SunEdison filed a Sept. 1 notice with its bankruptcy court that it intends to sell 16 General Electric wind turbines that will allow completion of a wind project in Texas.
SunEdison, which sought Chapter 11 protection in April, plans to transfer the right, title and interest in and to sixteen GE 1.7-103 wind turbines to Akuo Energy USA Inc. under an Asset Purchase Agreement dated Sep. 1. In connection with this transaction, a SunEdison affiliate that is not in bankruptcy, Rocksprings Val Verde Wind Holdings LLC, has entered into a Membership Interest Purchase Agreement (MIPA), also dated Sept. 1, with Akuo pursuant to which Rocksprings Holdings agreed sell 100% of the equity interests in Val Verde Wind Holdco LLC to Akuo. Akuo intends to use the 16 turbines to complete construction of the Rocksprings project.
Akuo is a third party purchaser unaffiliated with SunEdison and entered into the Asset Purchase Agreement on an arms’-length basis. Akuo will pay SunEdison $13 million in consideration for the turbines, subject to downward adjustment for scheduled liabilities estimated at $2,715,761.79 and up to $500,000 in the event undisclosed liabilities in connection with the Rocksprings sale are discovered by Akuo within six months after closing.
Separately, Rocksprings Val Verde Wind Holdings will receive $1 million in cash proceeds from the Rocksprings sale. Akuo has also agreed to replace $11,025,000 of letters of credit that would otherwise be drawn in the absence of the Rocksprings sale.
Advisor Rothschild and SunEdison conducted a sale process focused on SunEdison's inventory of turbines, which includes full turbines, as well as nacelles and hubs and nacelles only. In mid-April 2016, Rothschild launched a sale process requiring non-binding offers by June 2. Rothschild extended the offer period through July 1 for the turbines subject to this transaction.
During the sale process, SunEdison received offers for the turbines that would provide consideration in excess of what Akuo will pay. However, Akuo conditioned its buy of the Rocksprings wind project on the turbine deal.
Tim Derrick, the President and General Manager, North America Utility of SunEdison, said in supporting testimony that under the MIPA, Akuo would get 100% of the equity interests in Rocksprings Val Verde Wind LLC and Rocksprings Val Verde Wind II LLC.
Derrick wrote: "Consummating the Proposed Transaction on shortened notice is critical to ensuring that the necessary interconnections associated with the Rocksprings wind project can proceed without substantial delays and costs. The American Electric Power Service Corporation ('AEP') has agreed to provide an interconnection date in May 2017 for the Rocksprings project, provided that credit support, such as a letter of credit, is posted by September 16, 2016. If appropriate credit support is not posted by that date, another project may take the Rocksprings wind project’s position in the interconnection queue, and AEP has stated the next available interconnection date for the project would not be until the first quarter of 2018. Missing the September 16, 2016 interconnection date will therefore result in a substantial delay and potential exposure to estimated liquidated damages approximating $1.2 million per month pursuant to the power purchase agreements underlying the Rocksprings wind project, both of which are scheduled to expire in 2017.
"By delaying interconnection to the first quarter of 2018, the Rocksprings wind project is at serious risk of missing the expiration dates in both power purchase agreements, from which most of the project’s value is derived. As such, the expeditious entry of an Order authorizing the Proposed Transaction upon conclusion of the fourteen (14) calendar days’ notice period will enable the Debtors to promptly close the Rocksprings Transaction and thereafter transfer the Turbines to the Buyer pursuant to the Asset Purchase Agreement. The Buyer will thereafter be in a position to post the necessary credit support by September 16, 2016 and avoid liquidated damages that would result from delaying the interconnection date pursuant to the applicable power purchase agreements."
A buyer contact is: Akuo Energy USA Inc., 645 N. Michigan Ave., Suite 980, Chicago, IL 60611, Attn: Thomas Coté, Facsimile: (617) 960-2889, firstname.lastname@example.org.
Details of the wind project to be sold aren't given in the court filing. But, American Electric Power Service, on behalf of affiliate AEP Texas Central, on Feb. 22 filed with the Federal Energy Regulatory Commission a First Amended and Restated ERCOT Standard Generation Interconnection Agreement with Rocksprings Val Verde Wind LLC, part of SunEdison. The amended deal provides for the interconnection of a 149.34-MW wind facility. Rocksprings Val Verde's Fermi Substation will be in Val Verde County, about 30 miles north of Del Rio, Texas. The parties originally entered into an interconnect deal in 2015. The parties agreed to amend the original agreement to revise the nominal plant capacity and the number of wind units. This current version of the project involves a nominal 149.34-MW capacity comprised of 53 units at 2.3 MW each and 16 units at 1.715 MW each. These will be GE turbines. The version of the project from last year's SGIA had 180 MW of capacity composed of 90 GE turbines at 2 MW apiece.