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SEC Filings

10-Q
TERRAFORM GLOBAL, INC. filed this Form 10-Q on 11/08/2017
Entire Document
 
Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _____________________________________________________________________________
FORM 10-Q
 _____________________________________________________________________________
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-37528
 ______________________________________________________________
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=11880767&doc=11
TerraForm Global, Inc.
(Exact name of registrant as specified in its charter)
 _____________________________________________________________________________
Delaware
 
47-1919173
(State or other jurisdiction of incorporation or organization)
 
(I. R. S. Employer Identification No.)
7550 Wisconsin Avenue, 9th Floor, Bethesda, Maryland
 
20814
(Address of principal executive offices)
 
(Zip Code)
(240) 762-7700
(Registrant’s telephone number, including area code)
 ______________________________________________________________
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes  x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
o
  
Accelerated filer
 
x
 
 
 
 
Non-accelerated filer
 
o (Do not check if a smaller reporting company)
  
Smaller reporting company
 
o
 
 
 
 
 
 
 
Emerging growth company
 
x
 
 
 
 


1



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o     No  x

As of October 31, 2017, there were 112,100,528 shares of Class A common stock outstanding, 61,343,054 shares of Class B common stock outstanding, and no shares of Class B1 common stock outstanding.
 


2



TerraForm Global, Inc. and Subsidiaries
Table of Contents
Form 10-Q
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exhibit Index

3



PART I - Financial Information

Item 1. Financial Statements

TERRAFORM GLOBAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
 
Three Months Ended September 30,
Nine Months Ended September 30,
 
2017
 
2016
2017
 
2016
Operating revenues, net
$
67,427

 
$
55,055

$
186,413

 
$
159,171

Operating costs and expenses:
 
 
 
 
 
 
Cost of operations
11,407

 
10,291

34,441

 
32,320

General and administrative
19,006

 
16,315

58,341

 
40,724

Acquisition, formation and related costs
15

 
139

15

 
10,227

Depreciation, accretion and amortization
16,235

 
13,374

52,545

 
40,971

Costs associated with shareholder litigation
33,000

 

33,000

 

Total operating costs and expenses
79,663

 
40,119

178,342

 
124,242

Operating (loss) income
(12,236
)
 
14,936

8,071

 
34,929

Other expense (income):
 
 
 
 
 
 
(Gain) loss on the extinguishment of debt
(36
)
 
5

6,731

 
(5,730
)
Interest expense, net
29,121

 
33,159

88,578

 
95,797

(Gain) loss on foreign currency exchange
(7,114
)
 
4,268

(30,051
)
 
(21,963
)
Other income, net
14

 
(6,762
)
(8,218
)
 
(19,793
)
Total other expenses, net
21,985

 
30,670

57,040

 
48,311

Loss before income tax expense
(34,221
)
 
(15,734
)
(48,969
)
 
(13,382
)
Income tax expense
2,490

 
2,121

7,440

 
5,040

Net loss
(36,711
)
 
(17,855
)
(56,409
)
 
(18,422
)
Less: loss attributable to non-controlling interests
(13,416
)
 
(4,944
)
(21,020
)
 
(1,976
)
Net loss attributable to TerraForm Global, Inc. Class A common stockholders
$
(23,295
)
 
$
(12,911
)
$
(35,389
)
 
$
(16,446
)
 
 
 
 
 
 
 
Weighted average number of shares:
 
 
 
 
 
 
Class A common stock - Basic and Diluted
111,847

 
107,686

112,487

 
107,135

Loss per share:
 
 
 
 
 
 
Class A common stock - Basic and Diluted
$
(0.21
)
 
$
(0.12
)
$
(0.31
)
 
$
(0.15
)
See accompanying notes to unaudited condensed consolidated financial statements.

4



TERRAFORM GLOBAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(In thousands)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Net loss
$
(36,711
)
 
$
(17,855
)
 
$
(56,409
)
 
$
(18,422
)
Other comprehensive (loss) income:
 
 
 
 
 
 
 
Net foreign currency translation adjustments
6,392

 
3,668

 
(9,838
)
 
42,450

Net unrealized (loss) gain on hedging instruments
(1,865
)
 
(822
)
 
106

 
(13,142
)
Other comprehensive income (loss), net of tax
4,527

 
2,846

 
(9,732
)
 
29,308

Total comprehensive (loss) income
$
(32,184
)
 
$
(15,009
)
 
$
(66,141
)
 
$
10,886

Less: Comprehensive (loss) income attributed to non-controlling interest:
 
 
 
 
 
 
 
Net loss
(13,416
)
 
(4,944
)
 
(21,020
)
 
$
(1,976
)
Net foreign currency translation adjustments
2,019

 
3,445

 
3,455

 
18,728

Net unrealized loss on hedging instruments
(1,248
)
 
(550
)
 
(71
)
 
(8,799
)
Comprehensive (loss) income attributed to non-controlling interest
(12,645
)
 
(2,049
)
 
(17,636
)
 
7,953

Comprehensive (loss) income attributed to Class A common stockholders
$
(19,539
)
 
$
(12,960
)
 
$
(48,505
)
 
$
2,933

See accompanying notes to unaudited condensed consolidated financial statements.

5



TERRAFORM GLOBAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
 
September 30,
 
December 31,

2017
 
2016
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
631,635

 
$
680,893

Current portion of restricted cash, including consolidated variable interest entities of $68,534 in 2017 and $64,786 in 2016
123,680

 
79,294

Accounts receivable, net
40,444

 
37,596

Prepaid expenses and other current assets, including consolidated variable interest entities of $79,379 in 2017 and $85,501 in 2016
92,603

 
102,555

Total current assets
888,362

 
900,338

Power plants, net, including consolidated variable interest entities of $375,039 in 2017 and $431,686 in 2016
1,345,793

 
1,355,362

Restricted cash
13,426

 
16,482

Intangible assets, net, including consolidated variable interest entities of $54,596 in 2017 and $56,077 in 2016
82,177

 
82,450

Deposit for acquisitions, net
46,243

 
48,274

Other assets
53,242

 
45,373

Total assets
$
2,429,243

 
$
2,448,279

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
  
Current liabilities:
 
 
  
Current portion of long-term debt, including consolidated variable interest entities of $308,948 in 2017 and $314,928 in 2016
$
320,355

 
$
327,459

Accounts payable
12,573

 
12,009

Accrued expenses and other current liabilities, including consolidated variable interest entities of $42,907 in 2017 and $44,633 in 2016
163,835


119,179

Due to affiliates, net
13,987

 
16,084

Total current liabilities
510,750

 
474,731

Long-term debt, less current portion
763,529

 
758,609

Asset retirement obligations
11,668

 
10,310

Other long-term liabilities including consolidated variable interest entities of $48,155 in 2017 and $5,813 in 2016")
1,103

 
6,810

Deferred tax liabilities, including consolidated variable interest entities of $35,260 in 2017 and $40,817 in 2016
54,340

 
52,106

Total liabilities
1,341,390

 
1,302,566

Stockholders’ Equity:
 
 
 
Preferred stock, par value $0.01 per share, 50,000,000 shares authorized, no shares issued and outstanding at September 30, 2017 or December 31, 2016

 

Class A common stock, par value $0.01 per share, 2,750,000,000 shares authorized, 111,849,859 shares issued and outstanding at September 30, 2017, 113,253,681 shares issued and outstanding at December 31, 2016
1,147

 
1,132

Class B common stock, par value $0.01 per share, 200,000,000 shares authorized, 61,343,054 shares issued and outstanding at September 30, 2017 and December 31, 2016
613

 
613

Class B1 common stock, par value $0.01 per share, 550,000,000 shares authorized, no shares issued or outstanding at September 30, 2017 or December 31, 2016

 

Treasury stock
(6,215
)
 
(4,739
)
Additional paid-in capital
958,832

 
940,405

Accumulated deficit
(301,631
)
 
(266,242
)
Accumulated other comprehensive income
5,771

 
12,119

Total TerraForm Global, Inc. stockholders’ equity
658,517

 
683,288

Non-controlling interests
429,336

 
462,425

Total stockholders’ equity
1,087,853

 
1,145,713

Total liabilities and stockholders’ equity
$
2,429,243

 
$
2,448,279


6



See accompanying notes to unaudited condensed consolidated financial statements.

7



TERRAFORM GLOBAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)
 
Controlling Interests
 
 
Non-controlling Interests
 
Class A Common Stock
Class B Common Stock
Treasury Stock
Additional Paid-in Capital
Accumulated Deficit
Accumulated Other Comprehensive Income (Loss)
 
 
 
Accumulated Deficit
Accumulated Other Comprehensive Income (Loss)
 
Total Stockholders’ Equity
 
Shares
Amount
Shares
Amount
Shares
Amount
Total
 
Capital
Total
Balance at December 31, 2015
114,630

$
1,146

61,343

$
613

5

$
(28
)
$
923,740

$
(213,210
)
$
(11,181
)
$
701,080


$
609,225

$
(117,975
)
$
(9,678
)
$
481,572

$
1,182,652

Class A shares forfeited on termination of employment
(1,376
)
(14
)




14




 





Treasury Shares




254

(4,711
)



(4,711
)
 



 
(4,711
)
Stock-based compensation






3,646



3,646

 




3,646

Net loss







(53,032
)

(53,032
)
 

(25,466
)

(25,466
)
(78,498
)
Net SunEdison Investment










 
39,170



39,170

39,170

Other comprehensive income








23,300

23,300

 


11,378

11,378

34,678

Dividends paid






(30,674
)


(30,674
)
 




(30,674
)
Dividends payable - SUNE Class B










 
(550
)


(550
)
(550
)
Transfer of Equity interest from NCI to CI






14,781



14,781

 
(14,781
)


(14,781
)

Equity reallocation






28,898



28,898

 
(28,898
)


(28,898
)

Balance at December 31, 2016
113,254

$
1,132

61,343

$
613

259

$
(4,739
)
$
940,405

$
(266,242
)
$
12,119

$
683,288

 
$
604,166

$
(143,441
)
$
1,700

$
462,425

$
1,145,713

Class A shares forfeited on termination of employment
(428
)
(4
)




4










Class A shares - RSUs Vested
343

19





(19
)



 





Treasury Shares
(1,319
)



1,060

(1,476
)



(1,476
)





(1,476
)
Stock-based compensation






2,568



2,568






2,568

Net loss







(35,389
)

(35,389
)


(21,020
)

(21,020
)
(56,409
)
Net SunEdison Investment






4,888



4,888


2,301



2,301

7,189

Other comprehensive loss








(6,348
)
(6,348
)



(3,384
)
(3,384
)
(9,732
)
Transfer of Equity interest from NCI to CI






11,740



11,740


(11,740
)


(11,740
)

Equity reallocation






(754
)


(754
)

754



754


Balance at September 30, 2017
111,850

$
1,147

61,343

$
613

1,319

$
(6,215
)
$
958,832

$
(301,631
)
5,771

$
658,517

 
$
595,481

$
(164,461
)
$
(1,684
)
$
429,336

$
1,087,853

See accompanying notes to unaudited condensed consolidated financial statements.

8



TERRAFORM GLOBAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

Nine Months Ended September 30,
 
2017
 
2016
Cash flows from operating activities:
 
 
 
Net loss
$
(56,409
)
 
$
(18,422
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Amortization of deferred financing costs
1,284

 
7,824

Depreciation, amortization and accretion
52,545

 
40,971

Stock-based compensation expense
2,568

 
2,617

Change in fair value of interest rate swaps
2,949

 
5,854

Loss on disposal of property
967

 

Loss (gain) on extinguishment of debt
6,731

 
(5,730
)
Unrealized gains on foreign currency, net
(39,278
)
 
(22,549
)
Deferred tax expense (benefit)
530

 
(1,118
)
Other non-cash items
(2,674
)
 

Changes in assets and liabilities:
 
 
 
Accounts receivable
(1,701
)
 
110

Prepaid expenses and other current assets
7,613

 
3,254

Accounts payable, accrued expenses, and other current liabilities
(50,927
)
 
(35,414
)
Due to/from affiliates, net
(2,137
)
 
(5,593
)
Restricted cash from insurance proceeds
(50,000
)
 

Shareholder litigation accrual
83,000

 

Net cash used in operating activities
(44,939
)
 
(28,196
)
Cash flows from investing activities:
 
 
 
Capital expenditures
(2,801
)
 
(66,384
)
Change in restricted cash
8,336

 
63,144

Cash paid for acquisitions, net of cash acquired

 
(32,128
)
Cash acquired upon FERSA consolidation

 
8,022

Returns from BioTherm escrow and deposits
5,317

 
5,507

Net cash provided by (used in) investing activities
10,852

 
(21,839
)
Cash flows from financing activities:


 
 
Repayment of Revolver

 
(135,000
)
Repayments of Senior Notes

 
(35,441
)
Repayments of system debt financing
(9,462
)
 
(33,102
)
Net SunEdison investment

 
50,223

Dividends paid

 
(30,674
)
Net cash used in financing activities
(9,462
)
 
(183,994
)
Net decrease in cash and cash equivalents
(43,549
)
 
(234,029
)
Effect of exchange rate changes on cash and cash equivalents
(5,709
)
 
2,309

Cash and cash equivalents at beginning of period
680,893

 
922,318

Cash and cash equivalents at end of period
$
631,635

 
$
690,598

See accompanying notes to unaudited condensed consolidated financial statements.

9



TERRAFORM GLOBAL, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS
Overview
TerraForm Global, Inc. and its subsidiaries (together, the “Company”) is a controlled affiliate of SunEdison, Inc. (together with its consolidated subsidiaries excluding the Company, "SunEdison"). TerraForm Global, Inc. is a holding company and its sole asset is an equity interest in TerraForm Global, LLC (“Global LLC”), a globally diversified renewable energy company that owns, through its subsidiaries, wind and solar power plants and long-term contractual arrangements to sell the electricity generated by such power plants to third parties. TerraForm Global, Inc. is the managing member of Global LLC and operates, controls and consolidates the business affairs of Global LLC.
Entry into a Definitive Merger Agreement with Brookfield Asset Management Inc.
On March 6, 2017, TerraForm Global, Inc. entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Orion US Holdings 1 L.P. (“Parent”), a Delaware limited partnership and an affiliate of Brookfield Asset Management Inc. (“Brookfield”), and BRE GLBL Holdings Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), providing for the merger of Merger Sub with and into TerraForm Global, Inc. (the “Merger”), with TerraForm Global, Inc. surviving as a wholly owned subsidiary of Parent.
The proposed Merger was approved by the Board of Directors of the Company (the “Board”), following the recommendation of the Corporate Governance and Conflicts Committee of the Board (the “Conflicts Committee”). Completion of the Merger is expected to occur, subject to satisfaction of closing conditions, in the fourth quarter of 2017.
As a result of the Merger, each share of Class A common stock of TerraForm Global, Inc., par value $0.01 per share (the “Class A Shares”), issued and outstanding immediately prior to the effective time of the Merger (other than Class A Shares that are (i) owned by TerraForm Global, Inc., Parent or any of their direct or indirect wholly owned subsidiaries and not held on behalf of third parties, (ii) owned by stockholders who have perfected and not withdrawn a demand for appraisal rights pursuant to Section 262 of the Delaware General Corporation Law or (iii) held by any direct or indirect wholly owned subsidiary of the Company that is taxable as a corporation) will be converted into the right to receive per share Merger consideration equal to $5.10 per Class A Share in cash, without interest.
Concurrently with the execution and delivery of the Merger Agreement, SunEdison and certain of its affiliates executed and delivered a voting and support agreement with Brookfield and TerraForm Global, Inc. (the “Voting and Support Agreement”) pursuant to which SunEdison agreed to vote or cause to be voted any shares of common stock of TerraForm Global, Inc. held by it or any of its controlled affiliates in favor of the Merger and to take certain other actions to support the consummation of the Merger and the other transactions contemplated by the Merger Agreement (collectively, the "Brookfield Transaction"). The Voting and Support Agreement was approved by the bankruptcy court overseeing the SunEdison Bankruptcy (as defined below) on June 7, 2017.
The Merger Agreement includes a non-waivable condition to closing that the Merger Agreement and the transactions contemplated by the Merger Agreement be approved by holders of a majority of the outstanding Class A Shares, excluding all Class A Shares held by SunEdison or any of its affiliates (“SunEdison Class A Shares”) and Parent or any of its affiliates.
Closing of the Merger also is subject to certain other conditions, including the adoption of the Merger Agreement by the holders of a majority of the total voting power of the outstanding shares of common stock of TerraForm Global, Inc. entitled to vote on the Merger and receipt of certain regulatory approvals. The entry by the bankruptcy court overseeing the SunEdison Bankruptcy of orders authorizing and approving the entry by SunEdison (and, if applicable, SunEdison’s debtor affiliates) into the Settlement Agreement, the Voting and Support Agreement and any other agreement entered into in connection with the Merger or the other transactions contemplated by the Merger Agreement to which SunEdison or any other debtor will be a party (the “Bankruptcy Court Order”) is also a condition to the closing of the Merger. The bankruptcy court overseeing the SunEdison Bankruptcy entered the Bankruptcy Court Order on June 7, 2017 and this condition has been satisfied.
In addition, Parent’s and Merger Sub’s obligations to consummate the Merger are subject to the requirement that certain litigation has been finally dismissed with prejudice or the settlement thereof has been submitted for court approval in a manner reasonably satisfactory to Parent pursuant to agreements or stipulations containing releases reasonably satisfactory to Parent, and all final approvals of courts or regulatory authorities required for the settlements and releases to become final, binding and enforceable; provided, however, that in no event will a settlement of certain claims made by Renova Energia, S.A.

