Shares of TerraForm Power (TERP) rose 6.7% in pre-market trading Monday on news that the power producer had adopted a poison pill that would thwart an accumulation of its stock.
The rights plan will be triggered if an entity acquires 15% of its Class A stock.
The move came after Brookfield Asset Management (BAM) and hedge fund Appaloosa Management LP said in a filing on Friday they planned to make an offer for TerraForm Power's B shares owned by bankrupt renewable energy company SunEdison (SUNEQ) . Brookfield already owns 12% of TerraForm Power's Class A shares and Appaloosa holds 9.5%.
SunEdison said separately on Monday that it's exploring "value creation options" for the stock it owns of TerraForm Power and TerraForm Global (GLBL) . TerraForm said Monday it was working with SunEdison on that effort to gain a "strong valuation" for stockholders.
"TerraForm Power and TerraForm Global have important interests at stake in connection with these sales and the companies will take actions that it believes are in the best interests of its stockholders," chairman and interim CEO Peter Blackmore said in the statement.
Bethesda, Md.-based TerraForm Global revealed in a bondholder presentation Tuesday that it was in active discussions with SunEdison about a jointly supported sales process for the stake.
SunEdison has a 35% equity interest in Terraform Global, which is a publicly traded yieldco that owns renewable energy plants in emerging markets. But it holds almost all of its Class B shares, giving it 98% of the voting rights.
TerraForm Global cautioned that its 2015 annual report could include a warning about its ability to continue as a going concern due to the risk that it could get sucked into SunEdison's bankruptcy.
SunEdison filed for Chapter 11 bankruptcy on April 21. Its yieldcos aren't involved in the filing, but the close ties between the businesses have created operational challenges for the TerraForm entities.
Both received default notices from their bondholders last month because of their failure to file an audited annual report for 2015 by the May 29 deadline. SunEdison managed its yieldcos' finances before it filed for bankruptcy.
Bond research firm CreditSights wrote in a note last week that it saw an elevated probability that Brookfield Renewable Partners (BEP) could be the ultimate owner of TerraForm Power because of its affiliation with Brookfield Asset Management, which helped it acquire what will ultimately be a 30% stake in 3,000 megawatts of hydro generation in Colombia for $2 billion.
"The format for that deal may become the playbook for a potential TerraForm Power acquisition and partial equity dropdown into BEP," analysts Greg Jones and Andy DeVries said in the report.
-- Lisa Allen contributed to this report