case or renegotiate the terms of an alternative settlement agreement with SunEdison. Either option is likely to result in a drain on the Company’s resources, including significant litigation costs and management’s time and attention. Among the claims currently resolved by the Settlement Agreement which the Company would need to defend in the event that the Settlement Agreement is terminated are certain avoidance actions seeking to recapture payments made by SunEdison to the Company prior to SunEdison’s bankruptcy filing. In the event of an unfavorable determination with respect to such claims, the Company could face significant liabilities payable to the SunEdison estate. If the Settlement Agreement is terminated, we will continue to be subject to certain risks associated with SunEdison as described more fully under “Risks Related to our Relationship with SunEdison and the SunEdison Bankruptcy” below.
If we fail to complete the Brookfield Transaction, there is no guarantee that SunEdison will be able to successfully exit its Chapter 11 bankruptcy or that SunEdison’s interests in the Company, including its shares of our Class B common stock and Class B units in Global LLC, will be disposed of in a way that is favorable to the holders of the Company’s Class A common stock.
On March 28, 2017, SunEdison submitted a disclosure statement pursuant to Section 1125 of the Bankruptcy Code for purposes of soliciting votes to accept or reject a Joint Plan of SunEdison, Inc., et al., pursuant to Chapter 11 of the Bankruptcy Code (the “Plan of Reorganization”). Certain stakeholders in the bankruptcy estate of SunEdison may oppose the Plan of Reorganization and there is no assurance that the Plan of Reorganization will be approved by the requisite members of the bankruptcy estate of SunEdison or by the bankruptcy court overseeing the SunEdison Bankruptcy. SunEdison’s proposed Plan of Reorganization in the SunEdison Bankruptcy case is predicated on the successful completion of the Brookfield Transaction. If we fail to complete the Brookfield Transaction, the Plan of Reorganization will not be successful and there is no guarantee that SunEdison will be able to successfully exit its Chapter 11 bankruptcy. In such an event, SunEdison’s current Chapter 11 reorganization may be converted into a Chapter 7 liquidation. We continue to utilize SunEdison for certain limited business and operational services and, as such, a liquidation of SunEdison may have a material adverse effect on our business, results of operations and financial condition. In addition, if the Settlement Agreement is terminated and the Plan of Reorganization is not successfully implemented, SunEdison may seek bankruptcy court approval to transfer its shares of our Class B common stock and Class B units in Global LLC without exchanging them for shares of our Class A common stock and without seeking our approval. Such a disposition may be less favorable to our holders of Class A common stock than the Brookfield Transaction.
Risks Related to our Relationship with SunEdison and the SunEdison Bankruptcy
We are transitioning away from our historical reliance on SunEdison for important corporate, project and other services, which involves management challenges and poses risks that may adversely affect our business, results of operations and financial condition.
We have historically relied significantly on SunEdison for important corporate, project, and other services, including many management services under the Management Services Agreement ("MSA")  (such as management, accounting, banking, treasury, administrative, regulatory and reporting functions; recommending and implementing business strategy; maintenance of books and records; calculation and payment of taxes; and preparation of audited and unaudited financial statements), as well as asset management and O&M services for most of our projects.
Since the SunEdison Bankruptcy, we have been engaged in efforts to transition away from our historical reliance on SunEdison for corporate, project and other services, by seeking to identify alternative service providers and to establish and manage new relationships, as well as develop our own capabilities and resources in these areas. These efforts include creating a separate stand-alone organization, including, among other things, directly hiring employees and establishing our own accounting, information technology, human resources and other critical systems and infrastructure, and also include retaining third parties to provide O&M and asset management services for our power plants where we do not perform these services ourselves. However, our efforts in this regard, although designed to mitigate risks posed by the SunEdison Bankruptcy, involve a number of new risks and challenges that may have a material adverse effect on our business, results of operations and financial condition.
We may be unable to contract with substitute service providers on terms similar to those provided by SunEdison or at all. The fees of substitute service providers or the costs of performing all or a portion of the services ourselves are likely be substantially more than the fees that we currently pay under the MSA, which are equal to 2.5% of the Company’s cash available for distribution to shareholders for each the years 2016, 2017 and 2018. In addition, in light of SunEdison’s familiarity with our assets, a substitute service provider may not be able to provide the same level of service.
We may also be unable to perform the services ourselves, through hiring employees and migrating or establishing separate systems. Implementing any changes in connection with such transition may take longer than we expect, cost more than we expect, and divert management’s attention from other aspects of our business. We may also incur substantial legal and


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