10



(“Renova”) include an aggregate payment by the Company of greater than $3.0 million (net of any amounts funded directly or indirectly by insurance proceeds). These litigation matters are the Renova Arbitration (as defined below), the verified stockholder derivative complaint on behalf of the Company filed against four directors of the Company in the Court of Chancery of the State of Delaware (the “Aldridge Claim”), and certain securities cases currently coordinated in multidistrict litigation in the U.S. District Court for the Southern District of New York in a case captioned In re SunEdison, Inc. Securities Litigation (the “Securities Litigation”). Each of these litigation matters is more fully described in Note 15 - Commitments and Contingencies. In the event that this condition has not been satisfied when all other conditions to closing are satisfied (other than those that by their nature are satisfied or waived at closing), Parent and the Company have agreed to negotiate in good faith to adjust, or defer a portion of, the $5.10 in cash per Class A Share otherwise payable pursuant to the terms of the Merger Agreement so that this condition will be satisfied.
On May 26, 2017, TerraForm Global, Inc., TerraForm Global, LLC, TerraForm Global Brazil Holding B.V. and TERP GLBL Brasil I Participacoes Ltda. entered into a Settlement Agreement and Mutual Release (the “Renova Settlement Agreement”) with Renova. The Renova Settlement Agreement resolves all disputes among the Company and Renova that are the subject of an ongoing arbitration proceeding in the Center for Arbitration and Mediation of the Chamber of Commerce Brazil-Canada (the “Renova Arbitration”). Concurrently with the execution of the Renova Settlement Agreement, Renova and Parent entered into a Purchase & Sale Agreement (the “PSA”) with respect to all of the shares of Class A common stock of TerraForm Global, Inc. owned by Renova (excluding the shares to be released from escrow to TerraForm Global, Inc. pursuant to the Renova Settlement Agreement). Pursuant to the terms of the PSA, Parent agreed to purchase 19,535,004 shares of Class A common stock of TerraForm Global, Inc. from Renova for a purchase price in cash of $4.75 per share, or $92,791,269 in the aggregate.
The effectiveness of the full releases contained in the Renova Settlement Agreement was subject to certain conditions set forth in the Renova Settlement Agreement (including, but not limited to, the execution and filing of a joint stipulation with the Center for Arbitration and Mediation of the Chamber of Commerce Brazil-Canada withdrawing with prejudice all of the claims and counterclaims made in the Renova Arbitration and the purchase of Renova’s shares of Class A common stock of TerraForm Global, Inc. by Parent). Additionally, the consummation of the share purchase contemplated by the PSA was subject to customary conditions to closing and was conditioned upon the satisfaction of certain conditions set forth in the Renova Settlement Agreement, including the effectiveness of the mutual releases and release of the shares in escrow.
The conditions to the effectiveness of the full releases in the Renova Settlement Agreement, as well as the conditions to the consummation of the share purchase contemplated by the PSA, were satisfied on June 29, 2017. As a result, the full releases provided for in the Renova Settlement Agreement became effective, and the share purchase contemplated by the PSA was consummated, on June 29, 2017.
Concurrently with the execution of the Renova Settlement Agreement and the PSA, TerraForm Global, Inc. and Parent entered into a letter agreement (the “Renova Letter Agreement”), pursuant to which Parent agreed that upon the later to occur of (i) the effective time as described in the Renova Settlement Agreement and (ii) the closing of the share purchase contemplated by the PSA (as defined and described below), the condition to the obligations of Parent and Merger Sub to effect the Merger set forth in Section 7.2(c) (Litigation Settlement) of the Merger Agreement, solely with respect to Renova’s claims in the Renova Arbitration, has been satisfied and the aggregate payment made by the Company (net of any amounts funded directly or indirectly by insurance proceeds) under the Renova Settlement Agreement in connection with the settlement of Renova’s claims in the Renova Arbitration will be deemed to be zero. This condition to the obligations of Parent and Merger Sub to effect the merger set forth in Section 7.2(c) (Litigation Settlement) of the Merger Agreement solely with respect to Renova’s claims in the Renova Arbitration was also satisfied on June 29, 2017.
On July 21, 2017, the parties to the Aldridge Claim executed a stipulation of settlement, which, subject to court approval, settled the Aldridge Claim for a total aggregate settlement amount of $20.0 million to be paid out of insurance
proceeds. On July 25, 2017, the court authorized distribution of notice of the settlement to stockholders of the Company and stayed all non-settlement-related proceedings. The court held a final settlement hearing on October 10, 2017 and approved the proposed settlement of $20.0 million as fair, reasonable, and adequate. The Court also approved the plaintiff’s attorneys’ fees of $4.0 million, which is deducted from the settlement amount, resulting in a net settlement amount of $16.0 million to be paid to the Company.

On October 31, 2017, the Company and lead plaintiffs in In re TerraForm Global, Inc. Securities Litigation, which includes all of the class action claims against the company in connection with the Company’s initial public offering (but does not include the claims brought by plaintiffs in connection with the Company’s private placement offerings), participated in a private mediation session and reached agreement in principle to settle the case on a class-wide basis for $57.0 million, to be funded through a combination of proceeds from existing insurance and litigation settlement proceeds available to the Company. On November 1, 2017, the settling parties informed the Court of the mediated resolution. The Company and lead plaintiffs are

11



now working to prepare settlement documentation. The settlement is subject to Court approval which, unless waived, is also required to satisfy the condition to the closing of the Merger. The remaining Securities Litigation cases, which include the claims brought by plaintiffs in connection with the Company’s private placement offerings, remain pending.

Parent and the Company have agreed that, if the Company determines that it does not reasonably expect the Securities Litigation to be finally dismissed with prejudice or settled in a manner reasonably satisfactory to Parent by the termination date of December 6, 2017 (as such date may be extended to March 6, 2018 pursuant to the Merger Agreement), the Company may offer a merger consideration holdback. On October 5, 2017, the Company notified Parent that it intends to offer such a holdback if, prior to the termination date, the Company is not able to settle on satisfactory terms the Securities Litigation. If the Company offers a merger consideration holdback, the Company and Parent have agreed to negotiate in good faith and agree the implementation of a mechanism for the holdback that will allow for the removal of the dismissal or settlement of the Securities Litigation as a condition to the closing of the Merger and provide for representatives of the pre-closing stockholders of the Company to jointly, together with the Company, control the litigation, settlement or other resolution of the Securities Litigation (which may include litigating the Securities Litigation to conclusion) following the closing. Any such holdback mechanism must be consistent with the principle that Parent shall bear no risk for any net out-of-pocket costs of the Company and its subsidiaries incurred to resolve the Securities Litigation and the whistleblower claims described below. Parent has advised that it does not intend to waive this requirement or the condition to closing related to the dismissal or settlement of the Securities Litigation. Any offer by the Company that is consistent with the requirements set forth in this paragraph will be deemed to satisfy the condition to closing related to the dismissal or settlement of the Securities Litigation.

If the merger consideration holdback is implemented, then, at the closing of the Merger, the per share merger consideration will be reduced proportionately based on the aggregate amount of the holdback, and stockholders will be issued one contingent value right for each share held as of the closing, with the contingent value rights to represent a proportionate share of the difference between the holdback amount and the aggregate net out-of-pocket costs to the Company of the settlement or other resolution of the Securities Litigation. The amount of any holdback, if implemented, would be determined at a later date and stockholders would be asked to approve and adopt an amended merger agreement that reflects the holdback, contingent value right and reduced cash per share that would be paid at closing. The aggregate amount of any merger consideration holdback, the timing of any settlement or other resolution of the Securities Litigation (which may include litigating the Securities Litigation to conclusion) and any payment in respect of contingent value rights will depend on the results of ongoing mediation between the Company and the plaintiffs in the Securities Litigation as well as any negotiations between the Company and Parent.

Approval of the Merger from the Malaysian Sustainable Energy Development Authority was obtained on May 29, 2017, approval of the Merger from the Brazilian Conselho Administrativo de Defesa Econômica was obtained on May 31, 2017, approval of the Merger from the South African Competition Commission was obtained on July 26, 2017 and approval of the Merger from the South African Department of Energy was obtained with respect to two out of the three projects the Company owns in South Africa on August 4, 2017 and with respect to the third project the Company owns in South Africa on October 5, 2017. The foregoing approvals constitute all of the regulatory approvals required to complete the Merger.

The Company filed a Definitive Proxy Statement on Schedule 14A on October 10, 2017, and has scheduled a special meeting of the stockholders of its Class A and Class B common stock to be held on November 13, 2017 for the stockholders to vote upon a proposal to adopt and approve the Merger Agreement and a proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to adopt and approve the Merger Agreement.

Each of the Company, Parent and Merger Sub has made customary representations and warranties in the Merger Agreement. The Company has also agreed to various agreements and covenants, including, among others, and subject to certain exceptions, to conduct its business in the ordinary course between execution of the Merger Agreement and closing of the Merger and not to engage in certain specified types of transactions during such period.
In addition, the Company is subject to a “no change of recommendation” restriction limiting its ability to change its recommendation in respect of the Merger except as permitted by the Merger Agreement and a “no shop” restriction on its ability to solicit alternative acquisition proposals from third parties and to provide information to, and engage in discussions with, third parties regarding alternative acquisition proposals.
The Merger Agreement contains specified termination rights, including the right for each of the Company and Parent to terminate the Merger Agreement if the Merger is not consummated by December 6, 2017 (subject to a three-month extension under certain circumstances at the discretion of either the Company or Parent). The Merger Agreement provides for other

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customary termination rights for both the Company and Parent (including, for Parent, if the Board changes its recommendation in respect of the Merger) as more particularly set forth in the Merger Agreement. The Company is required to pay Parent a termination fee equal to $30.0 million following termination of the Agreement in the following circumstances: (i) the requisite stockholder approval has not been obtained by the termination date, and an alternative acquisition proposal to acquire the Company has been made or announced, and within 12 months of the termination of the Merger Agreement, the Company enters into a definitive agreement or consummates any alternative acquisition (as defined in the Merger Agreement), in such case, net of any expense fee paid by the Company to Parent in connection with the Merger; (ii) if either party terminates the Merger Agreement because the Bankruptcy Court Order has not been entered by the bankruptcy court by the date provided for such approval in the Settlement Agreement, and within 12 months of the termination of the Merger Agreement, the Company enters into a definitive agreement or consummates any alternative acquisition (as defined in the Merger Agreement), in such case, net of any expense fee paid by the Company to Parent in connection with the Merger; (iii) if either party terminates the Merger Agreement because the requisite stockholder approval has not been obtained or because the Agreement has not been consummated by the termination date, and at the time of termination, the Board has changed its recommendation in respect of the Merger; or (iv) if Parent terminates the Merger Agreement because the Board has made and not withdrawn a change of recommendation in respect of the Merger and at the time of Parent’s termination the Company has not obtained the requisite stockholder approval of the Merger or the Bankruptcy Court Order has not been entered by the bankruptcy court. In addition, if the Merger Agreement is terminated under certain circumstances, the Company has agreed to pay to Parent an $8.0 million expense reimbursement fee.
The representations, warranties and covenants of the Company contained in the Merger Agreement have been made solely for the benefit of Parent and Merger Sub. In addition, such representations, warranties and covenants (a) have been made only for purposes of the Merger Agreement, (b) have been qualified by confidential disclosures made to Parent and Merger Sub in connection with the Merger Agreement, (c) are subject to materiality qualifications contained in the Merger Agreement that may differ from what may be viewed as material by investors and (d) have been included in the Merger Agreement for the purpose of allocating risk among the contracting parties rather than establishing matters as facts. Accordingly, the representations, warranties and covenants in the Merger Agreement have been disclosed only to provide investors with information regarding the terms of the Merger Agreement, and not to provide investors with any other factual information regarding the Company or its business. Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or any of its subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties may have changed after the date of the Merger Agreement and may continue to change in the future, which subsequent information may or may not be fully reflected in the Company’s public disclosures.
The Company's entry into the Merger Agreement, and its exploration of strategic alternatives generally, involve certain risks and uncertainties, which may, among other things, disrupt its business or adversely impact its revenue, operating results and financial condition. A change of control of the Company without the consent of the lenders under the Company’s corporate level revolving credit facility (the “Revolver”) would constitute an event of default under the Revolver and, pursuant to the indenture governing the Company's 9.75% Senior Notes due 2022 (the “Senior Notes”), would require TerraForm Global Operating, LLC, a wholly-owned subsidiary of Global LLC (“Global Operating LLC”), to offer to repurchase its outstanding Senior Notes at 101.0% of their principal amount, plus accrued and unpaid interest, if any, to the repurchase date. Additionally, the occurrence of such changes may trigger change of control provisions in certain of the Company’s Power Purchase Agreements (“PPAs”). There can be no assurance that the Company will be able to complete the Merger, and failure to complete the Merger may adversely impact its business.
The foregoing description of the Merger Agreement, the Voting and Support Agreement, the Renova Settlement Agreement and the Renova Letter Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement, the Voting and Support Agreement, the Renova Settlement Agreement and the Renova Letter Agreement.
SunEdison Bankruptcy and Settlement Agreement with SunEdison
The Company's 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”). As discussed elsewhere in the Company’s unaudited condensed consolidated financial statements and the notes thereto contained in this Quarterly Report on Form 10-Q, the SunEdison Bankruptcy may have a material adverse effect on the Company. No assurance can be given on the outcome of the SunEdison Bankruptcy or its impact on the Company. The Company’s Conflicts Committee is responsible for oversight and approval of the business and affairs of the Company relating to or involving SunEdison and any of its affiliates (other than the Company), including in connection with the SunEdison Bankruptcy. The matters described in this section entitled “SunEdison Bankruptcy and Settlement Agreement with SunEdison” and other matters that presented conflict of

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interest issues between the Company and SunEdison have been approved and authorized pursuant to this authority by those members of the Conflicts Committee in place at the time the applicable decision was made.
The Company is not a part of the SunEdison Bankruptcy and does not rely substantially on SunEdison for funding, liquidity, or operational or staffing support. The Company continues to participate actively in the SunEdison Bankruptcy proceedings, and the SunEdison Bankruptcy will continue to have a negative impact on the Company given its complex relationship with SunEdison.
During the SunEdison Bankruptcy, SunEdison has not performed substantially as obligated under its agreements with the Company, including under sponsorship arrangements consisting of the various corporate level agreements put in place at the time of the Company’s IPO (collectively, the “Sponsorship Arrangement”) and certain operation and maintenance ("O&M") and asset management arrangements. SunEdison’s failure to perform substantially as obligated under its agreements with the Company, including under the Sponsorship Arrangement, project level O&M and asset management agreements and other support agreements may have a material adverse effect on the Company. Despite these adverse effects, the Company operates its business without significant support from SunEdison pursuant to plans for transitioning away from reliance on SunEdison that the Company is in the process of implementing. These plans include, among other things, establishing stand-alone information technology, accounting and other critical systems and infrastructure, directly hiring the Company's employees, and retaining third parties to provide O&M and asset management services for the Company's power plants where the Company does not perform these services itself. In addition to the one-time costs of implementing a stand-alone organization, the Company will be adversely affected to the extent it is unsuccessful in implementing the relevant plans or the resulting ongoing long-term costs are higher than the costs the Company expected to incur with SunEdison as a sponsor.
The project level financing agreements for the Company’s two remaining levered power plants in India and its 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 engineering, procurement and construction 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 the Company's levered power plants. If not cured or waived, these defaults may restrict the ability of the project companies to make distributions to the Company and may provide the lenders with the right to accelerate debt maturity. However, neither the Revolver nor the indenture governing the Senior Notes includes an event of default provision triggered by the SunEdison Bankruptcy, and none of the Company's PPAs includes a provision that would permit the offtake counterparty to terminate the PPA as a result of the SunEdison Bankruptcy.
On September 25, 2016, the Company filed its initial proof of claim in the SunEdison Bankruptcy, and filed an amended proof of claim on October 7, 2016. As set forth in the proofs of claim, the Company believes it has unsecured claims against SunEdison that it estimates are in excess of $2.0 billion. These claims include, without limitation, claims for damages relating to breach of SunEdison's obligations under the Sponsorship Arrangement between the Company and SunEdison and other agreements; contribution and indemnification claims arising from litigation; claims relating to SunEdison’s breach of fiduciary, agency and other duties; and claims for interference with and the disruption of the business of the Company and its subsidiaries, including the loss of business opportunities, loss of business records, failure to provide timely audited financials, and the increased cost of financing and commercial arrangements. Many of these claims are contingent, unliquidated and/or disputed by SunEdison and other parties in interest in the SunEdison Bankruptcy, and the estimated amounts of these claims may change substantially as circumstances develop and damages are determined. In addition, recoveries on unsecured claims in the SunEdison Bankruptcy are expected to be significantly impaired.
In addition, the Company believes that it may have claims entitled to administrative priority against SunEdison, including, without limitation, claims with respect to certain expenses that the Company has incurred after the commencement of the SunEdison Bankruptcy; however, the Company expects SunEdison and other parties in interest in the SunEdison Bankruptcy to dispute both the amount of these claims and whether or not these claims are entitled to administrative priority over other claims against SunEdison.
On November 7, 2016, the unsecured creditors’ committee in the SunEdison Bankruptcy case filed a motion with the bankruptcy court seeking standing to assert against the Company, on behalf of SunEdison, avoidance claims arising from intercompany transactions between the Company and SunEdison. If the Settlement Agreement becomes effective, the Company expects this standing motion will be withdrawn. If the Settlement Agreement is terminated or if the standing motion is not withdrawn, the Company expects to vigorously contest this standing motion and, if standing is granted, the underlying avoidance claims.
On March 6, 2017, the Company entered into a settlement agreement with SunEdison in connection with the SunEdison Bankruptcy and the Merger Agreement (the “Settlement Agreement”). The Settlement Agreement was approved by

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the bankruptcy court overseeing the SunEdison Bankruptcy on June 7, 2017; however, its effectiveness is conditional on the completion of the Brookfield Transaction. The Settlement Agreement contains certain terms to resolve the complex legal relationship between the Company and SunEdison, including, among other things, an allocation of the total consideration paid in connection with the Brookfield Transaction and, with certain exceptions, the full mutual release of all claims between SunEdison and its affiliated debtors and non-debtors, on the one hand, and the Company and its subsidiaries, on the other hand. Under the settlement terms, following the exchange of all of its Class B shares in TerraForm Global, Inc. and the Class B units in Global LLC for Class A Shares, SunEdison will receive consideration equal to 25.0% of the total consideration paid to all of the Company's shareholders, reflecting the settlement of intercompany claims and cancellation of incentive distribution rights. The remaining 75.0% of the consideration will be distributed to existing Class A shareholders. In addition, upon the effectiveness of the Settlement Agreement, with certain limited exceptions, all agreements between the Company and its subsidiaries, on the one hand, and SunEdison and its subsidiaries, on the other hand, including the agreements comprising the Sponsorship Arrangement, would be terminated. There can be no assurance that the Settlement Agreement will become effective, and such failure may adversely impact the Company's business. The foregoing description of the Settlement Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Settlement Agreement.
On July 28, 2017, the bankruptcy court overseeing the SunEdison Bankruptcy entered an order confirming a plan of reorganization for SunEdison (the “SunEdison Plan”). Among other things, the SunEdison Plan would further implement the settlements, releases and terminations contemplated by the Settlement Agreement. If the SunEdison Plan becomes effective, a reorganized SunEdison would emerge from the SunEdison Bankruptcy and operate outside of the supervision of the bankruptcy court. There are numerous conditions to the effectiveness of the SunEdison Plan, including the completion of the Brookfield Transaction, and accordingly there can be no assurance that the SunEdison Plan will become effective, and such failure may adversely impact the Company’s business. However, the effectiveness of the SunEdison Plan is not a condition to the completion of the Brookfield Transaction.

