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SEC Filings

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

significantly increase. Government incentives provide significant support for renewable energy sources, such as solar and wind energy, and a decrease in these benefits could increase the costs of investment in solar and wind energy.
If any of the laws or governmental regulations or policies that support renewable energy, including solar and wind energy, change or are terminated, or if we are subject to new and burdensome laws or regulations, such changes may have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, any changes to or termination of the regulations and governmental incentives discussed in detail under Item 1. Business - Government Incentives above may also significantly affect our business.
Our ability to pay dividends is limited by the Merger Agreement.
Under the Merger Agreement, we are restricted from declaring or paying dividends prior to the consummation of the Brookfield Transaction. In the event that the Brookfield Transaction is not consummated and the Merger Agreement is terminated or expires, we will evaluate whether it is prudent to cause Global LLC to distribute an appropriate portion of cash to its unit holder in order to permit TerraForm Global, Inc. to pay dividends to its shareholders each quarter and to rely primarily upon external financing sources, including the issuance of debt and equity securities to fund our acquisitions and growth capital expenditures. There can be no assurance as to the size or timing of any dividend we may pay in the future.
Our indebtedness could adversely affect our financial condition and ability to operate our business, including restricting our ability to pay cash dividends or react to changes in the economy or our industry.
We have substantial debt outstanding, which could have important negative consequences on our financial condition, including:
increasing our vulnerability to general economic and industry conditions and to the consequences of the SunEdison Bankruptcy and to our delayed financial statements;
exposing us to the risk of a default on our outstanding debt;
requiring a substantial portion of our cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, thereby reducing our ability to pay dividends to holders of our Class A common stock or to use our cash flow to fund our operations, capital expenditures and future business opportunities;
limiting our ability to enter into or receive payments under long-term power sales which require credit support;
limiting our ability to fund operations or future acquisitions;
restricting our ability to make certain distributions with respect to our capital stock and the ability of our subsidiaries to make certain distributions to us, in light of restricted payment and other covenants in our financing agreements;
exposing us to the risk of increased interest rates because certain of our borrowings are at variable rates of interest; and
limiting our ability to obtain additional financing for working capital, including collateral postings, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes; and limiting our ability to adjust to changing market conditions and placing us at a competitive disadvantage compared to our competitors who have less debt.
The Senior Notes contain restrictive covenants that limit our ability to return capital to stockholders or otherwise engage in activities that may be in our long-term best interests. Covenant defaults may occur in the future under the indenture governing the Senior Notes in the event of further delays in the filing of our periodic reports with the SEC. There can be no assurance that we will be able to file our periodic reports (including our Form 10-Q for the quarter ended March 31, 2017 or any quarters thereafter) with the SEC within the periods currently required under the indenture governing the Senior Notes. A default on the Senior Notes would permit the trustee or the holders of at least 25% in aggregate principal amount of notes outstanding to accelerate the Senior Notes. The Company would likely not have sufficient liquidity to meet this obligation, which could have a material adverse effect on our business, results of operations, financial condition and ability to pay dividends.
Our existing agreements governing our non-recourse financing contain financial and other restrictive covenants that limit our project companies’ ability to make distributions to us or otherwise engage in activities that may be in our long-term best interests. We expect any future project financings that we incur or assume will contain similar provisions. The non-recourse financing agreements generally prohibit distributions from the project entities to us unless certain specific conditions are met, including the satisfaction of certain financial ratios and the absence of defaults or events of default. Our inability to satisfy certain financial covenants or cure defaults or events of default may prevent cash distributions by the particular project companies to us, including defaults related to the SunEdison Bankruptcy or to delayed project level audits. The risks with respect to the SunEdison Bankruptcy on our project financings is further detailed in “The SunEdison Bankruptcy has resulted in


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