United States Securities and Exchange Commission Investigation
On April 21, 2016, the Company received a subpoena for documents and information in connection with an investigation by the Enforcement Division of the staff of the SEC captioned “In the Matter of SunEdison, Inc. (HO-12908).” The Company is cooperating with the investigation, and the outcome or resolution of this matter cannot be predicted at this time.
On October 17, 2017, plaintiff filed Berg v. TerraForm Global, Inc. et al., a putative class action, in the United States District Court for the District of Maryland against the Company, certain officers and directors of the Company, Brookfield Asset Management Inc., Orion US Holdings 1 L.P., and BRE GLBL Holdings Inc. (the “Berg Complaint”). The plaintiff asserts claims under Section 14(a) of the Securities Exchange Act and Rule 14a-9 promulgated thereunder against the Company and the officer and director defendants. The plaintiff also asserts a claim under Section 20(a) of the Securities Exchange Act against the officer and director defendants and against Brookfield Asset Management Inc., Orion US Holdings 1 L.P., and BRE GLBL Holdings Inc. (together, the “Brookfield Defendants”). The plaintiff alleges, among other things, that the proxy statement filed by the Company with the SEC on October 10, 2017 in connection with the Brookfield Transaction (the “Proxy Statement”) omits material facts regarding the Company’s financial projections and the valuation analysis performed by the Company’s financial advisors that were necessary to make the statements in the Proxy Statement not materially false or misleading. The complaint seeks to enjoin the defendants from proceeding with, consummating, or closing the Brookfield Transaction. In the event that the Brookfield Transaction is consummated, the complaint seeks to rescind the Brookfield Transaction or seeks an award of rescissory damages.
On October 12, 2017, the Company received a demand letter from a putative shareholder for the inspection of the Company’s books and records pursuant to 8 Del. C. § 220 (the “Demand Letter” and, together with the Berg Complaint, the “Merger Litigation”). The stated purpose of the demand letter was to “investigate potential wrongdoing, mismanagement, and breaches of fiduciary duties by members of the [Company’s board of directors], the Company’s executive officers, [and] controlling stockholders... in connection with" the Brookfield Transaction. The demand alleges, among other things, that the board of directors failed to disclose material information concerning the process leading up to the Brookfield Transaction.
The Company and the other defendants named in the Merger Litigation believe that the claims asserted in the Merger Litigation are without merit and no supplemental disclosure is required under applicable law. However, in order to avoid the risk of the Merger Litigation delaying or adversely affecting the Brookfield Transaction and to minimize the costs, risks and uncertainties inherent in litigation, and without admitting any liability or wrongdoing, the Company has determined to voluntarily supplement the Proxy Statement in a Current Report on Form 8-K filed by the Company with the SEC on November 3, 2017 (the “Proxy Supplement”). Nothing in the Proxy Statement or the Proxy Supplement shall be deemed an admission by the Company or any such other defendants or any other person or entity of the legal necessity or materiality under applicable laws of any of the disclosures set forth therein. To the contrary, the Company and such other defendants deny all liability with respect to the facts and claims alleged in the Merger Litigation and specifically deny all allegations that any additional disclosure was or is required or material under applicable laws.
Legal Proceeding Initiated by the Company
TerraForm Global, Inc. v. SunEdison, Inc., et al.
On April 3, 2016, the Company filed a verified complaint against SunEdison, SunEdison Holdings Corporation (collectively with SunEdison, the “SunEdison Defendants”), Ahmad Chatila, Martin Truong and Brian Wuebbels in the Court of Chancery of the State of Delaware. The complaint asserts claims for breach of fiduciary duty, breach of contract and unjust enrichment relating to the failure by the SunEdison Defendants to transfer the equity interests in the 425 MW India Projects for which the Company paid $231.0 million in the fourth quarter of 2015. The complaint seeks various forms of relief, including a constructive trust upon the equity interests of SunEdison in the 425 MW India Projects, money damages from the defendants, restoration of the $231.0 million to the Company and such other relief as the Court may deem just and proper. The claims against the SunEdison Defendants have been stayed as a result of the SunEdison Bankruptcy. The individual defendants filed an answer to the complaint on June 30, 2016. On July 19, 2017, the Company entered into a settlement agreement with the individual defendants, pursuant to which the parties exchanged mutual releases. The Court entered an order dismissing the individual defendants with prejudice on July 20, 2017.