Nasdaq Compliance

On March 20, 2017, the Company received a notification letter from a Hearings Advisor from the Nasdaq Office of General Counsel informing the Company that the hearings panel granted the Company's request for an extension until June 30, 2017 to regain compliance with Nasdaq’s continued listing requirements with respect to its Form 10-K for the year ended December 31, 2016 and its Form 10-Q for the first quarter of 2017. On May 15, 2017, the Company received a notification letter from a Senior Director of Nasdaq Listing Qualifications stating that because the Company has not yet filed its Form 10-Q for the period ended March 31, 2017, this served as an additional basis for delisting the Company’s securities from the Nasdaq Stock Market under Nasdaq Listing Rule 5250(c)(1).
In addition, because the Company did not hold an annual meeting during 2016, the Company was not in compliance with Nasdaq Listing Rule 5620(a) (the “Annual Meeting Rule”), which requires the Company to hold an annual meeting of shareholders within twelve months of the end for the Company's fiscal year. On January 4, 2017, the Company received a notification letter from a Senior Director of Nasdaq Listing Qualification, which stated that the Company's failure to hold its annual meeting by December 31, 2016 served as an additional basis for delisting the Company's securities and that the hearings panel would consider this matter in their decision regarding the Company's continued listing on the Nasdaq Global Select Market. On January 11, 2017, the Company submitted a response requesting an extension to hold an annual meeting and regain compliance with the Annual Meeting Rule. On March 20, 2017, the Company received a notification letter from a Hearings Advisor from the Nasdaq Office of General Counsel informing the Company that the hearings panel granted the Company's request for an extension until June 30, 2017 to regain compliance with Nasdaq’s continued listing requirements with respect to holding its annual meeting during the year ended December 31, 2016.
The Company filed its Annual Report on Form 10-K for the year ended December 31, 2016 with the Securities and Exchange Commission (the “SEC”) on June 15, 2017, filed its Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 with the SEC on June 27, 2017 and held its 2017 annual meeting on June 29, 2017. On June 30, 2017, the Company received a notification letter from a Hearings Advisor from the Nasdaq Office of General Counsel informing the Company that the Company has regained compliance with Nasdaq’s continued listing requirements and that the hearings panel has determined to continue the listing of the Company’s securities on the Nasdaq Stock Market.
Going Concern
The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The unaudited condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

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The Company believes that it has observed formalities and operating procedures to maintain its separate existence, that the Company's assets and liabilities can be readily identified as distinct from those of SunEdison and that the Company does not rely substantially on SunEdison for funding or liquidity and will have sufficient liquidity to support the Company's ongoing operations. The Company's 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 its business and establishing employee retention efforts, retaining third parties to provide O&M and asset management services for the Company's power plants where it does not perform these services itself 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 the Company believes there is no basis for substantive consolidation in its circumstances, there can be no assurance 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.

On July 28, 2017, the bankruptcy court overseeing the SunEdison Bankruptcy entered an order confirming the SunEdison Plan. If the SunEdison Plan (which includes the completion of the Brookfield Transaction as a condition to its effectiveness) becomes effective, interested parties in the SunEdison Bankruptcy would no longer be able to seek substantive consolidation of the Company with SunEdison.
There have also been covenant defaults under certain of the Company's project level financing arrangements, mainly because of delays in the delivery of project level audited financial statements and the SunEdison Bankruptcy, which resulted in defaults because SunEdison, Inc. and certain of its affiliates have been serving as O&M and asset management service providers or as guarantors under relevant contracts. The Company has been working diligently with its lenders to cure or waive instances of default, including through the completion of project level audits and the retention of replacement service providers. However, there can be no assurance that all remaining defaults will be cured or waived. All of the Company's project level financing arrangements are on a non-recourse basis, and therefore these defaults do not directly affect the financial position of the Company. However, if the remaining defaults are not cured or waived, this would continue to restrict the ability of the relevant project companies to make distributions to the Company, and may entitle certain project level lenders to demand repayment or enforce their security interests or other remedies.
Additionally, covenant defaults may occur in the future under the indenture governing the Senior Notes in the event of delays in the filing of the Company’s periodic reports with the SEC. There can be no assurance that the Company will be able to file its periodic reports 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 25.0% 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 its business, results of operations, financial condition and ability to pay dividends.
The risk of substantive consolidation of the Company with SunEdison and inclusion in the SunEdison Bankruptcy, as well as the risk of future covenant defaults under the indenture governing the Senior Notes, raise substantial doubt about the Company’s ability to continue as a going concern.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with SEC regulations for interim financial information. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America ("U.S. GAAP") for complete financial statements. The financial statements should be read in conjunction with the accounting policies and other disclosures as set forth in the notes to the Company’s annual financial statements for the year ended December 31, 2016, filed with the SEC on Form 10-K on June 15, 2017.

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Certain solar power plants in the Company’s current portfolio have been contributed from SunEdison (also referred to as a “dropdown”) and are reflected in the accompanying unaudited condensed consolidated balance sheets at SunEdison’s historical cost. When power plants are contributed or acquired from SunEdison, the Company is required to recast its historical financial statements to reflect the assets and liabilities of the acquired power plants for the period such power plants were owned by SunEdison in accordance with rules applicable to transactions between entities under common control.
The accompanying unaudited condensed consolidated financial statements represent the results of TerraForm Global, Inc., which consolidates Global LLC through its controlling interest. Corporate expenses represent those costs allocated to the Company under the Management Services Agreement, as more fully described in Note 16 - Related Parties.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all material adjustments consisting of normal and recurring adjustments necessary to present fairly the Company’s unaudited condensed consolidated financial position as of September 30, 2017, and the results of operations, comprehensive income and cash flows for the three and nine months ended September 30, 2017 and 2016.
Use of Estimates
In preparing the unaudited condensed consolidated financial statements in conformity with U.S. GAAP, the Company used estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements. Such estimates also affect the reported amounts of revenues, expenses and cash flows during the reporting period. To the extent there are material differences between the estimates and actual results, the Company's future results of operations would be affected.
Restricted Cash
Restricted cash consists of cash on deposit in financial institutions that is restricted to satisfy the requirements of certain debt, acquisition, and settlement agreements. These restrictions include, as of the balance sheet date: (i) cash on deposit in collateral accounts, debt service reserve accounts, and maintenance reserve accounts; (ii) cash on deposit in operating accounts but subject to distribution restrictions due to debt defaults; and (iii) $50.0 million of insurance proceeds on deposit for settlement of litigation.
New Accounting Standards
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. ASU 2014-09 is effective for the Company on January 1, 2018. Early adoption is permitted but not before January 1, 2017. ASU 2014-09 permits the use of either a retrospective or cumulative effect transition method. The Company has not determined which transition method it will adopt, and it is currently evaluating the impact that ASU 2014-09 will have on its consolidated financial statements and related disclosures upon adoption. The Company does not plan to adopt this standard prior to January 1, 2018.
In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which describes how an entity should assess its ability to meet obligations and sets rules for how this information should be disclosed in the financial statements. ASU 2014-15 provides accounting guidance that will be used along with existing auditing standards. ASU 2014-15 applies to all entities for the first annual period ending after December 15, 2016, and interim periods thereafter. The Company adopted ASU 2014-15 as of January 1, 2017 and this standard did not have a material effect on the Company's consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which primarily changes the lessee’s accounting for operating leases by requiring recognition of lease right-of-use assets and lease liabilities. This standard is effective for annual reporting periods beginning after December 15, 2018, with early adoption permitted. The Company is evaluating the effect of the standard on its consolidated financial statements.
In March 2016, the FASB issued ASU 2016-05, Derivatives and Hedging (Topic 815), which clarifies that a change in one of the parties to a derivative contract (through novation) that is part of a hedge accounting relationship does not, by itself, require designation of that relationship, as long as all other hedge accounting criteria continue to be met. This standard is effective for annual and interim periods in fiscal years beginning after December 15, 2016, with early adoption permitted. The Company evaluated the standard and determined that it did not have a material effect on its consolidated financial statements.
In March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging (Topic 815), which clarifies that determining whether the economic characteristics of a put or call are clearly and closely related to its debt host requires only an assessment

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of the four-step decision sequence outlined in FASB ASC paragraph 815-15-25-24. Additionally, entities are not required to separately assess whether the contingency itself is clearly and closely related. This standard is effective for annual and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. The Company does not expect this standard to have a material effect on its consolidated financial statements.
On March 30, 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718), which is intended to improve the accounting for share-based payment transactions as part of the FASB’s simplification initiative. ASU 2016-09 changes seven aspects of the accounting for share-based payment award transactions, including but not limited to: (1) accounting for income taxes; (2) classification of excess tax benefits on the statement of cash flows; (3) forfeitures; (4) minimum statutory tax withholding requirements; and (5) classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax-withholding purposes. This standard is effective for annual and interim periods in fiscal years beginning after December 15, 2016, with early adoption permitted. The Company evaluated the standard and determined that it did not have a material effect on its consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments. The amendments of ASU 2016-15 were issued to address eight specific cash flow issues for which stakeholders have indicated to the FASB that a diversity in practice existed in how entities were presenting and classifying these items in the statement of cash flows. The issues addressed by ASU 2016-15 include but are not limited to the classification of debt prepayment and debt extinguishment costs, payments made for contingent consideration for a business combination, proceeds from the settlement of insurance proceeds, distributions received from equity method investees and separately identifiable cash flows and the application of the predominance principle. The amendments of ASU 2016-15 are effective for public entities for fiscal years beginning after December 15, 2017 and interim periods in those fiscal years. Early adoption is permitted, including adoption in an interim fiscal period with all amendments adopted in the same period. The adoption of ASU 2016-15 is required to be applied retrospectively. The Company is evaluating the impact of the standard on its consolidated statements of cash flows.
In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other Than Inventory, which eliminates the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party exception for an intra-entity transfer of an asset other than inventory. ASU 2016-16 is effective for annual periods beginning after December 15, 2017, and for annual periods and interim periods thereafter with early adoption permitted. The Company is evaluating the effect of the standard on its consolidated financial statements.
In October 2016, the FASB issued ASU 2016-17, Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control. ASU 2016-17 updates ASU 2015-02. Under the amendments, a single decision maker is not required to consider indirect interests held through related parties that are under common control with the single decision maker to be the equivalent of direct interests in their entirety. Instead, a single decision maker is required to include those interests on a proportionate basis consistent with indirect interests held through other related parties. ASU 2016-17 is effective for annual periods beginning after December 15, 2017, and for annual periods and interim periods thereafter with early adoption permitted. The Company is evaluating the effect of the standard on its consolidated financial statements.
In November 2016, the FASB issued ASU 2016-18, Statement of Cashflows (Topic 320): Restricted Cash a Consensus of the FASB Emerging Issues Task Force. The amendments require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this update do not provide a definition of restricted cash or restricted cash equivalents. ASU 2016-18 is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The Company is evaluating the effect of this standard on its consolidated financial statements.
In December 2016, the FASB issued ASU 2016-19, Technical Corrections and Improvements. The amendments cover a wide range of topics in the Accounting Standards Codification, including differences between original guidance and the Accounting Standards Codification, guidance clarification and reference corrections, simplification and minor improvements. The adoption of ASU 2016-19 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2016. The Company evaluated the standard and determined that it did not have a material effect on its consolidated financial statements.
In December 2016, the FASB issued ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. The amendments in this update are of a similar nature to the items typically addressed in the ASU 2016-19, Technical Corrections and Improvements. However, the FASB decided to issue a separate update for technical corrections and improvements to Topic 606 and other Topics amended by ASU 2014-09 to increase stakeholders’ awareness of

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the proposals and to expedite improvements to ASU 2014-09. The adoption of ASU 2016-20 is effective from the periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company evaluated the standard and determined that it did not have a material effect on its consolidated financial statements.
In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The amendment seeks to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting, including acquisitions, disposals, goodwill and consolidation. The adoption of ASU 2017-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The amendments should be applied prospectively on or after the effective dates. The Company is evaluating the effect of this standard on its consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. To simplify the subsequent measurement of goodwill, the FASB eliminated Step 2 from the goodwill impairment test. Under the amendments in this update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The standard will be applied prospectively and is effective for annual and interim impairment tests performed in periods beginning after December 15, 2019. The Company is evaluating the effect of this standard on its consolidated financial statements.
In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting. The amendment clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. The new guidance is expected to reduce diversity in practice and result in fewer changes to the terms of an award being accounted for as modifications. Changes that do not impact the award’s fair value, vesting conditions, or classification as an equity or liability instrument will not to be assessed modification accounting. The guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The Company is evaluating the effect of this standard on its consolidated financial statements.
In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The objective of the amendment is to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. In addition to that main objective, the amendments make certain targeted improvements to simplify the application of the hedge accounting guidance in current U.S. GAAP based on the feedback received from preparers, auditors, users, and other stakeholders. The guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. The Company is evaluating the effect of this standard on its consolidated financial statements.

2. ACQUISITIONS
2017 Pending Acquisition
Acquisition of BioTherm
In April 2015, the Company entered into purchase and sale agreements to acquire a controlling interest in three operating power plants located in South Africa with an aggregate net capacity of 32.6 MW from BTSA Netherlands Coöperatie U.A. (“BioTherm”). The aggregate consideration payable for the controlling interests in these three power plants is approximately $75.1 million in cash, comprised of approximately $67.6 million and ZAR 100.4 million ($7.4 million as of September 30, 2017), plus 544,055 shares of the Company’s Class A common stock, which is fixed in accordance with the purchase and sale agreements. Additionally, a variable amount, which is estimated to be approximately $3.5 million , is due upon the completion of the transaction (the “Variable Amount”). The Variable Amount mainly represents customary working capital adjustments that have occurred between the date the Company entered into the purchase and sale agreements and the date that the transaction is completed. The aggregate consideration includes amounts for certain additional rights and services. No further consents are required with respect to the completion of the acquisition of the Klipheuwel wind power plant. However, the completion of the acquisition of the Aries and Konkoonsies solar power plants remains subject to obtaining consents from project lenders. The completion of the BioTherm transaction is expected to occur in the fourth quarter of 2017.

19



In August 2015, the Company paid $65.6 million in cash for the interests in the Aries and Konkoonsies solar power plants and the Klipheuwel wind power plant, as well as certain additional rights. In addition to the cash consideration, the Company provided 544,055 shares of its Class A common stock as consideration for the interests in the three power plants. Approximately $20.3 million of the cash payment and all of the 544,055 shares of the Company’s Class A common stock were deposited into an escrow account. The remaining cash portion of this escrow deposit is reported as non-current restricted cash on the Company’s unaudited condensed consolidated balance sheet as of September 30, 2017. The remaining paid consideration of $40.3 million in cash and the August 2015 fair value of the 544,055 shares are reported as a deposit for acquisitions on the Company’s unaudited condensed consolidated balance sheet as of September 30, 2017.
As of September 30, 2017, the remaining balance due upon the closing of the transaction was approximately $9.5 million (not including the Variable Amount), comprised of $2.0 million and ZAR 11.6 million ($0.9 million) due to BioTherm and ZAR 88.9 million ($6.6 million) due to minority interests. Prior to the completion of the BioTherm transaction, BioTherm is required to direct payment of all of BioTherm's pro rata share of the distributions from the Klipheuwel wind power plant to the Company, and the Company and BioTherm are required to jointly direct the release of amounts equal to BioTherm's pro rata share of the distributions from the Aries and Konkoonsies solar power plants from the escrow to the Company.
Pending receipt of the consents from the lenders to the Aries and Konkoonsies solar power plants, the Company may at its discretion direct a sale of these power plants to a third party. Due to the fact that the closing of the acquisition of these power plants did not occur by November 30, 2016, the parties have engaged in discussion to agree upon an alternative structure that would permit release of the escrowed funds as required pursuant to the applicable purchase and sale agreements. Failure to complete these acquisitions, or to reach agreement upon an alternative structure that would permit release of the escrowed funds, by November 30, 2017 would entitle BioTherm to sell the Aries and Konkoonsies solar power plants to a third party. Upon closing of a sale to a third party, all sale proceeds are required to be paid to the Company, any amounts remaining in the escrow account are required to be released to BioTherm and the Company is required to pay the remainder of the purchase price.
2016 Acquisitions and Dropdowns
Dropdown of NPS Star and WXA
On February 24, 2016, SunEdison transferred to the Company a 49.0% equity interest, constituting a controlling interest and substantially all of the economic interest, in each of NPS Star and WXA, each of which consists of three solar power plants located in Thailand. These solar power plants, which achieved commercial operation in December 2015 and represent 35.6 MW of aggregate net capacity, were required to be contributed to the Company, without further payment, pursuant to the Project Investment Agreement between SunEdison and the Company.
Acquisition of Alto Cielo
On April 8, 2016, the Company completed the acquisition of a 100.0% ownership interest in the Alto Cielo solar power plant located in Uruguay with an aggregate net capacity of 26.4 MW from Solarpack Corporación Tecnológica, S.L. The power plant reached commercial operation in March 2016. The aggregate cash consideration paid for the Alto Cielo power plant was $32.3 million, of which $1.1 million was being held in escrow accounts as of September 30, 2017 until certain conditions are met.

20



The acquisition date allocation of assets and liabilities for the Alto Cielo solar power plant is as follows:
 
2016
(In thousands)
Alto Cielo
Cash and cash equivalents
$
190

Restricted cash
1,923

Accounts receivable
311

Power plants
35,414

Other assets
2,738

Total assets acquired
40,576

Accrued expenses and other current liabilities
3,670

Deferred tax liabilities
557

Long-term debt, including current portion
4,031

Total liabilities assumed
8,258

Fair value of net assets acquired
$
32,318

Transfer of Balance of Equity in Certain Power Plants in India
In April 2016, SunEdison transferred to the Company the balance of 51.0% of the equity interests in the NSM Suryalabh, NSM Sitara and NSM L’Volta solar power plants in India following the expiration of the equity lock-up period in the applicable PPAs. Consideration for the transfer of the balance of 51.0% of the equity interests in these power plants was received by SunEdison in the form of shares of the Company’s Class B common stock that were issued to SunEdison at the time of the Company's IPO, and there was no further payment made by the Company to SunEdison at the time of the transfer.
In October 2016, SunEdison sold to the Company 11.0% of the equity interests in the Millenium solar power plant in India for cash consideration of approximately $1.0 million. In addition, SunEdison transferred to the Company the balance of 51.0% of the equity interests in the Focal solar power plant in India following the expiration of the equity lock-up period in the applicable PPAs, at which time the Company was required to make a cash payment of $0.5 million to the original project developer, a third party. Consideration for the transfer of the balance of 51.0% of the equity interests in the Focal power plant was received by SunEdison in the form of shares of the Company’s Class B common stock that were issued to SunEdison at the time of the Company's IPO, and there was no further payment made by the Company to SunEdison at the time of the transfer.
In October 2016, the Company also entered into arrangements with SunEdison for the transfer of the balance of the equity interests in the Millenium, Azure, ESP Urja and SE 25 solar power plants in India, in each case following the expiration of the equity lock-up period in the applicable PPAs (ranging from November 2016 to March 2017) and without further action by SunEdison. Consideration for the transfer of the balance of the equity interests in these power plants was received by SunEdison in the form of shares of the Company’s Class B common stock that were issued to SunEdison at the time of the Company's IPO, and there was no further payment made by the Company to SunEdison at the time of the transfers. In accordance with these arrangements, in November 2016, December 2016 and January 2017, the balance of 26.0% of the equity interests in Azure, ESP Urja and Millenium, respectively, was transferred to the Company. In March 2017, 100.0% of the equity interests in SE 25 were transferred to the Company.
Termination of Renova - ESPRA
On March 29, 2016, the Company entered into a Termination Agreement (the “Termination Agreement”) with Renova with respect to the Securities Purchase Agreement dated July 15, 2015 among the Company, SunEdison and Renova relating to the ESPRA hydro-electric power plant (the “ESPRA SPA”). The Termination Agreement provides that, subject to the satisfaction of certain conditions, the ESPRA SPA will be terminated by mutual agreement of the Company and Renova. These conditions were satisfied on March 31, 2016 and the ESPRA SPA has been terminated. The Termination Agreement provides that the Company will pay Renova $10.0 million in connection with the termination of the ESPRA SPA. The Company made this payment to Renova on April 1, 2016. Pursuant to the Termination Agreement, the Company and Renova have granted each other full releases of any further obligations under the ESPRA SPA.


