TerraForm Power Inc (NASDAQ:TERP) surged 6.7% on Monday during the pre-trading market. This was after it was learned that the company had adopted the use of a poison pill. The move to adopt a poison pill was pursued in order to stop the accumulation of stock.
The shares are divided into two classes; class A and B. The class A shares are owned by both public and private investors while SunEdison (SUNEQ) holds class B shares. The class A shares were amounting to 80 million as at October 31 while Class B shares were 60.4 million.
TerraForm’s shares which are under SunEdison will probably be bought by Appaloosa Management LP and Brookfield Asset Management (BAM) . This according to information that the two will be making an offer to Terra and the fact that SunEdison is bankrupt. The two companies already own shares in the company with Appaloosa having 9.5% and Brookfield 12%.
Even though they are bankrupt, SunEdison stated that they were looking for ways to create value for their stock in TerraForm Power and TerraForm Global (GLBL). Poison pill is the name given to the rights plan and it will be triggered by 15% ownership of TerraForm Power. TerraForm on the other hand said that it was working with SunEdison so as have strong value for their stockholders.
Peter Blackmore the interim CEO and chairman said that TerraForm and TerraForm Global have great interests in regards to sales. The two companies will therefore act on what they perceive to be the best for their stockholders.
On a presentation made on Tuesday TerraForm Global said that they were in ongoing discussions with SunEdision about a joint sales process in regards to the stake. SunEdision have an equity interest in TerraForm Global of 35% together with Class B shares which gives it 98% voting rights.