TerraForm Consent Offer Has Longest Sentence We’ve Seen in Some Time

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According to the Guinness Book of World Records, the longest grammatically correct sentence in world literature rings in at 1,288 words, from Nobel Prize-winning American writer William Faulkner’s novel “Absalom! Absalom!” By comparison a 448-word sentence in TerraForm Global Inc.’s (NASDAQ: GLBL) consent offer is a mere stripling.

TerraForm Global announced Friday morning that its operating subsidiary is soliciting consent from holders of record of the company’s 9.75% senior notes due 2022 to waive certain reporting covenants among the issuer (TerraForm Global), the guarantors of the note, and U.S. Bank, the trustee. Basically, the waivers give TerraForm Global until 5:00 p.m. ET, December 6, 2016, to reach compliance with the covenant related to timely filing of annual and quarterly reports.

A story last month at Bloomberg News reported that bankrupt solar energy maker SunEdison is working to sell its controlling stake in TerraForm Global and its other yieldco, TerraForm Power Inc. (NASDAQ: TERP). SunEdison last month stopped paying interest on senior notes issued by the company. The two yieldcos called SunEdison’s move “invalid,” according to Reuters.

As part of the consent offer, TerraForm Global will pay a consent fee of $5 per $1,000 of principal held if the consent is received by September 1 and accepted by the firm. Then comes the long sentence:

In addition, under the Proposed Waiver, in the event that (x) TerraForm Global, Inc. (the “Company”) publicly announces at any time an M&A Transaction that has been approved by the Board of Directors of the Company and (y) such M&A Transaction includes an offer by TerraForm Global (or one of its affiliates) or a potential acquiror (or one of its affiliates) to each Holder (as defined in the Indenture) of the Notes to repurchase all of that Holder’s Notes at a purchase price in cash at least equal to 101% of the aggregate principal amount of such Notes repurchased, plus accrued and unpaid interest, if any, on such Notes repurchased to the date of repurchase (such an offer, a “Repurchase Offer”), compliance with the Annual and Quarterly Reporting Covenants will be suspended beginning on the date of such public announcement and the Proposed Waiver will continue in full force and effect regardless of the Waiver Expiration Date; provided that such suspension of compliance with the Annual and Quarterly Reporting Covenants shall cease on the date that is six months following the date of such public announcement if such M&A Transaction (or any other M&A Transaction meeting the requirements of the preceding clause (y) relating to a Repurchase Offer) has not been consummated within such six months; provided, further, that if such M&A Transaction (including such other M&A Transaction meeting the requirements of the preceding clause (y) relating to a Repurchase Offer) has been consummated within such six months (it being understood that such M&A Transaction shall have met the requirement of the preceding clause (y) relating to a Repurchase Offer), (x) any and all Defaults or Events of Default existing as of the consummation of such M&A Transaction, and the consequences thereof, with respect to any failure to comply with the Indenture, the Notes or the Note Guarantees that may have occurred, directly or indirectly, as a result of, arising from, relating to or in connection with a failure to comply with the Annual and Quarterly Reporting Covenants will be waived and (y) compliance with the Annual and Quarterly Reporting Covenants will be waived with respect to any fiscal quarter or fiscal year (other than (i) the first full fiscal quarter that begins after the consummation of such M&A Transaction and any subsequent fiscal quarter thereafter and (ii) the first full fiscal year that begins after the consummation of such M&A Transaction and any subsequent fiscal year thereafter) (it being understood that, with respect to each such fiscal period in (i) and (ii) of this clause (y), compliance with the Annual and Quarterly Reporting Covenants shall again apply).

Whether that sentence is grammatically correct is left as an exercise for the reader.

Someone understands it, we suspect, because TerraForm Global’s share price has jumped more than 5% Friday morning to $3.57 in a 52-week range of $1.92 to $10.47. The consensus 12-month target price is $3.35 per share.