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3. POWER PLANTS
Power plants, net consists of:
(In thousands)
September
 30, 2017
 
December
 31, 2016
Land
$
10,351

 
$
9,787

Solar power plants
695,869

 
763,147

Wind power plants
786,335

 
676,824

     Total power plants in service, at cost
1,492,555

 
1,449,758

Less: accumulated depreciation
(146,762
)
 
(94,634
)
     Total power plants in service, net
1,345,793

 
1,355,124

Construction in progress

 
238

     Total power plants, net
$
1,345,793

 
$
1,355,362

The Company recorded depreciation expense related to power plants of $15.5 million and $49.5 million for the three and nine months ended September 30, 2017, respectively, as compared to $12.4 million and $38.3 million, respectively, for the same periods in the prior year.
Construction in progress represents costs incurred to complete the construction of the power plants in the Company’s current portfolio that were either contributed to the Company by SunEdison or acquired from SunEdison. When power plants are contributed or sold to the Company after completion by SunEdison, the Company retroactively recasts its historical financial statements to present the construction activity as if it consolidated the power plants at inception of the construction. All construction in progress costs are stated at SunEdison’s historical cost.
Certain of the Company's solar power plants in India are entitled to receive viability gap funding support in an amount determined through a competitive bidding process. The viability gap funding support is funded by India’s National Clean Energy Fund and is paid by the offtake counterparty to these solar power plants, the Solar Energy Corporation of India ("SECI"), a not-for-profit company established by the Ministry of New and Renewable Energy to facilitate solar energy generation capacity in India. The program is expected to provide viability gap funding subsidies to the applicable solar power plants in the aggregate amount of INR 1,189.4 million, 50.0% of which is payable as early as three months after each power plant's commissioning, and 10.0% of which is payable each year for five years thereafter, subject to the plant meeting certain requirements. SECI is contractually obligated to establish an irrevocable letter of credit to secure its payment obligations.
The Company recorded the awarded viability gap funding in full as a reduction to the cost of power plants in service, with a $2.3 million and $2.3 million receivable included in current other assets, and $3.5 million and $3.4 million in other assets in the unaudited condensed consolidated balance sheet as of September 30, 2017 and December 31, 2016, respectively. The current portion of the viability gap funding includes the initial 50.0% receivable following the solar power plant’s commercial operation date and the 10.0% receivable in the first year thereafter. The initial 50.0% receivable, or $8.9 million, was received in cash during 2016. The remaining portion of the current receivable is expected to be received in the fourth quarter of 2017. It is possible that $3.1 million of the remaining receivable balance of one of the power plants will not be received due to a lower capacity utilization factor than required under the applicable PPA. As the result, the Company reserved this amount against property, plant and equipment.


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4. DEPOSITS FOR ACQUISITIONS
Deposits for acquisitions consist of:
 
As of September 30,
 
As of December 31,
(In thousands)
2017
 
2016
India PSA payment to SunEdison
$
231,000

 
$
231,000

BioTherm payment
51,101

 
51,101

Total deposits for acquisitions
282,101

 
282,101

Less: provision for contingent loss
(231,000
)
 
(231,000
)
Less: BioTherm distributions
(4,858
)
 
(2,827
)
Total deposits for acquisitions, net
$
46,243

 
$
48,274

425 MW India Projects
On November 20, 2015, the Company and SunEdison Holdings Corporation entered into an Equity Interest Purchase and Sale Agreement pursuant to which the Company agreed to acquire from SunEdison Holdings Corporation a portfolio of 17 solar energy projects in India with an aggregate nameplate capacity of 425 MW (the “425 MW India Projects”). This agreement was subsequently amended and restated on December 1, 2015. Pursuant to the Amended and Restated Equity Interest Purchase and Sale Agreement (the “India PSA”), the Company paid $231.0 million in cash to SunEdison Holdings Corporation in the fourth quarter of 2015 in exchange for the 425 MW India Projects, which projects would be transferred to the Company upon satisfaction of certain conditions precedent.
During 2016, and beginning prior to the SunEdison Bankruptcy, the Company became aware that there was substantial risk that the 425 MW India Projects would not be completed and transferred to the Company in accordance with the India PSA.
In April 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 in the State of Delaware (see Note 15 - Commitments and Contingencies). The complaint asserts claims for breach of fiduciary duty, breach of contract and unjust enrichment relating to the failure by SunEdison 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 SunEdison 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.
The Settlement Agreement includes a release by the Company of its claims against the SunEdison Defendants, including all of the Company’s claims relating to the 425 MW India Projects, and if the Settlement Agreement becomes effective the Company will not recover any amounts on these claims outside of the consideration received under the terms of the Settlement Agreement. If the Settlement Agreement is terminated, the Company expects to continue to pursue its claims against the SunEdison Defendants.
The $231.0 million paid by the Company in accordance with the India PSA is reported as a deposit for acquisitions on the Company’s unaudited condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016. The Company determined that the deposit for acquisition of the 425 MW India Projects was impaired as of December 31, 2015, and recorded a provision for contingent loss of the full $231.0 million in the consolidated balance sheet as of December 31, 2015. The Company also recorded a corresponding charge in the consolidated statement of operations for the year ended December 31, 2015. The provision for contingent loss remained on the unaudited condensed consolidated balance sheet as of September 30, 2017.
In September 2016, the Company reached an agreement with certain subsidiaries of SunEdison pursuant to which the Company consented to the sale of certain of SunEdison’s subsidiaries’ assets to a third party buyer (the “Third Party Sale Transaction”). The Third Party Sale Transaction was conducted in connection with SunEdison’s bankruptcy process and included the 17.4 MW Del Litoral and 57.4 MW El Naranjal solar power projects in Uruguay, the 24.1 MW Bora Bora Poly wind power project in India and the 425 MW India Projects. The Company has agreed not to pursue claims against a third party buyer of these projects, however the Company has retained all of its claims against SunEdison and its affiliated persons. As a

23



condition to the Company’s consent to the Third Party Sale Transaction, the Company and certain subsidiaries of SunEdison that directly or indirectly own the assets that are subject to the Third Party Sale Transaction have entered into a proceeds sharing arrangement pursuant to which the Company is entitled to receive a portion of the cash proceeds received by the SunEdison parties in the Third Party Sale Transaction. In September 2016, the Company received $6.7 million in cash proceeds from this arrangement. The Company has not received, and does not expect to receive, any additional cash proceeds from this arrangement going forward.
BioTherm
In August 2015, the Company paid $65.6 million in cash for the interests in the Aries and Konkoonsies solar power plants and the Klipheuwel wind power plant, as well as certain additional rights. In addition to the cash consideration, the Company provided 544,055 shares of its Class A common stock as consideration for the interests in the three power plants. In accordance with the funding arrangements, during the first and third quarters of 2017 the Company received $1.3 million and $1.7 million, respectively, from the escrow account holding the purchase consideration for the Aries and Konkoonsies solar power plants, which reduced the outstanding balance of the escrow account from $16.4 million as of December 31, 2016 to $13.4 million as of September 30, 2017. Cash paid to the escrow account is reported as non-current restricted cash in the Company’s unaudited condensed consolidated balance sheet. Additionally, in the first and third quarters of 2017, the Company received distributions equaling $1.2 million and $1.1 million, respectively, from BioTherm with respect to the Klipheuwel wind power plant. The remaining paid consideration of $40.3 million in cash and the August 2015 fair value of the 544,055 shares are reported as a deposit for acquisitions on the Company’s unaudited condensed consolidated balance sheet as of September 30, 2017. See Note 2 - Acquisitions for additional details related to this acquisition.

5. INTANGIBLE ASSETS
The following table presents the gross carrying amount and accumulated amortization of intangible assets as of September 30, 2017:
(In thousands, except weighted average amortization period)
 
Remaining Weighted Average Amortization Period (Years)
 
Gross Carrying Amount
 
Accumulated Amortization
 
Accumulated Currency Translation Adjustment
 
Net Book Value
In-place value of market rate revenue contracts
 
17
 
$
95,253

 
$
(10,200
)
 
$
(2,876
)
 
$
82,177

The following table presents the gross carrying amount and accumulated amortization of intangible assets as of December 31, 2016:
(In thousands, except weighted average amortization period)
 
Remaining Weighted Average Amortization Period (Years)
 
Gross Carrying Amount
 
Accumulated Amortization
 
Accumulated Currency Translation Adjustment
 
Net Book Value
In-place value of market rate revenue contracts
 
18
 
$
93,943

 
$
(5,932
)
 
$
(5,561
)
 
$
82,450

As of September 30, 2017, the Company had revenue contracts in the form of PPAs that were obtained through acquisitions. PPAs are amortized on a straight line basis over the useful life of the agreements, which range from 19 to 25 years. Amortization expense related to revenue contracts is recognized in the unaudited condensed consolidated statements of operations as either a reduction or increase of revenue when the contract rate is above or below market rates (favorable or unfavorable) or within depreciation, accretion and amortization expense when the contract rate is equal to market rates (in-place).
As such, the amortization expense for the three and nine months ended September 30, 2017 was $1.0 million and $3.4 million, respectively. For the three and nine months ended September 30, 2017, $0.3 million and $1.1 million, respectively, was recorded as a reduction of revenue while the remaining $0.7 million and $2.3 million, respectively, was recorded within the depreciation, accretion, and amortization line item in the unaudited condensed consolidated statement of operations.
During the nine months ended September 30, 2017, the Company capitalized $1.3 million of internally developed software. As of September 30, 2017, the software was not ready for its intended use, and as such, there was no amortization charged.

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6. VARIABLE INTEREST ENTITIES
The Company consolidates any variable interest entities (“VIEs”) in power plants in which it is the primary beneficiary. The Company is the primary beneficiary of nine VIEs in entities that were consolidated as of September 30, 2017, each of which existed and was consolidated as of December 31, 2016. The VIEs own and operate power plants in order to generate contracted cash flows.
As disclosed in Note 2 - Acquisitions, in October 2016, the Company entered into arrangements with SunEdison for the transfer of the balance of the equity interests in the Millenium and SE 25 solar power plants in India, in each case following the expiration of the equity lock-up period in the applicable PPAs in January and March 2017, respectively, and without further action by SunEdison. In accordance with these arrangements, in January 2017, the balance of 26.0% of the equity interests in Millenium was transferred to the Company. In March 2017, 100.0% of the equity interests in SE 25 were transferred to the Company. As a result of the transfer of equity interest in Millenium and SE 25, these power plants are no longer considered VIEs as of September 30, 2017.
The carrying amounts and classification of the consolidated VIEs’ assets and liabilities included in the Company’s unaudited condensed consolidated balance sheets are as follows:
(In thousands)
As of September 30, 2017
 
As of December 31, 2016
Current assets
$
172,385

 
$
186,739

Non-current assets
358,878

 
423,315

Total assets
$
531,263

 
$
610,054

Current liabilities
$
373,254

 
$
386,297

Non-current liabilities
109,055

 
162,793

Total liabilities
$
482,309

 
$
549,090

The amounts shown in the table above exclude intercompany balances which are eliminated upon consolidation. All of the assets in the table above are restricted for settlement of the VIE obligations, and all of the liabilities in the table above can only be settled by using VIE resources.

7. LONG-TERM DEBT
Long-term debt as of September 30, 2017 and December 31, 2016 consists of the following:
 
As of September 30,
 
As of December 31,
 
 
 
 
 
 
 
(In thousands, except rates)
2017
 
2016
 
Interest Type
 
Current Interest Rate (%)(1)
 
Financing Type
Corporate level long-term debt:
 
 
 
 
 
 
 
 
 
 
Senior Notes
$
753,829

 
$
752,813

 
Fixed
 
9.80%
 
 
Term debt
Project level long-term debt:
 
 
 
 
 
 
 
 
 
 
Permanent financing
346,342

 
351,607

 
Blended
 
12.6%
(2) 
 
Term debt
Total long-term debt
1,100,171

 
1,104,420

 
 
 
 
 
 
 
Less: deferred financing costs, net (3)
16,287

 
18,352

 
 
 
 
 
 
 
Less: current portion of long-term debt (4)
320,355

 
327,459

 
 
 
 
 
 
 
Consolidated long-term debt, less current portion
$
763,529

 
$
758,609

 
 
 
 
 
 
 
(1)
The weighted average effective interest rate as of September 30, 2017.
(2)
As of September 30, 2017, 8.9% of this balance had fixed interest rate debt and the remaining 91.1% had variable interest rate debt, of which a portion is hedged with interest rate swaps.
(3)
Total net debt reflects the reclassification of deferred financing costs to reduce long-term debt as further described in Note 1 - Nature of Operations.

25



(4)
Approximately $310.8 million and $323.3 million have been classified as current due to non-compliance with certain debt covenants as of September 30, 2017 and December 31, 2016, respectively.
Corporate Level Long-Term Debt
Revolving Credit Facility
On March 31, 2017, Global Operating LLC permanently reduced to zero and terminated the revolving commitments under 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.
The Company had drawn zero on the Revolver as of September 30, 2017 and December 31, 2016. The Company issued a letter of credit for $0.4 million in August 2016 under the terms of the Revolver in support of the Alto Cielo acquisition, which remained outstanding as of December 31, 2016. The outstanding letter of credit was terminated on March 23, 2017 in connection with the Fifth Amendment.
Senior Notes
The aggregate amount of the Senior Notes outstanding at September 30, 2017 was $753.8 million (or a notional amount of $760.4 million) and the aggregate amount outstanding at December 31, 2016 was $752.8 million (or a notional amount of $760.4 million).
Global Operating LLC received a notice of default, dated January 17, 2017, from the trustee under the indenture governing the Senior Notes with respect to the failure of Global Operating LLC to comply with its obligations under the indenture governing the Senior Notes to timely furnish the Company's Form 10-Q for the third quarter of 2016. However, no event of default under the indenture governing the Senior Notes occurred with respect to the Company's Form 10-Q for the third quarter of 2016 because such Form 10-Q was filed before an event of default under the indenture governing the Senior Notes would otherwise arise.
Global Operating LLC received a notice of default, dated May 16, 2017, from the trustee under the indenture governing the Senior Notes with respect to the failure of Global Operating LLC to comply with its obligations under the indenture governing the Senior Notes to timely furnish the Company's Form 10-K for the year ended December 31, 2016. No event of default under the indenture governing the Senior Notes occurred due to the filing of the Company’s Form 10-K for the year ended December 31, 2016 before an event of default under the indenture governing the Senior Notes would otherwise arise.
Covenant defaults may occur in the future under the indenture governing the Senior Notes in the event of delays in the filing of the Company’s periodic reports with the SEC. There can be no assurance that the Company will be able to file its periodic reports 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 its business, results of operations, financial condition and ability to pay dividends.
Project Level Long-Term Debt
The Company typically finances power plants through entity specific debt secured by the power plant’s assets and equity interests with no recourse to the Company. These financing agreements typically provide for a credit facility used for construction, which upon completion is converted into term debt. The Company had $346.3 million and $351.6 million of project level debt as of September 30, 2017 and December 31, 2016, respectively. The project level debt is secured by the assets of the applicable project companies and certain intermediary holding companies.
As of September 30, 2017 and December 31, 2016, term debt for power plants in South Africa consists of variable rate loans, totaling $310.4 million and $315.2 million, respectively, with interest rates tied to the three-month LIBOR and the three-month Johannesburg Interbank Agreed Rate, as well as fixed rate loans totaling $14.4 million and $12.6 million, respectively.

26



The interest rates on the South Africa term debt ranged from 13.0% to 13.3% as of September 30, 2017 and 11.4% to 13.0% as of December 31, 2016. The increase in interest rates in South Africa is due to an additional 2.0% of default interest being charged on the Witkop and Soutpan term debt. The debt for each power plant matures in 2031. Principal and interest are due and payable in arrears at the end of each fiscal quarter or semi-annually and on the maturity date of the credit facilities.
As of September 30, 2017 and December 31, 2016, the Witkop and Soutpan power plants, which have term debt financed with a South African rand (ZAR)-denominated term loan from The Standard Bank of South Africa Limited and other lenders, had an outstanding principal amount totaling $136.8 million and $136.6 million, respectively. This term debt matures in 2031. As of September 30, 2017 and December 31, 2016, the Witkop and Soutpan project companies were not in compliance with certain covenants due to the SunEdison Bankruptcy, as well as the expiration of a performance bond posted by a subcontractor under the engineering, procurement and construction contract. Thus, the debt balances are classified as current as of September 30, 2017 and December 31, 2016. These defaults also prevent the Soutpan and Witkop project companies from making distributions and provide the lenders with the right to accelerate the debt maturity. The Company has obtained waivers and/or forbearance agreements from the lenders for varying periods as the Company continues to work to cure such defaults. However, certain defaults were not cured prior to the expiration of the applicable waivers. As a result of these defaults, the lenders are entitled to demand, and have demanded, that the project companies pay default interest of 2.0% effective as of February 1, 2017. As of September 30, 2017, the Soutpan and Witkop project companies have accrued and paid a total of ZAR 25.8 million ($1.9 million) in default interest.
As of September 30, 2017 and December 31, 2016, the Boshof power plant, which has term debt financed with a U.S. dollar-denominated term loan from the Overseas Private Investment Corporation (“OPIC”), had an outstanding principal amount of approximately $173.6 million and $178.5 million, respectively. The term debt matures in September 2031. As of September 30, 2017 and December 31, 2016, the project company was not in compliance with certain covenants due to the SunEdison Bankruptcy, as well as a delay by the contractor, a SunEdison subsidiary, in achieving final completion under the engineering, procurement and construction contract. Thus, the debt balances are classified as current as of September 30, 2017 and December 31, 2016. These defaults also prevent the Boshof project company from making distributions and provide OPIC with the right to accelerate the debt maturity. The Company is currently working with OPIC to cure such defaults.
As of September 30, 2017 and December 31, 2016, term debt for power plants in India consists of fixed rate loans totaling $15.8 million and $17.3 million, respectively, with interest rates ranging from 0.0% to 4.8%, and the debt matures in 2026. Principal and interest are due and payable in arrears monthly or quarterly and on the maturity dates of the credit facilities.
As of September 30, 2017 and December 31, 2016, the Azure and ESP Urja power plants, which have term debt financed with U.S. dollar-denominated term loans from OPIC, had a combined outstanding principal amount of approximately $15.7 million and $17.3 million, respectively. The term debt matures in September and December of 2026, respectively, and bears fixed interest at a rate of 4.5% and 4.8% per annum, respectively. Interest and principal amortization payments are made on a quarterly basis. As of September 30, 2017 and December 31, 2016, the Azure project company was not in compliance with certain financial ratio covenants due to changes in foreign currency valuations. In addition, the Azure and ESP Urja project companies were not in compliance with certain covenants due to the SunEdison Bankruptcy, as well as a delay by local authorities to complete the classification of a portion of the project sites as non-agricultural use. Thus, the debt balances are classified as current as of September 30, 2017 and December 31, 2016. These defaults also prevent the Azure and ESP Urja project companies from making distributions and provide OPIC with the right to accelerate the debt maturity. The Company is currently working with OPIC to cure such defaults.
As of September 30, 2017 and December 31, 2016, the Corporate Season power plant in Malaysia has term debt from Standard Chartered Bank with an outstanding principal amount of $5.1 million and $5.1 million, respectively. The term debt matures in 2028, and bears a variable interest rate tied to the Kuala Lumpur Interbank Offered Rate. The interest rate as of September 30, 2017 and December 31, 2016 was 6.1%. Principal and interest are due and payable in arrears at the end of each fiscal quarter or on the maturity date of the credit facility.
The Silverstar Pavilion and Fortune 11 power plants in Malaysia have outstanding loans with a holder of a non-controlling interest in such power plants in the aggregate amount of $0.7 million as of September 30, 2017 and December 31, 2016 and with a fixed interest rate of 4.0%.
The Alto Cielo power plant in Uruguay had term debt from Jugler S.A. that was fully repaid as of September 30, 2017.
Each of the project level financing agreements contains customary representations, covenants and warranties of the respective borrower including limitations on business activities, guarantees, environmental issues, power plant maintenance standards and a minimum debt service coverage ratio requirement. In particular, these agreements contain financial and other restrictive covenants that limit the project companies' ability to make distributions or otherwise engage in activities that may be

