From BloombergView, Dec. 23, 2015:
Yieldcos, Spoofers and Blockchains
If you haven't been following the SunEdison story, let me commend it to you, because it is bonkers. The basic setup is that you've got SunEdison, a public company that develops renewable power projects, and you've got its two yieldcos, TerraForm Power and TerraForm Global. The yieldcos are also public companies but are controlled by SunEdison, and they buy completed projects from SunEdison. The idea is that SunEdison investors get a growthy risky developer of projects, while yieldco investors get yieldy safe operators of projects with contracted cash flows. The concern is that the yieldcos are "captive buyers" of SunEdison projects, and so there are safeguards (separate managers and boards, conflicts committees) to protect yieldco investors against the risk that SunEdison will use the yieldcos as piggy banks by selling them bad projects at inflated prices.
Except that SunEdison ran into financial troubles this year, and this happened:
At a Nov. 20 board meeting, SunEdison Chief Financial Officer Brian Wuebbels asked TerraForm Power’s two-man conflicts committee to approve the new Vivint terms, some of the people said. He also sought their help raising cash, one person added, suggesting TerraForm prepay for future project purchases or repurchase shares held by SunEdison. Messrs. Lerdal and Dahya refused both requests, the person said.
Unfortunately, not a single footnote.The men were replaced on the conflicts committee, according to filings. SunEdison appointed new directors, while senior SunEdison officials took over management roles. Mr. Wuebbels became CEO of both TerraForm entities. Manavendra Sial, another SunEdison executive, became their interim finance chief."Among Mr. Sial’s first actions, according to filings and a person familiar with the matter, was authorizing a $150 million payment to SunEdison."...MUCH MORE