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SEC Filings

10-K
TERRAFORM GLOBAL, INC. filed this Form 10-K on 06/15/2017
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SunEdison was the construction contractor or module or tracker supplier for many of our power plants, and it is unlikely that we will be able to recover on any claims under those contracts or related warranties.
SunEdison served as the prime construction contractor pursuant to engineering, procurement and construction contracts with our subsidiaries for most of our power plants acquired from SunEdison. These contracts are generally fixed price, turn-key construction contracts that include workmanship and other warranties with respect to the design and construction of the facilities that survive for a period of time after the completion of construction. These contracts or related contracts (including O&M agreements) also often include production or availability guarantees with respect to the output or availability of the facility that survive completion of construction. With respect to certain of our power plants, we also utilized SunEdison solar modules or tracker technology and obtained warranties from SunEdison, including material and workmanship warranties and output guarantees. Because of these relationships, we have existing warranty or contract claims and would likely in the future have such claims. If the Settlement Agreement becomes effective, it will permanently settle all such claims with SunEdison and we will not recover any amounts on these claims outside of the consideration received under the terms of the Settlement Agreement. Even if the Settlement Agreement does not become effective, the SunEdison Bankruptcy would reduce or eliminate our recoveries on claims under these agreements and warranties, which may have a material adverse effect on our business, results of operations and financial condition.
SunEdison is a party to important agreements at the corporate and project levels, which have been adversely affected by the SunEdison Bankruptcy and will be terminated upon the effectiveness of the Settlement Agreement.
As detailed in other risk factors under “Risks Related to our Relationship with SunEdison and the SunEdison Bankruptcy,” we have a number of important agreements with SunEdison at the corporate and project levels. For example, SunEdison has an obligation pursuant to the Interest Payment Agreement to pay to the Company an aggregate amount equal to all of the scheduled interest on the Senior Notes up to $81.2 million in 2016, and up to an aggregate amount of $40.0 million in 2017, $30.0 million in 2018, $20.0 million in 2019 and $10.0 million in 2020, plus any interest due on any payment not remitted when due. The Settlement Agreement provides for the termination of these agreements and would result in the release of our intercompany claims against SunEdison in connection with such agreements.
Even if the Settlement Agreement does not become effective, the SunEdison Bankruptcy has adversely affected our rights under these agreements in a number of respects. For example, the protection of the automatic stay, which arises upon the commencement of a bankruptcy case, prohibits us from terminating a contract with any of the debtor entities (which includes SunEdison) without the consent of the bankruptcy court. Similarly, the U.S. Bankruptcy Code invalidates certain clauses that permit a party to terminate an executory contract (a contract where both parties have performance remaining) based on the counterparty’s financial condition, insolvency or commencement of bankruptcy proceedings. Legal proceedings to obtain relief from the automatic stay, to terminate agreements or to enforce rights under agreements can be time consuming, costly and uncertain as to outcome. SunEdison has agreed and could agree in the future to provisions in its debtor-in-possession ("DIP") financing that limit its ability to perform under agreements with us and that give the DIP lenders significant power over such performance.
Our ability to recover for breach, failure to perform or rejection of contracts (particularly for prepetition claims) is likely to be limited, and may be eliminated, depending on the recoveries generally for SunEdison’s creditors, due to competing claims with higher priority and the limited financial resources of SunEdison.
There is a risk that our assets and liabilities could be consolidated with those of SunEdison in the SunEdison Bankruptcy.

We believe that we have observed formalities and operating procedures to maintain our separate existence from SunEdison, that our assets and liabilities can be readily identified as distinct from those of SunEdison and that we do not rely substantially on SunEdison for funding or liquidity and will have sufficient liquidity to support our ongoing operations. Our contingency planning with respect to the SunEdison Bankruptcy has included and will include, among other things, establishing stand-alone information technology, accounting and other critical systems and infrastructure, directly hiring employees necessary to operate our business and establishing employee retention efforts, retaining replacement operation and maintenance and asset management services for our power plants from other providers where we do not perform these services ourselves and the pursuit of strategic alternatives.
However, there is a risk that an interested party in the SunEdison Bankruptcy could request that the assets and liabilities of the Company be substantively consolidated with SunEdison and that the Company and/or its assets and liabilities be included in the SunEdison Bankruptcy. Substantive consolidation is an equitable remedy in bankruptcy that results in the pooling of assets and liabilities of the debtor and one or more of its affiliates solely for purposes of the bankruptcy case, including for purposes of distributions to creditors and voting on and treatment under a reorganization plan. While it has not


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