27



in their long-term best interests. The project level financing agreements generally prohibit distributions from the project companies unless certain specific conditions are met, including the satisfaction of certain financial ratios.
Debt Extinguishments
Gains and losses on extinguishment of debt recognized for the three months ended September 30, 2017 and 2016, respectively, were immaterial amounts.
During the nine months ended September 30, 2017, the Company permanently reduced to zero and terminated the revolving commitments under the Revolver. As a result, a loss on extinguishment of debt of $6.7 million was recognized for the same period. During the nine months ended September 30, 2016, a gain on extinguishment of debt of $5.7 million was recognized due to repurchases of Senior Notes in January 2016.
In January 2016, the Company repurchased $41.0 million of the Senior Notes for $33.2 million and paid $1.9 million of interest and prepayment fees. In total, the Company repurchased $49.6 million of the Senior Notes for $40.0 million plus prepayment fees and interest of $2.3 million. A gain on extinguishment of debt of $6.3 million was recognized in the first quarter of 2016 related to these repurchases.
Interest Income
Interest expense in the unaudited condensed consolidated statements of operations is presented net of interest income. During the three and nine months ended September 30, 2017, the Company received interest income of $2.2 million and $5.0 million, respectively, from its cash and cash equivalents balances, short-term investments and restricted deposit accounts, compared to $0.9 million and $4.1 million during the same periods in 2016.
Maturities
The aggregate amounts of contractual payments of long-term debt due after September 30, 2017, excluding amortization of debt discounts and premiums, as stated in the financing agreements, are as follows:

Maturities (1)
(In thousands)
Within 1 Year
 
Year 1 through Year 2
 
Year 2 through Year 3
 
Year 3 through Year 4
 
Year 4 through Year 5
 
Thereafter
 
Total
Project Level
$
15,584

 
$
16,857

 
$
16,380

 
$
16,765

 
$
15,108

 
$
265,648

 
$
346,342

Corporate

 

 

 

 

 
753,829

 
753,829

Total debt
$
15,584

 
$
16,857

 
$
16,380

 
$
16,765

 
$
15,108

 
$
1,019,477

 
$
1,100,171

(1)
Represents the contractual principal payment due dates for the Company’s long-term debt and does not reflect the reclassification of $310.8 million of long-term debt to current as a result of debt defaults under a portion of its non-recourse financing agreements or deferred financing costs that are included with the net long-term balance of the unaudited condensed consolidated balance sheet.

8. INCOME TAXES
The income tax provision consisted of the following:
 
Three Months Ended
September 30,
Nine Months Ended
 September 30,
(In thousands, except effective tax rate)
2017
 
2016
2017
 
2016
Loss before income tax expense
$
(34,221
)
 
$
(15,734
)
$
(48,969
)
 
$
(13,382
)
Income tax expense
2,490

 
2,121

7,440

 
5,040

Effective tax rate
(7.3
)%
 
(13.5
)%
(15.2
)%
 
(37.7
)%
The Company records income tax expense each quarter using its best estimate of the full year’s effective tax rate. The Company regularly reviews its deferred tax assets for realizability, taking into consideration all available evidence, both positive and negative, including cumulative losses, projected future pre-tax and taxable income (losses), the expected timing of the reversals of existing temporary differences and the expected impact of tax planning strategies.

28



As of September 30, 2017, TerraForm Global, Inc. owned 64.85% of Global LLC and consolidates the results of Global LLC through its controlling interest. The Company records SunEdison's 35.15% ownership of Global LLC as a non-controlling interest in the financial statements. Global LLC is treated as a partnership for income tax purposes.
For the nine months ended September 30, 2017, the overall effective tax rate was different than the statutory rate of 35.0% primarily due to valuation allowances, tax holiday benefits, taxes on non-operating income in Thailand, presumed profits taxes in Brazil, interest expense in India and withholding taxes in the Netherlands. As of September 30, 2017, most jurisdictions were in a net deferred tax asset position. A valuation allowance is recorded against the deferred tax assets where appropriate, primarily because of the historical losses in those jurisdictions.
9. DERIVATIVES
As part of the Company’s risk management strategy, the Company has entered into derivative instruments which include interest rate swaps, cross currency swaps, and foreign currency contracts to mitigate interest rate and foreign currency exposure. If the Company elects to do so and if the instrument meets the criteria specified in ASC 815, Derivatives and Hedging, the Company designates its derivative instruments as cash flow hedges. The Company enters into interest rate swap agreements in order to hedge the variability of expected future cash interest payments. Cross currency swaps are used to reduce risks arising from the change in fair value of certain foreign currency denominated assets and liabilities in order to minimize the impact of foreign currency fluctuations on operating results. Foreign currency contracts are used to mitigate the economic and financial market risks of fluctuations in foreign currency exchange rates. The Company does not use derivative instruments for speculative purposes.
Activities related to derivative instruments were reported in the line items as of and for the periods indicated, as follows:
(In thousands)
 
 
Fair Value As of
Type of Instrument
Balance Sheet Classification
 
September 30,
2017
 
December 31,
2016
Derivatives designated as hedging:
 
 
 
 
Interest rate swaps
Other liabilities, net
 
$
(5,895
)
 
$
(2,237
)
 
Accumulated other comprehensive loss
 
5,895

 
2,237

Cross currency swaps
Other assets, net
 
$
39,844

 
$
41,752

 
Accumulated other comprehensive loss
 
5,421

 
6,688

 
 
 
 
 
 
Derivatives not designated as hedging:
 


 


Interest rate swaps
Other liabilities
 
$
(2,935
)
 
$
(68
)
Foreign currency forward contracts
Other liabilities
 
$
(16,645
)
 
$
(13,299
)
(In thousands)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
Type of Instrument
Statement of Operations Classification
 
2017
 
2016
 
2017
 
2016
Derivatives not designated as hedging:
 
 
 
 
 
 
 
 
Interest rate swaps
Interest expense (income)
 
$
3,711

 
$
1,072

 
$
5,525

 
$
5,854

Currency forward contracts
Other expense (income)
 
$
25,829

 
$
4,586

 
$
17,341

 
$
36,206

Certain derivative contracts contain provisions providing the counterparties a lien on specific assets as collateral. There was no cash collateral received or pledged as of September 30, 2017 or December 31, 2016, respectively, related to the Company’s derivative transactions.    
Derivatives Designated as Hedges
Interest Rate Swaps
The Company has entered into interest rate swap agreements to hedge variable rate project level debt. These interest rate swaps qualify for hedge accounting and are designated as cash flow hedges. Under the interest rate swap agreements, the

29



power plant pays a fixed rate and the counterparty to the agreement pays a variable interest rate. No amounts deferred in other comprehensive income were reclassified into earnings during the three and nine months ended September 30, 2017 and 2016
Cross Currency Swaps
The Company has entered into cross currency swap agreements to hedge its exposure to foreign currency fluctuations on debt denominated in U.S. dollars. These cross currency rate swaps qualify for hedge accounting and were designated as cash flow hedges. The amounts deferred in other comprehensive income and reclassified into loss were $25.8 million and $4.6 million during the three months ended September 30, 2017 and 2016, respectively, and $17.3 million and $36.2 million during the nine months ended September 30, 2017 and 2016, respectively. There was no ineffectiveness recorded for the periods presented.
Derivatives Not Designated as Hedges
Interest Rate Swaps
The Company has entered into interest rate swap agreements that economically hedge the cash flows for project level debt. These interest rate swaps pay a fixed rate and the counterparties to the agreements pay a variable interest rate. The changes in fair value are recorded in interest expense, net in the unaudited condensed consolidated statements of operations as these hedges are not accounted for under hedge accounting.
Foreign Currency Contracts
The Company transacts business in various foreign currencies and has established a program that primarily utilizes foreign currency contracts to offset the risks associated with the effects of certain foreign currency exposures. The Company does not use these foreign currency contracts for trading purposes nor does it designate these forward contracts as hedging instruments pursuant to ASC 815. As of September 30, 2017, the notional amounts of the foreign currency contracts the Company held to purchase U.S. dollars in exchange for other major international currencies were $96.9 million. Included in the Company’s non-operating expense was $25.8 million of expense and $(17.3) million of net income related to these foreign currency contracts for the three and nine months ended September 30, 2017, respectively, which was a result of devaluation as compared to the U.S. dollar in the Brazilian real (BRL), Chinese yuan renminbi (CNY), Indian rupee (INR), Malaysian ringgit (MYR), South African rand (ZAR) and Thai baht (THB). The fair value of the Company’s outstanding foreign currency forward contracts was a net liability of $16.6 million as of September 30, 2017. The cash flow related to foreign currency contracts that remain outstanding is classified as operating activities. The cash flow associated with foreign currency contract settlements is classified as investing activities. The net loss relating to investments was partially offset by the lower cost related to the cash flows related to the acquisitions and debt extinguishments that were hedged.
Notional Amounts
(In thousands)
Notional Amounts as of September 30, 2017
Derivatives designated as hedges:
 
   Interest rate swaps (USD)
$
128,377

   Cross currency swaps (USD)
$
347,297

Derivatives not designated as hedges:
 
   Interest rate swaps (USD)
123,383

   Currency forward contracts (BRL)
30,913

   Currency forward contracts (CNY)
15,001

   Currency forward contracts (INR)
29,857

   Currency forward contracts (MYR)
2,905

   Currency forward contracts (THB)
4,369

   Currency forward contracts (ZAR)
13,899



30



10. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of assets and liabilities are determined using either unadjusted quoted prices in active markets (Level 1) or pricing inputs that are observable (Level 2) whenever that information is available and using unobservable inputs (Level 3) to estimate fair value only when relevant observable inputs are not available.
The Company uses valuation techniques that maximize the use of observable inputs. Assets and liabilities are classified in their entirety based on the lowest priority level of input that is significant to the fair value measurement. Where observable inputs are available for substantially the full term of the asset or liability, the instrument is categorized in Level 2. If the inputs into the valuation are not corroborated by market data, in such instances, the valuation for these contracts is established using techniques including extrapolation from or interpolation between actively traded contracts as well as the calculation of implied volatilities. When such inputs have a significant impact on the measurement of fair value, the instrument is categorized as Level 3. The Company regularly evaluates and validates the inputs used to determine fair value by using pricing services to support the underlying market price of interest rates and foreign currency exchange rates.
Recurring Fair Value Measurements
The following table summarizes the financial instruments measured at fair value on a recurring basis classified in the fair value hierarchy (Level 1, 2 or 3) based on the inputs used for valuation in the accompanying unaudited condensed consolidated balance sheets:
 
As of September 30, 2017
 
As of December 31, 2016
Assets (liabilities) in thousands
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
Interest rate swaps
$

 
$
(8,830
)
 
$

 
$
(8,830
)
 
$

 
$
(2,305
)
 
$

 
$
(2,305
)
Foreign currency forward contracts
(16,645
)
 

 

 
(16,645
)
 
(13,299
)
 

 

 
(13,299
)
Cross currency swaps

 
39,844

 

 
39,844

 

 
41,752

 

 
41,752

Total
$
(16,645
)
 
$
31,014

 
$

 
$
14,369

 
$
(13,299
)
 
$
39,447

 
$

 
$
26,148

The Company uses a discounted valuation technique to determine the fair value of its derivative assets and liabilities. The primary inputs into the valuation of interest rate swaps, cross currency swaps and foreign currency contracts are forward interest rates, foreign currency exchange rates, and to a lesser degree, credit spreads. The Company’s interest rate swaps and cross currency swaps are considered Level 2, since all significant inputs are corroborated by market observable data. There were no transfers into or out of Level 1, Level 2 or Level 3 during the periods ended September 30, 2017 or December 31, 2016.
Fair Value of Long-Term Debt
The following table presents the carrying amount and estimated fair value of the Company's outstanding short-term and long-term debt obligations as of September 30, 2017 and December 31, 2016, respectively:

As of September 30, 2017
 
As of December 31, 2016
(In thousands)
Carrying Amount
 
Fair Value
 
Carrying Amount
 
Fair Value
Long-term debt, including current portion
$
1,100,171

 
$
1,239,734

 
$
1,104,420

 
$
1,209,863

The fair value of the Company’s long-term debt was determined using inputs classified as Level 2 and a discounted cash flow approach using market rates for similar debt instruments.

11. STOCKHOLDERS’ EQUITY
Outstanding Equity Securities

31



As of September 30, 2017, the following shares of the Company were outstanding:
Class:
Number Outstanding
 
Holders
Class A common stock
111,849,859

 
*
Class B common stock
61,343,054

 
SunEdison
Class B1 common stock

 
Not Applicable
Preferred stock

 
Not Applicable
Total shares outstanding
173,192,913

 

* Common stockholders are comprised of: public stockholders (including Brookfield, Vincent C. Smith, Knighthead Capital Management, LLC and Gardner Lewis Asset Management, L.P.), SunEdison, executive officers, management and employees.
Treasury Stock
As of September 30, 2017, the Company owned 1,319,164 treasury shares of Class A common stock. All of these treasury shares were acquired in exchange for the settlement of future tax obligations related to stock-based compensation arrangements, or as a result of the release of shares from escrow to the Company pursuant to the Renova Settlement Agreement.
Dividends
On February 29, 2016, the Company declared a quarterly dividend for the fourth quarter of 2015 on the Company's Class A common stock of $0.275 per share. The dividend was paid on March 17, 2016 to stockholders of record as of March 10, 2016. The Company has not declared or paid a dividend since March 17, 2016. Under the Merger Agreement, the Company is restricted from declaring or paying dividends prior to the consummation of the Brookfield Transaction.
Equity Reallocation
Equity reallocation of $0.8 million as of September 30, 2017 was due to an adjustment of capital balances to reflect respective equity ownership percentages as of each balance sheet date.

12. STOCK-BASED COMPENSATION
The TerraForm Global, Inc. 2014 Long-Term Incentive Plan (the “Incentive Plan”) provides for the award of incentive and non-qualified stock options, stock appreciation rights, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) to employees and non-employee directors, including employees and non-employee directors of SunEdison and its affiliates. The maximum contractual term of an award is 10 years from the date of grant. Shares issued under the plan may be authorized and unissued shares or treasury shares. As of September 30, 2017, the Company had authorized 17,884,910 shares for awards under the Incentive Plan and 9,425,274 shares remain available for future grant under this plan.
Stock-based compensation expense is recorded as a component of general and administrative expense in the Company’s unaudited condensed consolidated statements of operations and totaled $0.8 million and $2.5 million for the three and nine months ended September 30, 2017, respectively, compared to $0.6 million and $2.6 million for the same periods in 2016.
Employee benefit related costs, including stock-based compensation costs related to equity awards in the stock of SunEdison, Inc. and its consolidated subsidiaries, of SunEdison employees who provide services to the Company are allocated to the Company based on the relative percentage of their time that the employee spends providing service to the Company. The amount of stock-based compensation expense related to equity awards in the stock of SunEdison and its consolidated subsidiaries which has been allocated to the Company was $0.5 million and $1.3 million for the three and nine months ended September 30, 2017, respectively, and is reflected in the unaudited condensed consolidated statements of operations within general and administrative costs and has been treated as an equity contribution from SunEdison on the unaudited condensed consolidated statements of stockholders' equity. Similarly, stock-based compensation costs related to equity awards to SunEdison employees in the Company’s stock are allocated to SunEdison based on the relative percentage of their time that the employee spends providing service to SunEdison. The amount of stock-based compensation expense related to equity awards in the Company's stock which has been allocated to SunEdison was $0.4 million and $1.2 million for the three and nine months ended September 30, 2017, respectively, and is recognized as a distribution to SunEdison on the unaudited condensed consolidated statements of stockholders' equity with no impact to the Company’s unaudited condensed consolidated statements of operations.

32



Restricted Stock Awards
RSAs provide the holder with immediate voting rights, but are restricted in all other respects until vested. Upon a termination of employment for any reason, any unvested shares of Class A common stock held by the terminated participant will be forfeited. All unvested RSAs are paid dividends and distributions.
The following table presents information regarding outstanding RSAs as of September 30, 2017 and changes during the nine months then ended:
 
Number of RSAs Outstanding
 
Weighted Average Grant Date Fair Value Per Share
 
Aggregate Intrinsic Value
(in millions)
Balance at January 1, 2017
4,688,975

 
$
0.18

 
 
Converted
(1,280,000
)
 
 
 
 
Forfeited
(427,561
)
 
0.21

 
 
Balance at September 30, 2017
2,981,414

 
$
0.17

 
$
14.2

As of September 30, 2017, $0.4 million of total unrecognized compensation cost related to RSAs is expected to be recognized over a weighted average period of approximately 1.9 years.
The weighted average fair value of RSAs on the date of grant was $0.17 and $0.18 for the nine months ended September 30, 2017 and 2016, respectively.
Restricted Stock Units
RSUs do not entitle the holders to voting rights and holders of the RSUs do not have any right to receive dividends or distributions.
The following table presents information regarding outstanding RSUs as of September 30, 2017 and changes during the nine months then ended:
 
Number of RSUs Outstanding
 
Aggregate Intrinsic Value
(In millions)
 
Weighted Average 
Remaining
Contractual Life (In years)
Balance at January 1, 2017
2,311,687

 
 
 
 
Granted
909,525

 
 
 
 
Converted
(342,903
)
 
 
 
 
Forfeited
(731,932
)
 
 
 
 
Balance at September 30, 2017
2,146,377

 
$
10.2

 
1.1
As of September 30, 2017, $5.6 million of total unrecognized compensation cost related to RSUs is expected to be recognized over a weighted average period of approximately 1.8 years.

