Print Page  |  Close Window

SEC Filings

TERRAFORM GLOBAL, INC. filed this Form 10-Q on 06/27/2017
Entire Document

Gain on Foreign Currency Exchange, net
Net gain on foreign currency exchange was $21.6 million for the three months ended March 31, 2017 versus a net gain of $12.3 million for the three months ended March 31, 2016, resulting in an increase of $9.3 million. This change is primarily due to an increased gain of $6.1 million related to the impact of revaluation to the U.S. dollar of plant assets and liabilities denominated in foreign currencies and foreign currency exchange rates on intercompany loans, in addition to the benefit of a lower net loss of $3.2 million on foreign currency forward contracts that matured during the three months ended March 31, 2017 versus the same period in 2016.
Other Income, net
Other income, net was $5.1 million for the three months ended March 31, 2017 compared to $7.0 million for the same period in 2016. The decrease was due to the receipt of damages payments from contractors in South Africa during the first quarter of 2016.
Income Tax Provision
The income tax expense was $2.5 million for the three months ended March 31, 2017, compared to $0.9 million for the three months ended March 31, 2016. For the three months ended March 31, 2017, the overall effective tax rate was different than the statutory rate of 35.0% primarily due to valuation allowances, tax holiday benefits, projected minimum taxes in foreign jurisdictions, and presumed profits taxes in Brazil. As of March 31, 2017, most jurisdictions were in a net deferred tax asset position. A valuation allowance is recorded against the deferred tax assets primarily because of the historical losses in those jurisdictions.

Liquidity and Capital Resources
Liquidity Risk
The Company’s principal liquidity requirements are to finance current operations, service debt and, if and when declared by the Company, to fund cash dividends to investors. Changes in operating plans, lower than anticipated electricity sales, increased expenses, acquisitions or other events may cause management to seek additional debt or equity financing in future periods. There can be no guarantee that financing will be available on acceptable terms or at all. Debt financing, if available, could impose additional cash payment obligations and additional covenants and operating restrictions. The Company’s ability to meet its debt service obligations and other capital requirements, including capital expenditures, as well as make acquisitions, will also depend on the Company’s future operating performance which, in turn, will be subject to general economic, financial, business, competitive, legislative, regulatory and other conditions, many of which are beyond management’s control.
Specifically, our controlling shareholder, SunEdison, Inc., and certain of its affiliates voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code on April 21, 2016 (the "SunEdison Bankruptcy"). We believe that we have observed formalities and operating procedures to maintain our separate existence, 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 third parties to provide O&M and asset management services for our power plants 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. While it has not been requested to date and we believe there is no basis for substantive consolidation in our circumstances, we cannot assure you that substantive consolidation will not be requested in the future or that the bankruptcy court would not consider it. 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. Bankruptcy courts have broad equitable powers, and as a result, outcomes in bankruptcy proceedings are inherently difficult to predict.
To the extent the bankruptcy court were to determine that substantive consolidation was appropriate under the Company's facts and circumstances, the assets and liabilities of the Company could be made available to help satisfy the debt or contractual obligations of SunEdison.