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SEC Filings

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

Location of Power Generation Assets/Tax Repatriation
While the Company is a U.S. taxpayer, substantially all of the Company’s assets are located in foreign tax jurisdictions, and the Company may acquire additional power plants in foreign tax jurisdictions in the future. Changes in tax rates and the application of foreign tax withholding requirements in foreign jurisdictions where the Company owns power plants will impact the contribution from such assets to cash available for distribution. In order to minimize withholdings at the project level, cash from profits may be maintained at the foreign entity level for future acquisitions. Intercompany loans may be structured at a level to allow for the efficient flow of cash and to fund the dividend requirements.
Cash Distribution Restrictions
In many cases, the Company obtains project level financing for its power plants. These project level financing agreements typically restrict the ability of the Company’s project companies to distribute funds unless specific financial thresholds and operating reserves are satisfied on specified dates. In addition, these financing arrangements also generally limit our ability to distribute funds to the Company if defaults have occurred or would occur with the giving of notice or the lapse of time, or both. As discussed above in Business - Recent Developments - SunEdison Bankruptcy, the project level financing agreements for our two remaining levered power plants in India and our three power plants in South Africa contain provisions that provide the lenders with the right to accelerate debt maturity due to the SunEdison Bankruptcy because SunEdison is an original sponsor of the project and/or a party to certain material project agreements, such as O&M and EPC related contracts. In addition, certain audited financial statements at the project level were delayed and may be delayed again in the future. Future delays would create defaults at the project level for our levered power plants. If not cured or waived, these defaults may restrict the ability of the project companies to make distributions to us or provide the lenders with the right to accelerate debt maturity. We are currently working with the applicable project lenders to cure such defaults. While a project level loan is in default, or during a forbearance period if required by the applicable lenders, we do not expect to be able make distributions from the applicable project company, reducing the cash available to fund our corporate level operating expenses and debt service on the Senior Notes. Failure to receive these distributions for a meaningful period of time could have a material adverse effect on our business, financial condition and results of operations.
Existing Indebtedness
The indenture governing the Senior Notes does not include an event of default provision triggered by the SunEdison Bankruptcy. However, 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 or that holders of the Senior Notes will agree to any required extension of financial statement filing dates on acceptable terms or at all. 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.
On March 31, 2017, Global Operating LLC permanently reduced to zero and terminated the revolving commitments under our corporate level revolving credit facility (the “Revolver”) and entered into a fifth amendment (the “Fifth Amendment”) to the Revolver. The Fifth Amendment provides that Global LLC will no longer be required to deliver to the administrative agent and the other lenders party to the Revolver its annual financial statements and accompanying audit reports, unaudited quarterly financial statements, annual compliance certificates, statements of reconciliation after changes in accounting principles, annual financial plans and reconciliations of non-recourse project indebtedness pursuant to the Revolver, and removes the requirement that Global LLC and its subsidiaries comply with certain financial ratios contained in the Revolver. The Fifth Amendment requires Global Operating LLC to provide the administrative agent under the Revolver with an annual collateral verification within 90 days after the end of each fiscal year.
Access to Capital Markets
Our ability to acquire additional renewable energy power plants is dependent on our ability to borrow additional funds and access the capital markets, including the project finance market for project level debt. At this time, the conditions in the capital markets for our corporate debt and equity securities have made it difficult to obtain corporate level financing in the capital markets at an attractive cost. Additionally, as a result of the SunEdison Bankruptcy and our delay in filing our periodic reports with the SEC, we may have difficulty accessing the project finance market for project level debt financing. If we are unable to raise adequate proceeds when needed to fund acquisitions, the ability to grow our portfolio may be limited, which could have an adverse effect on our projected cash available for distribution, business, financial condition, results of operations and cash flows.


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