13. LOSS PER SHARE
Loss per share is calculated utilizing the weighted average shares outstanding. Under the two-class method, unvested RSAs that contain non-forfeitable rights to dividends are treated as participating securities and are included in the earnings per share computation to the extent that there are undistributed earnings available, but these securities do not participate in losses.
Class A Common Stock
Basic and diluted loss per share for the three and nine months ended September 30, 2017 and 2016 was calculated as follows:

33



(In thousands, except per share amounts)
Three Months Ended
September 30, 2017
 
Three Months Ended
September 30, 2016
 
Nine Months Ended
September 30, 2017
 
Nine Months Ended
September 30, 2016
Basic and diluted (loss) income per share:
 
 
 
 
 
 
 
Net (loss) income attributable to Class A common stockholders
$
(23,295
)
 
$
(12,911
)
 
$
(35,389
)
 
$
(16,446
)
Less: dividends paid on Class A common stock and participating RSAs

 

 

 
30,674

Undistributed (loss) income attributable to Class A stockholders
$
(23,295
)
 
$
(12,911
)
 
$
(35,389
)
 
$
(47,120
)

 
 
 
 
 
 
 
Weighted-average shares outstanding
111,847,123

 
107,685,964

 
112,487,074

 
107,135,203


 
 
 
 
 
 
 
Distributed earnings per share
$

 
$

 
$

 
$
0.29

Undistributed (loss) income per share
(0.21
)
 
(0.12
)
 
(0.31
)
 
(0.44
)
Basic and diluted (loss) earnings per share
$
(0.21
)
 
$
(0.12
)
 
$
(0.31
)
 
$
(0.15
)
The computations for diluted loss per share for the three and nine months ended September 30, 2017 exclude 61,343,054 shares of Class B common stock, 2,981,414 unvested RSAs and 2,146,377 unvested RSUs because the effect would have been anti-dilutive. The computations for diluted loss per share for the three and nine months ended September 30, 2016 exclude 61,343,054 shares of Class B common stock, 6,245,398 unvested RSAs and 2,515,947 unvested RSUs because the effect would have been anti-dilutive.

14. NON-CONTROLLING INTERESTS
Non-controlling interests represent the portion of net assets in consolidated entities that are not owned by the Company. The following table presents the non-controlling interest balances by entity, reported in stockholders’ equity in the unaudited condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016:
(in thousands)
As of September 30, 2017
 
As of December 31, 2016
SunEdison’s non-controlling interests in Global LLC
$
356,931

 
$
370,117

Non-controlling interests in power plants
72,405

 
92,308

Total non-controlling interests
$
429,336

 
$
462,425

As of September 30, 2017, TerraForm Global, Inc. owned 64.85% of Global LLC and consolidated the results of Global LLC through its controlling interest, with SunEdison's 35.15% interest shown as a non-controlling interest.


15. COMMITMENTS AND CONTINGENCIES
Commitments to Acquire Power Plants
In April 2015, the Company entered into purchase and sale agreements to acquire controlling interests in three operating power plants located in South Africa with an aggregate net capacity of 32.6 MW from BioTherm. The aggregate consideration payable for these three power plants is approximately $75.1 million. See Note 2 - Acquisitions for additional discussion of these commitments.    
Legal Proceedings Initiated Against the Company
Project Litigation
GUVNL Litigation
The Company is subject to litigation with Gujarat Urja Vikas Nigam Limited (“GUVNL”), the offtake counterparty for certain power plants in India, which is seeking a reduction of the tariff set forth in the applicable PPAs. In separate litigation, GUVNL also claims that there has been a violation of the terms of certain PPAs between GUVNL and the applicable project

34



companies on account of a change in stockholders since execution of such PPAs, and as such GUVNL is entitled to terminate such PPAs. The Company successfully defended each case at the first court level and an appeal of each case was dismissed by the appellate level, but GUVNL has appealed to the Supreme Court of India on each matter. The cases are currently pending with the Supreme Court of India. The Company believes that the likelihood of an unfavorable outcome is remote.
Honiton Litigation
The Company was subject to litigation proceedings with Suzlon Energy (Tianjin) Limited (“SETL”) with respect to alleged breaches of a turbine supply contract relating to the Honiton wind power plants in China. The operation and maintenance service contracts claim pending before an arbitral tribunal was resolved on December 3, 2015, pursuant to which the Company was required to pay an award of $0.5 million, which was paid in January 2016. On June 3, 2016, SETL and the Company reached a settlement resolving all remaining disputes relating to the turbine contracts. The terms of this final settlement resulted in SETL assigning all rights as a creditor it held against the Company to Beijing Aliyun Investment and Consulting Co. Ltd. (“Aliyun”). In addition, the Company agreed to pay Aliyun $7.1 million (RMB 47.0 million), of which RMB 45.0 million was paid during the second quarter of 2016, and the remaining RMB 2.0 million is due no later than July 2018, subject to various conditions set forth in the settlement agreement. In accordance with the settlement agreement, SETL withdrew its pending claims against the Company. As of September 30, 2017, a liability was recognized related to the proceedings in the amount of $0.3 million (RMB 2.0 million).
Bankruptcy Court Action
Motion to Stay and Motion to Compel Mediation
On November 2, 2016, the unsecured creditors’ committee in the SunEdison Bankruptcy filed an adversary complaint against the Company and others with the U.S. Bankruptcy Court for the Southern District of New York. The complaint and contemporaneous motion to stay seek to stay pending litigation against current and former directors and officers of SunEdison and the Company, including TerraForm Global, Inc. v. SunEdison, Inc., et al., the Company’s action against SunEdison described below. The unsecured creditors’ committee intended to file a derivative action on behalf of the SunEdison bankruptcy estate against current and former SunEdison officers and directors. It requested the stay in order to preserve the proceeds of SunEdison’s and the Company's directors’ and officers’ liability insurance policies. On November 4, 2016, the unsecured creditors’ committee filed a motion in the SunEdison Bankruptcy case for derivative standing to sue various current and former SunEdison officers and directors. The unsecured creditors’ committee filed an amended adversary complaint on November 9, 2016. As described in a motion to compel mediation filed by SunEdison on November 23, 2016, SunEdison and the unsecured creditors’ committee agreed to hold the motion to stay and any proposed claims by the unsecured creditors’ committee against various current and former SunEdison officers and directors in abeyance pending a global mediation relating to insurance issues. The Company’s objection to the motion to stay and the motion to compel mediation was filed on December 1, 2016. On December 28, 2016, pursuant to a consent order entered by the bankruptcy court, SunEdison, the unsecured creditors’ committee and the Company, among other parties, were directed to participate in a mediation process conducted in connection with the SunEdison Bankruptcy. The mediation commenced on February 10, 2017. On March 27, 2017, SunEdison, the unsecured creditors’ committee and the directors and officers of SunEdison who would be defendants in the estate claims proposed to be brought by the unsecured creditors’ committee reached an agreement in principle to settle those claims in exchange for a payment of $32.0 million from the $150.0 million directors’ and officers’ liability insurance policies shared with the Company, TerraForm Power, Inc. (together with its subsidiaries, "TerraForm Power"), SunEdison and certain of their respective directors and officers covering the period from July 15, 2015 to July 14, 2016. The agreement has been approved by the bankruptcy court overseeing the SunEdison Bankruptcy, but remains subject to the effectiveness of the SunEdison Plan and, as a result, the completion of the Brookfield Transaction (which is a condition to the effectiveness of the SunEdison Plan). On March 31, 2017, the limited stay expired. The Company is unable to provide any assurances as to the ultimate outcome of these motions or that an adverse resolution of legal proceedings would not have a material adverse effect on the Company’s consolidated financial position and results of operations.
Avoidance Actions
On November 7, 2016, the unsecured creditors’ committee in the SunEdison Bankruptcy filed a motion with the bankruptcy court seeking standing to assert against the Company, on behalf of SunEdison, avoidance claims arising from intercompany transactions between the Company and SunEdison. The Company’s objection to the standing motion was filed on November 29, 2016. The unsecured creditors’ committee filed a reply and supplemental reply in support of its standing motion on December 5, 2016 and December 21, 2016, respectively. On March 6, 2017, the Company entered into a settlement agreement with SunEdison in connection with the SunEdison Bankruptcy and the Merger Agreement (the “Settlement Agreement”), pursuant to which SunEdison would release any potential avoidance claims it may have against the Company. The Settlement Agreement was approved by the Bankruptcy Court on June 7, 2017; however, its effectiveness is conditional on

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the completion of the Brookfield Transaction. If the Settlement Agreement becomes effective, the Company expects this standing motion will be withdrawn. If the Settlement Agreement is terminated, the Company expects to vigorously contest this standing motion and, if standing is granted, the underlying avoidance claims. The Company is unable to provide any assurances as to the ultimate outcome of these claims or that an adverse resolution of a legal proceeding, if commenced, would not have a material adverse effect on the Company’s consolidated financial position and results of operations.
Renova Arbitration
On July 14, 2016, Renova Energia, S.A. (“Renova”) filed a request for arbitration against TerraForm Global, Inc., TerraForm Global, LLC, TerraForm Global Brazil Holding B.V. and TERP GLBL Brasil I Participacoes S.A. (collectively, the “TerraForm Global Parties”) in the Center for Arbitration and Mediation of the Chamber of Commerce Brazil-Canada (the “Renova Arbitration”). Renova alleges, among other things, that TerraForm Global, Inc. and certain of its subsidiaries listed above: (i) fraudulently induced Renova to enter into the acquisition agreements related to the Salvador and Bahia wind power plants, the omnibus closing agreement with respect to such acquisitions, and the put/call arrangement entered into between SunEdison and Renova in connection with the Renova Transaction based on misleading and false representations about their and SunEdison’s financial condition and prospects; (ii) aided and abetted SunEdison’s fraud; (iii) negligently misrepresented their and SunEdison’s financial conditions and prospects; (iv) committed related violations of federal and state securities laws; (v) breached express warranties under the applicable acquisition agreements; (vi) wrongfully refused to repurchase from Renova seven million shares of TerraForm Global, Inc. Class A common stock pursuant to Renova’s put exercise notice of March 31, 2016, in breach of the put/call arrangement entered into between SunEdison and Renova in connection with the Renova Transaction; and (vii) unjustly enriched themselves. Renova seeks, among other relief, rescission of the Salvador and Bahia transactions, and/or damages in an amount to be determined in the arbitration of not less than $250 million, representing the drop in value of the 20,327,499 shares of TerraForm Global, Inc. Class A common stock Renova received in the Salvador transaction, from its $15/share IPO price to its trading level of $3.38/share at the time the request for arbitration was filed, as well as other related losses. 
On May 26, 2017, the TerraForm Global Parties entered into a Settlement Agreement and Mutual Release (the “Renova Settlement Agreement”) with Renova. The Renova Settlement Agreement resolves all disputes among the TerraForm Global Parties and Renova that are the subject of the Renova Arbitration.
Pursuant to the Renova Settlement Agreement, the TerraForm Global Parties have agreed to make a one-time settlement payment in the aggregate amount of $15.0 million, in exchange for and contingent on the withdrawal with prejudice of all claims and counterclaims made in the Renova Arbitration and termination of the Renova Arbitration. In addition, 792,495 shares of TerraForm Global, Inc. Class A common stock issued to Renova and currently held in escrow pursuant to the acquisition agreements for the Salvador wind power plant acquired by a subsidiary of the Company will be returned to the Company. None of the parties to the Renova Arbitration has admitted to any wrongdoing or liability with respect to the claims asserted in the Renova Arbitration. Subject to the satisfaction of certain conditions set forth in the Renova Settlement Agreement (including the purchase of Renova’s shares of TerraForm Global, Inc. Class A common stock by an affiliate of Brookfield as described below), the parties have granted each other full releases with respect to any claims arising in connection with the previously completed acquisitions by the Company of the Salvador and Bahia wind power plants from Renova and all related transactions and any other disputes that could arise in the future among the TerraForm Global Parties and Renova concerning or related in any way to such transactions and events, which are the subject of the Renova Arbitration.
Also, concurrently with the execution of the Renova Settlement Agreement, Renova and affiliates of Brookfield entered into a Purchase & Sale Agreement (the “PSA”) with respect to all of the shares of Class A common stock of TerraForm Global, Inc. owned by Renova (excluding the shares to be released from escrow to TerraForm Global, Inc. pursuant to the Renova Settlement Agreement). Pursuant to the terms of the PSA, an affiliate of Brookfield agreed to purchase 19,535,004 shares of Class A common stock of TerraForm Global, Inc. from Renova for a purchase price in cash of $4.75 per share, or $92,791,269 in the aggregate. The consummation of the share purchase contemplated by the PSA is subject to customary conditions to closing and is conditioned upon the satisfaction of certain conditions set forth in the Renova Settlement Agreement described above, including the effectiveness of the mutual releases and release of the shares in escrow.
The conditions to the effectiveness of the full releases in the Renova Settlement Agreement, as well as the conditions to the consummation of the share purchase contemplated by the PSA, were satisfied on June 29, 2017. As a result, on June 29, 2017, the Company made a one-time settlement payment to Renova in the aggregate amount of $15.0 million, 792,495 shares of TerraForm Global, Inc. Class A common stock issued to Renova were returned from escrow to the Company, the TerraForm Global Parties and Renova executed and filed a joint stipulation with the Center for Arbitration and Mediation of the Chamber of Commerce Brazil-Canada withdrawing with prejudice all of the claims and counterclaims made in the Renova Arbitration, the full releases provided for in the Renova Settlement Agreement became effective, and the share purchase contemplated by the PSA was consummated.

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The Company recognized $3.8 million of general and administrative expenses as of December 31, 2016 as a result of this settlement.
Securities Litigation
Multidistrict Litigation- In re TerraForm Global, Inc. Securities Litigation
On July 27, 2016, lead plaintiff Municipal Employees’ Retirement System of Michigan in the Horowitz et. al v. SunEdison, Inc. et al. action (E.D. Mo.) moved to transfer various actions pending in federal district courts to the U.S. District Court for the Southern District of New York (the "SDNY") for consolidated or coordinated pretrial proceedings before the Multidistrict Litigation Panel. On October 4, 2016, the Multidistrict Litigation Panel issued an order transferring the following cases to the SDNY for consolidated or coordinated pretrial proceedings:
Fraser v. Wuebbels et al.
Iron Workers Mid-South Pension Fund v. TerraForm Global, Inc. et al.
Badri v. TerraForm Global, Inc. et al.
Patel v. TerraForm Global, Inc. et al.
Pyramid Holdings, Inc. v. TerraForm Global, Inc. et al.
Beltran v. TerraForm Global, Inc. et al.
Oklahoma Firefighters Pension & Retirement System v. SunEdison, Inc. et al.
Glenview Capital Partners, L.P. et al. v. SunEdison, Inc. et al.
Omega Capital Investors et al. v. SunEdison, Inc. et al.

Four of these actions, Fraser v. Wuebbels et al., Iron Workers Mid-South Pension Fund v. TerraForm Global, Inc. et al., Badri v. TerraForm Global, Inc. et al., and Patel v. TerraForm Global, Inc. et al., were initially filed in the Superior Court of the State of California for the County of San Mateo on October 23, 2015, December 3, 2015, December 9, 2015 and January 4, 2016, respectively. These four separate purported class actions were filed against the Company, certain of its officers and directors, each of the underwriters of the Company’s IPO, and SunEdison. A separate class action, Agrawal v. TerraForm Global, Inc. et al., was filed in the Superior Court of the State of California for the County of San Mateo on October 30, 2015. This action was voluntarily dismissed without prejudice in February 2016. Additionally, two separate purported class action lawsuits, Beltran v. TerraForm Global, Inc. et al. and Pyramid Holdings, Inc. v. TerraForm Global, Inc. et al., were filed on October 29, 2015 and November 5, 2015, respectively, in the U.S. District Court for the Northern District of California against the same defendants. The class action plaintiffs assert claims under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, as amended (the “Securities Act”). The class action complaints allege, among other things, that the defendants made false and materially misleading statements and failed to disclose material information in the Company's registration statement for the IPO regarding SunEdison and its recent operating results and business strategy. Among other relief, the class action complaints seek class certification, unspecified compensatory damages, rescission, attorneys’ fees, costs, and such other relief as the Court should deem just and proper. On April 26, 2016, in light of SunEdison’s voluntary petition for bankruptcy on April 21, 2016, the Company and the other defendants removed the remaining state actions to the U.S. District Court for the Northern District of California. On May 27, 2016, the plaintiffs in the cases removed from state court filed motions to remand. On June 1, 2016, the defendants filed motions to transfer the cases to the SDNY, the jurisdiction in which SunEdison’s bankruptcy is pending. The previous briefing schedule has been vacated as a result of the October 4, 2016 transfer order issued by the Multidistrict Litigation Panel. On November 3, 2016, Plaintiff in Patel v. TerraForm Global, Inc. et al. voluntarily dismissed the case. On December 20, 2016, Plaintiff in Beltran v. TerraForm Global, Inc. et al. voluntarily dismissed the case. On December 22, 2016, the Court consolidated Pyramid Holdings, Inc. v. TerraForm Global, Inc. et al., Badri v. TerraForm Global, Inc. et al., Iron Workers Mid-South Pension Fund v. TerraForm Global, Inc. et al., and Fraser v. Wuebbels et al. as In re TerraForm Global, Inc. Securities Litigation and ordered the plaintiffs to file a consolidated complaint. On January 16, 2017, the plaintiffs filed the Consolidated Class Action Complaint. On April 21, 2017, the plaintiffs filed a Consolidated Second Amended Class Action Complaint. The Company is unable to provide any assurances as to the ultimate outcome of these lawsuits or that an adverse resolution of these lawsuits would not have a material adverse effect on the Company’s consolidated financial position and results of operations.
Multidistrict Litigation - Private Placement Securities Litigation
On March 29, 2016, plaintiff filed Oklahoma Firefighters Pension & Retirement System v. SunEdison, Inc. et al., in the Superior Court of the State of California for the County of San Mateo against the Company, SunEdison, certain officers and directors of the Company and SunEdison, and the underwriters of the Company’s IPO. The plaintiff asserts claims under Sections 11, 12(a)(2), and 15 of the Securities Act. The complaint alleges, among other things, that the defendants made false and materially misleading statements and failed to disclose material information in the Company's registration statement for the

