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EX-32 - EXHIBIT 32 - TERRAFORM GLOBAL, INC.a2q_2017x10-qxexxx32xsecti.htm
EX-31.2 - EXHIBIT 31.2 - TERRAFORM GLOBAL, INC.a2q2017_10-qxxxexxx31x2xbx.htm
EX-31.1 - EXHIBIT 31.1 - TERRAFORM GLOBAL, INC.a2q_2017xexxx31x1xpxxblack.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _____________________________________________________________________________
FORM 10-Q
 _____________________________________________________________________________
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2017
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-37528
 ______________________________________________________________
image0a12.jpg
TerraForm Global, Inc.
(Exact name of registrant as specified in its charter)
 _____________________________________________________________________________
Delaware
 
47-1919173
(State or other jurisdiction of incorporation or organization)
 
(I. R. S. Employer Identification No.)
7550 Wisconsin Avenue, 9th Floor, Bethesda, Maryland
 
20814
(Address of principal executive offices)
 
(Zip Code)
(240) 762-7700
(Registrant’s telephone number, including area code)
 ______________________________________________________________
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes  x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
o
  
Accelerated filer
 
x
 
 
 
 
Non-accelerated filer
 
o (Do not check if a smaller reporting company)
  
Smaller reporting company
 
o
 
 
 
 
 
 
 
Emerging growth company
 
x
 
 
 
 


1



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o     No  x

As of July 31, 2017, there were 112,970,826 shares of Class A common stock outstanding, 61,343,054 shares of Class B common stock outstanding, and no shares of Class B1 common stock outstanding.
 


2



TerraForm Global, Inc. and Subsidiaries
Table of Contents
Form 10-Q
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exhibit Index

3



PART I - Financial Information

Item 1. Financial Statements

TERRAFORM GLOBAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
 
Three Months Ended
June 30,
Six Months Ended
June 30,
 
2017
 
2016
2017
 
2016
Operating revenues, net
$
62,502

 
$
56,430

$
118,986

 
$
104,116

Operating costs and expenses:
 
 
 
 
 
 
Cost of operations
11,695

 
11,797

23,034

 
22,029

General and administrative
20,366

 
14,225

39,335

 
24,409

Acquisition, formation and related costs

 
83


 
10,088

Depreciation, accretion and amortization
21,209

 
13,025

36,310

 
27,597

Total operating costs and expenses
53,270

 
39,130

98,679

 
84,123

Operating income
9,232

 
17,300

20,307

 
19,993

Other expense (income):
 
 
 
 
 
 
Loss (gain) on the extinguishment of debt

 
526

6,767

 
(5,735
)
Interest expense, net
28,968

 
28,975

59,457

 
62,638

Gain on foreign currency exchange
(1,295
)
 
(13,882
)
(22,937
)
 
(26,231
)
Other income, net
(3,181
)
 
(6,061
)
(8,232
)
 
(13,031
)
Total other expenses, net
24,492

 
9,558

35,055

 
17,641

(Loss) income before income tax expense
(15,260
)
 
7,742

(14,748
)
 
2,352

Income tax expense
2,485

 
2,061

4,950

 
2,919

Net (loss) income
(17,745
)
 
5,681

(19,698
)
 
(567
)
Less:(loss) income attributable to non-controlling interests
(7,364
)
 
4,584

(7,604
)
 
2,968

Net (loss) income attributable to TerraForm Global, Inc. Class A common stockholders
$
(10,381
)
 
$
1,097

$
(12,094
)
 
$
(3,535
)
 
 
 
 
 
 
 
Weighted average number of shares:
 
 
 
 
 
 
Class A common stock - Basic and Diluted
112,944

 
106,856

113,099

 
106,856

Loss per share:
 
 
 
 
 
 
Class A common stock - Basic and Diluted
$
(0.09
)
 
$
0.01

$
(0.11
)
 
$
(0.03
)
See accompanying notes to unaudited condensed consolidated financial statements.

