3/9/17: Buying the Fresh Start for TerraForm (TERP)

By Igor Greenwald • March 9, 2017

Energy Strategist Portfolio Update

TerraForm Power (NASDAQ: TERP) upgraded to a buy below $13 in Aggressive Portfolio

For more information, please see the latest issue.

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Gompps

09/19/17 ‐ 9:04am ET September 19, 2017 at 9:04am ET

I received a notice that TerraForm (TERP) was

Gompps

09/19/17 ‐ 9:06am ET September 19, 2017 at 9:06am ET

Sorry about that, I received a notice that I needed to make an election for my shares in TERP stocks to choose between cash consideration or a stock consideration. Do you have a recommendation?

Robert Rapier

09/19/17 ‐ 5:08pm ET September 19, 2017 at 5:08pm ET

As of now, the shares are trading at a premium to the cash offer, so I would be inclined to hold onto the shares.

Peter

09/28/17 ‐ 1:51am ET September 28, 2017 at 1:51am ET

Hi,
according to what I received from my (German) bank holding on to the shares is not an option because of an imminent merger with Brookfiled Asset Management Inc, Orion US Holings 1 L.P. and BRE TERP Holdings Inc..

I have to choose between receiving $ 9.52 in cash (which is insane given that TERP is trading abobe $ 13) or have the TERRAFORM POWER A DL-,01 exchanged for Terraform Power (which seems to be a different, post-merger entity). If I don´t make a choice by 4 Oct. I´ll get a combination of new shares and cash (still to be determined how much).

What´s your advice? Should I sell to avoid the risk of being shortchanged or can I rely on that the regulatory framework around mergers will protect me from that?

Robert Rapier

09/29/17 ‐ 11:56am ET September 29, 2017 at 11:56am ET

Hi Peter,

I agree, $9.52 in cash does not seem like a reasonable offer. There is also this provision:

“In addition to the merger consideration, TERP shareholders will also be entitled to a special dividend of $1.94 per TERP share, contingent on completion of the merger. The Company will declare the payment of the special dividend immediately prior to the effective time of the merger.”

What isn’t clear is if taking the cash means you don’t get the dividend, as you will no longer be a shareholder. Given the rather large premium of where TERP is trading versus the cash offer, I believe I would opt to take the shares and the dividend.

Peter

09/30/17 ‐ 12:02am ET September 30, 2017 at 12:02am ET

Thanks. What I´m still wondering is what the new shares represent. Will the assts of the new company be the same as that of current TERP? Will the net asset value per share be different?

Robert Rapier

10/01/17 ‐ 11:02pm ET October 1, 2017 at 11:02pm ET

Yes, those are key questions. I don’t see them answered in the literature the company has provided. Is there a shareholder services contact listed who could perhaps answer some specific questions?

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