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IPO regarding SunEdison and its recent operating results and business strategy. The complaint seeks compensatory damages, rescission, and such other relief (including equitable or injunctive relief) as the Court may deem just and proper. On April 26, 2016, in light of SunEdison’s voluntary petition for bankruptcy on April 21, 2016, the Company and the other defendants removed the action to the U.S. District Court for the Northern District of California. On May 27, 2016, the plaintiffs moved to remand. On June 1, 2016, the defendants moved to transfer the case to the SDNY, the jurisdiction in which SunEdison’s bankruptcy is pending. The Company is unable to provide any assurances as to the ultimate outcome of this lawsuit or that an adverse resolution of this lawsuit would not have a material adverse effect on the Company’s consolidated financial position and results of operations.
On March 29, 2016, plaintiffs filed Glenview Capital Partners, L.P. et al. v. SunEdison, Inc. et al., in the Superior Court of the State of California for the County of San Mateo against the Company, SunEdison, certain officers and directors of the Company and SunEdison, and the underwriters of the Company’s August 5, 2015 bond offering and SunEdison’s August 18, 2015 preferred stock offering. The plaintiffs assert claims under Sections 11, 12(a)(2), and 15 of the Securities Act, as well as the Maryland Securities Act. The plaintiffs allege, among other things, that they purchased securities pursuant to offering documents that contained untrue statements of material fact and omitted other material facts necessary to make the statements in the offering documents not misleading. The complaint further alleges that these false and misleading statements led to the forced conversion of the plaintiffs’ Class D securities into restricted common stock, that the Company breached the June 9, 2015 Class D Purchase Agreement between the Company and the plaintiffs, and that the defendants made negligent misrepresentations in connection with the Company’s Class D registration statement. The complaint seeks unspecified damages, rescission, and such other relief (including equitable or injunctive relief) as the Court may deem just and proper. On April 26, 2016, in light of SunEdison’s voluntary petition for bankruptcy on April 21, 2016, the Company and the other defendants removed the action to the U.S. District Court for the Northern District of California. On May 26, 2016, the plaintiffs filed a motion to remand. On May 27, 2016, the defendants moved to transfer the case to the SDNY, the jurisdiction in which SunEdison’s bankruptcy is pending. The Court held a hearing on the motion to remand and the motion to transfer on August 18, 2016. On August 26, 2016, the Court issued an order denying the plaintiffs’ motion to remand and granting the defendants’ motion to transfer. The Court also certified a legal issue for interlocutory review, and on September 2, 2016, the plaintiffs filed a petition for permission to appeal with the U.S. Court of Appeals for the Ninth Circuit. On November 17, 2016, the Ninth Circuit issued an order requiring all parties to file statements addressing the effect of the Multidistrict Litigation Panel’s transfer order on the motion for permission to appeal. On December 8, 2016, the parties filed their responses. The Company is unable to provide any assurances as to the ultimate outcome of this lawsuit or that an adverse resolution of this lawsuit would not have a material adverse effect on the Company’s consolidated financial position and results of operations.
On March 30, 2016, plaintiffs filed Omega Capital Investors et al. v. SunEdison, Inc. et al., in the Superior Court of the State of California for the County of San Mateo against the Company, SunEdison, certain officers and directors of the Company and SunEdison, and the underwriters of SunEdison’s preferred stock offering. The plaintiffs assert claims under Sections 11, 12(a)(2), and 15 of the Securities Act, as well as the Maryland Securities Act. The plaintiffs allege, among other things, that the defendants made false and misleading statements in connection with the Company’s IPO, and that these false and misleading statements led to the forced conversion of their Class D securities into restricted common stock. The complaint further alleges that the Company breached the June 9, 2015 Class D Purchase Agreement between the Company and the plaintiffs and made negligent misrepresentations in connection with the Company’s Class D registration statement. The complaint seeks unspecified damages, rescission, and such other relief (including equitable or injunctive relief) as the Court may deem just and proper. On April 26, 2016, in light of SunEdison’s voluntary petition for bankruptcy on April 21, 2016, the Company and the other defendants removed the action to the U.S. District Court for the Northern District of California. On May 26, 2016, the plaintiffs filed a motion to remand. On June 1, 2016, the defendants moved to transfer the case to the SDNY, the jurisdiction in which SunEdison’s bankruptcy is pending. The Court held a hearing on the motion to remand and the motion to transfer on August 18, 2016. On August 26, 2016, the Court issued an order denying the plaintiffs’ motion to remand and granting the defendants’ motion to transfer. The Court also certified a legal issue for interlocutory review, and on September 2, 2016, the plaintiffs filed a petition for permission to appeal with the U.S. Court of Appeals for the Ninth Circuit. On November 17, 2016, the Ninth Circuit issued an order requiring all parties to file statements addressing the effect of the Multidistrict Litigation Panel’s transfer order on the motion for permission to appeal. On December 8, 2016, the parties filed their responses. The Company is unable to provide any assurances as to the ultimate outcome of this lawsuit or that an adverse resolution of this lawsuit would not have a material adverse effect on the Company’s consolidated financial position and results of operations.
On July 14, 2016, plaintiffs filed Kingdon Associates et al. v. TerraForm Global, Inc. et al. in the Superior Court of the State of California for the County of San Mateo against the Company, TerraForm Global, LLC, certain officers and directors of the Company and SunEdison, and the underwriters of the Company’s IPO. The plaintiffs assert claims under Sections 11, 12(a)(2), and 15 of the Securities Act, as well as state law claims for breach of contract, negligent misrepresentation, and violation of Maryland securities laws. The plaintiffs allege, among other things, that the defendants made false and materially misleading statements and failed to disclose material information in the Company's registration statement for the IPO regarding SunEdison

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and its recent operating results and business strategy and that these false and misleading statements led to the forced conversion of their Class D securities into restricted common stock. The complaint further alleges that the Company breached the June 9, 2015 Class D Purchase Agreement between the Company and the plaintiffs and made negligent misrepresentations in connection with the Company’s Class D registration statement. The complaint seeks compensatory damages, rescission, and such other relief (including equitable or injunctive relief) as the Court may deem just and proper. On September 26, 2016, in light of SunEdison’s voluntary petition for bankruptcy on April 21, 2016, the Company and the other defendants removed the action to the U.S. District Court for the Northern District of California. Plaintiffs did not oppose the Multidistrict Litigation Panel's conditional transfer order, and the matter was transferred to the multidistrict litigation on October 20, 2016. The Company is unable to provide any assurances as to the ultimate outcome of this lawsuit or that an adverse resolution of this lawsuit would not have a material adverse effect on the Company’s consolidated financial position and results of operations.
On August 8, 2016, plaintiffs filed Canyon Capital Advisors LLC et al. v. TerraForm Global, Inc. et al. in the Superior Court of the State of California for the County of San Mateo against the Company, certain officers and directors of the Company and SunEdison, and the underwriters of the Company’s IPO and SunEdison’s August 18, 2015 preferred stock offering. The plaintiffs assert claims under Sections 11, 12(a)(2), and 15 of the Securities Act, as well as the California Corporate Securities Law. The plaintiffs allege, among other things, that they purchased securities pursuant to offering documents that contained untrue statements of material fact and omitted other material facts necessary to make the statements in the offering documents not misleading. The complaint seeks unspecified damages, rescission, and such other relief (including equitable or injunctive relief) as the Court may deem just and proper. On September 8, 2016, in light of SunEdison’s voluntary petition for bankruptcy on April 21, 2016, the Company and the other defendants removed the action to the U.S. District Court for the Northern District of California. On September 26, 2016, plaintiffs filed a motion to remand. On October 6, 2016, plaintiffs filed an amended motion to remand. On October 20, 2016, defendants filed their opposition to that motion, and on November 2, 2016, plaintiffs filed their reply. On October 19, 2016, defendants filed a motion to stay the case until a final transfer determination could be made by the Multidistrict Litigation Panel. On November 2, 2016, plaintiffs filed an opposition to the motion to stay. The Court held a hearing on the motion to remand and the motion to stay on November 10, 2016. On October 26, 2016, plaintiffs filed a motion to vacate the conditional transfer order. On November 16, 2016, defendants filed an opposition to the motion to vacate. On November 17, 2016, the parties filed a stipulation withdrawing the motions to stay and vacate, which the Court entered. On November 22, 2016, the Multidistrict Litigation Panel transferred the case to the SDNY for consolidated or coordinated pretrial proceedings. The Company is unable to provide any assurances as to the ultimate outcome of this lawsuit or that an adverse resolution of this lawsuit would not have a material adverse effect on the Company’s consolidated financial position and results of operations.
On September 16, 2016, plaintiff filed VMT II LLC v. TerraForm Global, Inc. et al. in the Superior Court of the State of California for the County of San Mateo against the Company, certain officers and directors of the Company and SunEdison, and the underwriters of SunEdison’s preferred stock offering. The plaintiff asserts claims under Sections 11, 12(a)(2), and 15 of the Securities Act, as well as the Maryland Securities Act. The plaintiff alleges, among other things, that the defendants made false and misleading statements in connection with the Company’s IPO, and that these false and misleading statements led to the forced conversion of their Class D securities into restricted common stock. The complaint further alleges that the Company breached the June 9, 2015 Class D Purchase Agreement between the Company and the plaintiffs and made negligent misrepresentations in connection with the Company’s Class D registration statement. The complaint seeks unspecified damages, rescission, and such other relief (including equitable or injunctive relief) as the Court may deem just and proper. On September 28, 2016, in light of SunEdison’s voluntary petition for bankruptcy on April 21, 2016, the Company and the other defendants removed the action to the U.S. District Court for the Northern District of California. Plaintiffs did not oppose the Multidistrict Litigation Panel's conditional transfer order, and the matter was transferred to the multidistrict litigation on October 20, 2016. The Company is unable to provide any assurances as to the ultimate outcome of this lawsuit or that an adverse resolution of this lawsuit would not have a material adverse effect on the Company’s consolidated financial position and results of operations.
Multidistrict Litigation Proceedings
On December 19, 2016, an initial case management conference was held in the multidistrict litigation proceedings in the SDNY. The Court entered a partial stay of all proceedings through March 31, 2017, and entered an order requiring all parties to the multidistrict litigation, including the parties to the conditional transfer cases, to participate in a mediation process conducted in connection with the SunEdison Bankruptcy, which also includes the derivative claim described below. The mediation commenced on February 10, 2017.
On February 6, 2017, the Company filed pre-motion letters with the Court describing the grounds for anticipated motions to dismiss in the following matters: In re TerraForm Global, Inc. Securities Litigation, Oklahoma Firefighters Pension & Retirement System v. SunEdison, Inc. et al., Glenview Capital Partners, L.P. et al. v. SunEdison, Inc. et al., Omega Capital

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Investors et al. v. SunEdison, Inc. et al., Kingdon Associates et al. v. TerraForm Global, Inc. et al., Canyon Capital Advisors LLC et al. v. TerraForm Global, Inc. et al., and VMT II LLC v. TerraForm Global, Inc. et al.(collectively, but excluding In re TerraForm Global, Inc. Securities Litigation, the “Private Placement Securities Litigation”). The plaintiffs in those matters filed responses on February 20, 2017.
On March 31, 2017, the partial stay expired. On April 13, 2017, the Court held a status conference and entered a briefing schedule for the Company’s anticipated motion to dismiss the Consolidated Second Amended Class Action Complaint in In re TerraForm Global, Inc. Securities Litigation. The Company filed its motion to dismiss on June 9, 2017, and Plaintiffs filed their opposition on July 21, 2017. The Company filed a reply brief on August 18, 2017. Further proceedings in the remaining multidistrict litigation matters described above have been stayed pending resolution of the initial motion to dismiss.
On October 31, 2017, the Company and lead plaintiffs in In re TerraForm Global, Inc. Securities Litigation participated in a private mediation session and reached agreement in principle to settle the case on a class-wide basis for $57.0 million, to be funded through a combination of proceeds from existing insurance and litigation settlement proceeds available to the Company. On November 1, 2017, the settling parties informed the Court of the mediated resolution. The Company and the lead plaintiffs are currently working to prepare settlement documentation. The settlement is subject to Court approval.
On March 22, 2017, the Multidistrict Litigation Panel issued conditional transfer orders in Domenech v. TerraForm Global, Inc. et al. and Perez v. TerraForm Global, Inc. et al., and these matters were transferred to the multidistrict litigation on April 13, 2017 and May 31, 2017, respectively. These matters are further described below.
Derivative Claim
Aldridge v. Blackmore et al.
On April 12, 2016, a verified stockholder derivative complaint on behalf of the Company was filed against four directors of the Company in the Court of Chancery of the State of Delaware. The lawsuit alleges that the directors breached their fiduciary duties by authorizing the Company’s $231.0 million payment to SunEdison for the 425 MW India Projects. The complaint seeks unspecified compensatory damages and such other relief that the Court may deem just and equitable. The Company filed its answer to the complaint on June 30, 2016. On July 6, 2016, the Company served its responses to the plaintiff’s discovery requests. On December 28, 2016, the parties agreed to stay the litigation and participate in a mediation process conducted in connection with the SunEdison Bankruptcy, which also includes the securities litigation cases pending before the Multidistrict Litigation Panel. The mediation commenced on February 10, 2017. On March 31, 2017, the agreed upon stay expired. On April 17, 2017, the Court entered a scheduling order. On July 21, 2017, the parties executed a Stipulation of Settlement, which, subject to Court approval, will settle the litigation for a total aggregate settlement amount of $20.0 million and will be paid out of proceeds from the Company’s directors’ and officers’ liability insurance policies. On July 25, 2017, the Court authorized distribution of notice of the settlement to current stockholders of the Company and stayed all non-settlement-related proceedings. The Court held a final settlement hearing on October 10, 2017 and approved the proposed settlement of $20.0 million as fair, reasonable and adequate. The Court also approved the plaintiff’s attorneys’ fees of $4.0 million, which is deducted from the settlement amount, resulting in a net settlement amount of $16.0 million to be paid to the Company.
Retaliation Claims
Francisco Perez Gundin Claim
On May 18, 2016, the Company’s former director, Francisco Perez Gundin, filed a complaint against the Company, TerraForm Power, Inc., and certain individuals, with the United States Department of Labor. The complaint alleges that the defendants engaged in a retaliatory termination of Mr. Gundin’s employment after he allegedly voiced concerns to SunEdison’s board of directors about public representations made by SunEdison officers regarding SunEdison’s liquidity position, and after he allegedly voiced his opposition to transactions that he alleges were self-interested and which he alleges SunEdison forced on the Company. He alleges that the Company participated in SunEdison’s retaliatory termination by constructively terminating his position as a member of the board of directors of the Company in connection with SunEdison’s constructive termination of his employment. He seeks lost wages, bonuses, benefits, and other money that he alleges that he would have received if he had not been subjected to the allegedly retaliatory termination.
The matter will now be adjudicated in an administrative proceeding before the Occupational Safety and Health Administration of the United States Department of Labor (“OSHA”). On October 17, 2016, the Company filed its Position Statement, which seeks dismissal of the matter in full, in response to the complaint. On March 6, 2017, Mr. Gundin filed a response to the Company’s Position Statement and an additional Statement of Facts in support of the claim. The Company has not yet been asked by OSHA to provide a response to Mr. Gundin’s submission.

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On February 21, 2017, Mr. Gundin filed a complaint against the Company, TerraForm Power, Inc., and certain individuals, with the United States District Court for the District of Maryland. The complaint asserts claims under Section 922 of the Dodd Frank Act, as well as related common law claims, based on allegations that Mr. Gundin was terminated in retaliation for raising concerns to the SunEdison, Inc. board of directors about conduct that he believed constituted violations of federal securities laws. On March 22, 2017, the Multidistrict Litigation Panel issued a conditional transfer order, which Mr. Gundin did not oppose, and the matter was transferred to the multidistrict litigation on April 13, 2017.
On July 21, 2017, the Court held a case management conference and entered an initial scheduling order, pursuant to which the Court consolidated this case with the Zornoza whistleblower case described below.
On August 11, 2017, the Company filed a pre-motion letter describing the grounds for its anticipated motion to dismiss. Plaintiff filed a response to the pre-motion letter on September 11, 2017. On October 6, 2017, the Court held a further case management conference and entered a briefing schedule for the Company’s anticipated motion to dismiss the consolidated
complaint. On November 6, 2017, the Company filed a motion to dismiss the consolidated complaint. Plaintiff’s response is due December 21, 2017, and any reply is due January 16, 2018. The Court also stayed discovery pending resolution of the motions to dismiss.

The Company is unable to predict with certainty the ultimate resolution of this proceeding.
Carlos Domenech Zornoza Claim
On May 10, 2016, the Company’s former director and Chief Executive Officer, Carlos Domenech Zornoza, filed a complaint against the Company, TerraForm Power, Inc., and certain individuals, with the United States Department of Labor. The complaint alleges that the defendants engaged in a retaliatory termination of Mr. Domenech Zornoza’s employment on November 20, 2015 after he allegedly voiced concerns to SunEdison’s board of directors about public representations made by SunEdison officers regarding SunEdison’s liquidity position, and after he allegedly voiced his opposition to transactions that he alleges were self-interested and which he alleges SunEdison forced on the Company. He alleges that the Company participated in SunEdison’s retaliatory termination by terminating his position as Chief Executive Officer of the Company in connection with SunEdison’s termination of his employment. He seeks lost wages, bonuses, benefits, and other money that he alleges that he would have received if he had not been subjected to the allegedly retaliatory termination.
The matter will now be adjudicated in an administrative proceeding before OSHA. On October 17, 2016, the Company filed its Position Statement, which seeks dismissal of the matter in full, in response to the complaint. On March 3, 2017, Mr. Domenech Zornoza filed a response to the Company’s Position Statement and an additional Statement of Facts in support of the claim. The Company has not yet been asked by OSHA to provide a response to Mr. Domenech Zornoza’s submission.
On February 21, 2017, Mr. Domenech Zornoza filed a complaint against the Company, TerraForm Power, Inc., and certain individuals, with the United States District Court for the District of Maryland. The complaint asserts claims under Section 922 of the Dodd Frank Act, as well as related common law claims, based on allegations that Mr. Domenech Zornoza was terminated in retaliation for raising concerns to the SunEdison, Inc. board of directors about conduct that he believed constituted violations of federal securities laws. On March 22, 2017, the Multidistrict Litigation Panel issued a conditional transfer order with respect to the complaint. On April 12, 2017, Mr. Domenech Zornoza filed a motion to vacate the Multidistrict Litigation Panel’s conditional transfer order, which the defendants opposed on April 28, 2017. On May 31, 2017, the matter was transferred to the multidistrict litigation.
On July 21, 2017, the Court held a case management conference and entered an initial scheduling order, pursuant to which the Court consolidated this case with the Gundin whistleblower case described above.
On August 11, 2017, the Company filed a pre-motion letter describing the grounds for its anticipated motion to dismiss. Plaintiff filed a response to the pre-motion letter on September 11, 2017. On October 6, 2017, the Court held a further case management conference and entered a briefing schedule for the Company’s anticipated motion to dismiss the consolidated
complaint. On November 6, 2017, the Company filed a motion to dismiss the consolidated complaint. Plaintiff’s response is due December 21, 2017, and any reply is due January 16, 2018. The Court also stayed discovery pending resolution of the motions to dismiss.

The Company is unable to predict with certainty the ultimate resolution of this proceeding.

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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.
Merger Litigation

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.

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As previously described, the Third Party Sale Transaction was conducted in connection with SunEdison’s bankruptcy process and included the 425 MW India portfolio. The Company has agreed not to pursue claims against a third party buyer, however the Company has retained all of its claims against SunEdison and its affiliated persons.
On September 25, 2016, the Company filed its initial proof of claim in the SunEdison Bankruptcy case, and filed an amended proof of claim on October 7, 2016. As set forth in the proofs of claim, the Company believes it has unsecured claims against SunEdison that it estimates are in excess of $2.0 billion. These claims include, without limitation, claims for damages relating to breach of SunEdison's obligations under the sponsorship arrangements consisting of the various corporate level agreements put in place at the time of the Company’s IPO (collectively, the “Sponsorship Arrangement”) and other agreements; contribution and indemnification claims arising from litigation; claims relating to SunEdison’s breach of fiduciary, agency and other duties; and claims for interference with and the disruption of the business of the Company and its subsidiaries, including the loss of business opportunities, loss of business records, failure to provide timely audited financials, and the increased cost of financing and commercial arrangements. Many of these claims are contingent, unliquidated and/or disputed by SunEdison and other parties in interest in the SunEdison Bankruptcy case, and the estimated amounts of these claims may change substantially as circumstances develop and damages are determined. In addition, recoveries on unsecured claims in the SunEdison Bankruptcy case are expected to be significantly impaired.
On March 6, 2017, the Company entered into the Settlement Agreement with SunEdison. The Settlement Agreement was approved by the bankruptcy court overseeing the SunEdison Bankruptcy on June 7, 2017; however, its effectiveness is conditional on the completion of the Brookfield Transaction. The Settlement Agreement contains certain terms to resolve the complex legal relationship between the Company and SunEdison, including, among other things, an allocation of the total consideration paid in connection with the Brookfield Transaction and, with certain exceptions, the full mutual release of all claims between SunEdison and its affiliated debtors and non-debtors, on the one hand, and the Company and its subsidiaries, on the other hand. This release includes a release by the Company of its claims against the SunEdison Defendants. If the Settlement Agreement is terminated, the Company expects to continue to pursue its claims against the SunEdison Defendants.
Other Matters
From time to time, the Company is a party to legal proceedings arising in the ordinary course of its business. Although the Company cannot predict with certainty the ultimate resolution of such proceedings or other claims asserted against the Company, except as otherwise described above, the Company does not believe that any other currently pending legal proceeding to which the Company is a party will have a material adverse effect on its business, financial condition or results of operations.

16. RELATED PARTIES
SunEdison Bankruptcy
On April 21, 2016, SunEdison and certain of its domestic and international subsidiaries voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code (the “SunEdison Bankruptcy”). The Company is not a part of the SunEdison Bankruptcy and does not rely substantially on SunEdison for funding, liquidity, or operational or staffing support. The Company continues to participate actively in the SunEdison Bankruptcy proceedings, and the SunEdison Bankruptcy will continue to have a negative impact on the Company given its complex relationship with SunEdison.
During the SunEdison Bankruptcy, SunEdison has not performed substantially as obligated under its agreements with the Company, including under the Sponsorship Arrangement and certain O&M and asset management arrangements. The Company believes that the Sponsorship Arrangement comprises a single integrated transaction. The agreements comprising the Sponsorship Arrangement are set forth in separate documents and discussed individually in this Quarterly Report on Form 10-Q. However, the elements of the Sponsorship Arrangement are closely related and a default under one element may be a defense to, or excuse performance under, another element. SunEdison and its various stakeholders have expressed disagreement with this view of the Sponsorship Arrangements and can be expected to contest any such assertion in connection with the SunEdison Bankruptcy.
On March 6, 2017, the Company entered into a settlement agreement with SunEdison in connection with the SunEdison Bankruptcy and Merger Agreement (the “Settlement Agreement”). The Settlement Agreement was approved by the bankruptcy court overseeing the SunEdison Bankruptcy on June 7, 2017; however, its effectiveness is conditional on the completion of the Brookfield Transaction. The Settlement Agreement contains certain terms to resolve the complex legal relationship between the Company and SunEdison, including, among other things, an allocation of the total consideration paid in connection with the Brookfield Transaction and, with certain exceptions, the full mutual release of all claims between SunEdison and its affiliated debtors and non-debtors, on the one hand, and the Company and its subsidiaries, on the

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other hand. Under the settlement terms, following the exchange of all of its Class B shares in TerraForm Global, Inc. and the Class B units in Global LLC for Class A Shares, SunEdison will receive consideration equal to 25.0% of the total consideration paid to all of the Company's shareholders, reflecting the settlement of intercompany claims and cancellation of incentive distribution rights. The remaining 75.0% of the consideration will be distributed to existing Class A shareholders. In addition, upon the effectiveness of the Settlement Agreement, with certain limited exceptions, all agreements between the Company and its subsidiaries, on the one hand, and SunEdison and its subsidiaries, on the other hand, including the agreements comprising the Sponsorship Arrangement, would be terminated. There can be no assurance that the Settlement Agreement will become effective, and such failure may adversely impact the Company’s business. The foregoing description of the Settlement Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Settlement Agreement.
On July 28, 2017, the bankruptcy court overseeing the SunEdison Bankruptcy entered an order confirming a plan of reorganization for SunEdison (the “SunEdison Plan”). Among other things, the SunEdison Plan would further implement the settlements, releases and terminations contemplated by the Settlement Agreement. If the SunEdison Plan becomes effective, a reorganized SunEdison would emerge from the SunEdison Bankruptcy and operate outside of the supervision of the bankruptcy court. There are numerous conditions to the effectiveness of the SunEdison Plan, including the completion of the Brookfield Transaction, and accordingly there can be no assurance that the SunEdison Plan will become effective, and such failure may adversely impact the Company’s business. However, the effectiveness of the SunEdison Plan is not a condition to the completion of the Brookfield Transaction.
Transition Services Agreement
    
On September 7, 2017, the Company entered into a transition services agreement with SunEdison. Pursuant to the terms of this agreement, SunEdison will continue to provide the Company, on an interim basis, certain services that SunEdison has historically provided the Company. These services include, without limitation, services related to information technology, tax, human resources, treasury, finance and controllership. The Company will pay SunEdison certain monthly fees in exchange for SunEdison's provision of the transition services. In addition to the services provided by SunEdison, the transition services
agreement contemplates that the Company will provide certain services to SunEdison. These specific services will be determined based on the needs of the parties, and will be charged at rates consistent with past practice. The transition services agreement, and the parties' obligations thereunder, also applies retroactively to transition services provided from and after February 1, 2017, and terminated in accordance with the terms of the transition service agreement on October 31, 2017. The Company is currently negotiating an extension of the transition services agreement with SunEdison with respect to certain of the services provided thereunder, however there can be no assurance that the Company will be able to enter into this extension on acceptable terms or at all.

Management Services Agreement
Immediately prior to the completion of the IPO on August 5, 2015, the Company entered into a Management Services Agreement (the “MSA") with SunEdison. Prior to the IPO and MSA execution, amounts were allocated from SunEdison for general corporate overhead costs attributable to the operations of the Company. The general corporate overhead expenses incurred by SunEdison include costs from certain corporate and shared services functions provided by SunEdison and are reflected in the Company’s unaudited condensed consolidated statements of operations as general and administrative expense. The amounts reflected include (i) charges that were incurred by SunEdison that were specifically identified as being attributable to the Company and (ii) an allocation of applicable remaining general corporate overhead costs based on the proportional level of effort attributable to the operation of the Company’s power plants. These costs include legal, accounting, tax, treasury, information technology, insurance, employee benefit costs, communications, human resources, and procurement. Corporate costs that were specifically identifiable to a particular operation of SunEdison have been allocated to that operation, including the Company. Where specific identification of charges to a particular operation of SunEdison was not practicable, an allocation was applied to all remaining general corporate overhead costs. The allocation methodology for all remaining corporate overhead costs is based on management’s estimate of the proportional level of effort devoted by corporate resources that is attributable to each of the Company’s operations. The cost allocations have been determined on a basis considered to be a reasonable reflection of all costs of doing business by the Company. The amounts that would have been or will be incurred on a stand-alone basis could differ from the amounts allocated due to economies of scale, management judgment, or other factors.
Subsequent to the IPO and pursuant to the MSA, SunEdison agreed to provide, or arrange for other service providers to provide, management and administrative services including legal, accounting, tax, treasury, project finance, information technology, insurance, employee benefit costs, communications, human resources, and procurement to the Company. As consideration for the services provided, the MSA requires the Company to pay SunEdison a base management fee as follows: (i) no fee for 2015, (ii) 2.5% of the Company’s cash available for distribution in 2016, 2017 and 2018, and (iii) an amount equal

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to SunEdison’s or other service provider’s actual cost in 2019 and thereafter. All costs under the MSA are reflected in the Company’s unaudited condensed consolidated statement of operations as general and administrative expense, and the difference between actual costs and the fee paid pursuant to the MSA will be treated as an equity contribution from SunEdison. No cash payments were made to SunEdison for the MSA fees during the nine months ended September 30, 2017 or 2016. However, pursuant to the Settlement Agreement, the Company is required to reimburse to SunEdison for costs and expenses incurred by SunEdison for services that it performs for the Company. As of September 30, 2017, the Company had accrued $4.0 million related to services performed by SunEdison. Also pursuant to the Settlement Agreement, the Company performs certain services for SunEdison, and the Company is entitled to reimbursement by SunEdison for costs and expenses incurred by the Company for such services. As of September 30, 2017, the Company recorded an immaterial amount related to services the Company performs for SunEdison.
As a result of the SunEdison Bankruptcy, SunEdison has not performed substantially as obligated under the MSA, and as a result the Company has borne the actual costs of a substantial portion of the services that SunEdison was obligated to provide under the MSA. As discussed in Note 1 - Nature of Operations, on September 25, 2016, the Company filed its initial proof of claim in the SunEdison Bankruptcy case, which was amended on October 7, 2016. This proof of claim asserted claims based on, among other things, SunEdison's breach of the Sponsorship Arrangement between the Company and SunEdison, which included the MSA. The MSA will be terminated upon the effectiveness of the Settlement Agreement.
Included in general and administrative expense are costs incurred under the MSA and corporate allocations of zero for the three and nine months ended September 30, 2017, and $15.9 million and $39.1 million for the three and nine months ended September 30, 2016, respectively. General and administrative expense represents costs incurred or reimbursable by SunEdison for services provided to the Company pursuant to the MSA subsequent to the IPO and allocated to the Company in corporate allocations prior to the IPO.
Project Investment Agreement
Immediately prior to the completion of the IPO on August 5, 2015, the Company entered into the Project Investment Agreement with SunEdison. Pursuant to the Project Investment Agreement, SunEdison agreed to contribute to the Company certain projects, without further payment, once each project reached commercial operation. These projects include the 17.4 MW Del Litoral and 57.4 MW El Naranjal solar power projects in Uruguay, the 24.1 MW Bora Bora Poly wind power project in India, and the 17.8 MW NPS Star and 17.8 MW WXA solar power projects in Thailand. The NPS Star and WXA solar power projects reached commercial operation in December 2015 and were transferred by SunEdison to the Company in the first quarter of 2016.
On March 23, 2016, SunEdison and the Company entered into an amendment to the Project Investment Agreement which extended the contribution deadline for SunEdison to contribute the remaining projects pursuant to the Project Investment Agreement to July 31, 2016. As part of the SunEdison Bankruptcy, the construction on the projects was materially delayed and/or abandoned due to the lack of funding by SunEdison. There were material amounts of project costs and equity contributions for the Del Litoral and El Naranjal solar power projects in Uruguay that remained to be contributed by SunEdison in order to complete construction of these projects and disbursement of the project finance debt facilities. Additionally, SunEdison experienced delays in completing construction of the Bora Bora Poly wind power project in India, and the transfer of the project required project lender consent, which was not obtained. In light of the SunEdison Bankruptcy, the Company will not obtain these projects under the Project Investment Agreement and it will not obtain any substitute projects from SunEdison.
As discussed in Note 1 - Nature of Operations, on September 25, 2016, the Company filed its initial proof of claim in the SunEdison Bankruptcy case, which was amended on October 7, 2016. This proof of claim asserted claims based on, among other things, SunEdison's breach of the Sponsorship Arrangement between the Company and SunEdison, which included the Project Investment Agreement. The Project Investment Agreement will be terminated upon the effectiveness of the Settlement Agreement.
Interest Payment Agreement
Immediately prior to the completion of the IPO on August 5, 2015, Global LLC and Global Operating LLC entered into an interest payment agreement (the “Interest Payment Agreement”) with SunEdison, pursuant to which SunEdison agreed to pay an aggregate amount equal to all of the scheduled interest of up to $81.2 million on the Senior Notes until December 31, 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. SunEdison’s interest support payments due to the Company have been reduced by $2.9 million as a result of the $49.6 million of the Senior Notes that were extinguished under the open market repurchase program that began in December 2015 and continued through January 2016. SunEdison will not be obligated to pay any amounts due under the Senior Notes in connection with an acceleration of the payment of the principal amount of such indebtedness.

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Upon expiration of the distribution forbearance period applicable to the Class B common stock that were issued to SunEdison at the time of the Company's IPO, Global LLC will be entitled to set off any amounts owing by SunEdison pursuant to the Interest Payment Agreement against any and all amounts owed by Global LLC to SunEdison under the distribution provisions of the Global LLC Operating Agreement, and Global LLC may pay such amounts to Global Operating LLC. For the three months ended September 30, 2017 and 2016, SunEdison paid Global LLC zero and $41.2 million, respectively, related to interest payments on the Senior Notes.
The Interest Payment Agreement terminates upon payment by SunEdison of all amounts owing thereunder. It may, however, be terminated prior to that by mutual written agreement of SunEdison and Global Operating LLC and will automatically terminate upon the repayment in full of the outstanding principal amount of the Senior Notes or a change of control of the Company, Global LLC or Global Operating LLC. The agreement may also be terminated at the election of SunEdison, Global LLC or Global Operating LLC if any of them experiences bankruptcy or insolvency. Any decision by Global LLC or Global Operating LLC to terminate the Interest Payment Agreement must have the prior approval of the Conflicts Committee.
On July 29, 2016, the Company received a notice from SunEdison purporting to terminate the Interest Payment Agreement. The notice alleges that SunEdison's bankruptcy permits termination as of right without following the bankruptcy procedures for rejection of executory contracts. Although the Company does not expect SunEdison to perform under the Interest Payment Agreement going forward, the Company is contesting the purported termination of the Interest Payment Agreement, believes that the termination notice is invalid, and is asserting a claim in the SunEdison Bankruptcy for the full amount of damages resulting from SunEdison’s breach of the Interest Payment Agreement.
As discussed in Note 1 - Nature of Operations, on September 25, 2016, the Company filed its initial proof of claim in the SunEdison Bankruptcy case, which was amended on October 7, 2016. This proof of claim asserted claims based on, among other things, SunEdison's breach of the Sponsorship Arrangement between the Company and SunEdison, which included the Interest Support Agreement. The Interest Support Agreement will be terminated upon the effectiveness of the Settlement Agreement.
Equity Interest Purchase and Sale Agreement for 425 MW India Projects
See Note 4 - Deposits for Acquisitions for information regarding the 425 MW India Projects.
Operation and Maintenance (“O&M”) and Asset Management Services
O&M services, as well as asset management services, were provided to the Company by affiliates of SunEdison pursuant to contractual agreements. Costs incurred for these services were zero and $3.8 million for the three and nine months ended September 30, 2017, and $3.9 million and $13.6 million for the three and nine months ended September 30, 2016, respectively, and are reported as cost of operations in the unaudited condensed consolidated statements of operations. These agreements were all terminated as of April 1, 2017.
Engineering, Procurement and Construction Contracts and Module and Tracker Warranties
SunEdison served as the prime construction contractor for most of the Company’s power plants that were acquired from SunEdison pursuant to engineering, procurement and construction contracts with the Company’s project companies. 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 power plants 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 power plant that survive completion of construction. Moreover, the Company also generally obtained solar module and tracker warranties from SunEdison, including material and workmanship warranties and output guarantees, for those solar power plants that the Company acquired from SunEdison that utilized SunEdison modules or trackers, as applicable. The SunEdison Bankruptcy will likely reduce or eliminate the Company’s potential recoveries on claims under these agreements and warranties, and all such claims or potential claims will be released upon the effectiveness of the Settlement Agreement.
Due to/from SunEdison, net
Certain of the Company’s expenses and capital expenditures related to construction in process are paid by affiliates of SunEdison and are reimbursed by the Company to the same or other affiliates of SunEdison. As of September 30, 2017 and December 31, 2016, the Company owed SunEdison and its affiliates $9.8 million and $16.1 million, net, respectively.
Depending on the nature of the activity, amounts are either reflected in operating activities or as a non-cash addition to power plants included in Due to SunEdison, net. Additionally, SunEdison provided contributions to the Company in the form of

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stockholder loans. Related amounts have been recognized as additional paid-in capital as there is no expectation for the Company to repay SunEdison for the contributions related to stockholder loans. These contributions totaled $7.2 million and $37.6 million for the nine months ended September 30, 2017 and 2016, respectively.
Incentive Distribution Rights
Immediately prior to the completion of the IPO on August 5, 2015, Global LLC entered into the Fourth Amended and Restated Operating Agreement of Global LLC, which granted SunEdison 100.0% of the incentive distribution rights (“IDRs”) of Global LLC. IDRs represent the right to receive increasing percentages (15.0%, 25.0% and 50.0%) of Global LLC’s quarterly distributions after the Class A units, Class B units and Class B1 units of Global LLC have received quarterly distributions in an amount equal to $0.275 per unit (the “Minimum Quarterly Distribution”), and the target distribution levels have been achieved. As of September 30, 2017 and December 31, 2016, SunEdison held 100.0% of the IDRs. SunEdison has pledged the IDRs as collateral under its DIP financing and its first and second lien credit facilities and second lien secured notes. SunEdison has granted the Company a right of first refusal with respect to any proposed sale of IDRs to a third party (other than its controlled affiliates), which the Company may exercise to purchase the IDRs proposed to be sold on the same terms offered to such third party at any time within 30 days after it receives written notice of the proposed sale and its terms.
Initial IDR Structure
If for any quarter:
Global LLC has made cash distributions to the holders of its Class A units, Class B1 units and, subject to the Distribution Forbearance Period and the Subordination Period (as described below) provisions, Class B units in an amount equal to the Minimum Quarterly Distribution; and
Global LLC has distributed cash to the holders of its Class A units and Class B1 units in an amount necessary to eliminate any arrearages in payment of the Minimum Quarterly Distribution;

then, subject to the Distribution Forbearance Period provisions, Global LLC will make additional cash distributions for that quarter to holders of its Class A units, Class B units, Class B1 units and the IDRs in the following manner:
first, to all holders of Class A units, Class B1 units and Class B units, pro rata, until each holder receives a total of $0.3163 per unit for that quarter (the “First Target Distribution”) (115.0% of the Minimum Quarterly Distribution);
<