4



TERRAFORM GLOBAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(In thousands)
 
Three Months Ended June 30,
 
Six Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
Net (loss) income
$
(17,745
)
 
$
5,681

 
$
(19,698
)
 
$
(567
)
Other comprehensive (loss) income:
 
 
 
 
 
 
 
Net foreign currency translation adjustments
(28,811
)
 
34,225

 
(16,230
)
 
38,782

Net unrealized gain (loss) on hedging instruments
3,747

 
2,139

 
1,971

 
(12,324
)
Other comprehensive (loss) income, net of tax
(25,064
)
 
36,364

 
(14,259
)
 
26,458

Total comprehensive (loss) income
$
(42,809
)
 
$
42,045

 
$
(33,957
)
 
$
25,891

Less: Comprehensive (loss) income attributed to non-controlling interest:
 
 
 
 
 
 
 
Net (loss) income
(7,364
)
 
4,584

 
(7,604
)
 
$
2,968

Net foreign currency translation adjustments
(11,431
)
 
13,453

 
(5,483
)
 
15,285

Net unrealized income (loss) on hedging instruments
2,513

 
1,433

 
1,323

 
(8,249
)
Comprehensive (loss) income attributed to non-controlling interest
(16,282
)
 
19,470

 
(11,764
)
 
10,004

Comprehensive (loss) income attributed to Class A common stockholders
$
(26,527
)
 
$
22,575

 
$
(22,193
)
 
$
15,887

See accompanying notes to unaudited condensed consolidated financial statements.

5



TERRAFORM GLOBAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
 
June 30,
 
December 31,

2017
 
2016
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
650,241

 
$
680,893

Current portion of restricted cash, including consolidated variable interest entities of $76,556 in 2017 and $64,786 in 2016
82,022

 
79,294

Accounts receivable, net
37,744

 
37,596

Prepaid expenses and other current assets, including consolidated variable interest entities of $79,429 in 2017 and $85,501 in 2016
124,908

 
102,555

Total current assets
894,915

 
900,338

Power plants, net, including consolidated variable interest entities of $388,140 in 2017 and $431,686 in 2016
1,355,235

 
1,355,362

Restricted cash
15,196

 
16,482

Intangible assets, net, including consolidated variable interest entities of $57,479 in 2017 and $56,077 in 2016
85,129

 
82,450

Deposit for acquisitions, net
47,019

 
48,274

Other assets
46,851

 
45,373

Total assets
$
2,444,345

 
$
2,448,279

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
  
Current liabilities:
 
 
  
Current portion of long-term debt, including consolidated variable interest entities of $315,530 in 2017 and $314,928 in 2016
$
327,749

 
$
327,459

Accounts payable
12,325

 
12,009

Accrued expenses and other current liabilities, including consolidated variable interest entities of $54,018 in 2017 and $44,633 in 2016
143,741


119,179

Due to affiliates, net
9,786

 
16,084

Total current liabilities
493,601

 
474,731

Long-term debt, less current portion
761,329

 
758,609

Asset retirement obligations
11,522

 
10,310

Other long-term liabilities including consolidated variable interest entities of $50,629 in 2017 and $5,813 in 2016")
1,498

 
6,810

Deferred tax liabilities, including consolidated variable interest entities of $35,697 in 2017 and $40,817 in 2016
55,488

 
52,106

Total liabilities
1,323,438

 
1,302,566

Stockholders’ Equity:
 
 
 
Preferred stock, par value $0.01 per share, 50,000,000 shares authorized, no shares issued and outstanding at June 30, 2017 or December 31, 2016

 

Class A common stock, par value $0.01 per share, 2,750,000,000 shares authorized, 112,970,826 shares issued and outstanding at June 30, 2017, 113,253,681 shares issued and outstanding at December 31, 2016
1,129

 
1,132

Class B common stock, par value $0.01 per share, 200,000,000 shares authorized, 61,343,054 shares issued and outstanding at June 30, 2017 and December 31, 2016
613

 
613

Class B1 common stock, par value $0.01 per share, 550,000,000 shares authorized, no shares issued or outstanding at June 30, 2017 or December 31, 2016

 

Treasury stock
(5,166
)
 
(4,739
)
Additional paid-in capital
957,932

 
940,405

Accumulated deficit
(278,336
)
 
(266,242
)
Accumulated other comprehensive income
2,020

 
12,119

Total TerraForm Global, Inc. stockholders’ equity
678,192

 
683,288

Non-controlling interests
442,715

 
462,425

Total stockholders’ equity
1,120,907

 
1,145,713

Total liabilities and stockholders’ equity
$
2,444,345

 
$
2,448,279

See accompanying notes to unaudited condensed consolidated financial statements.

6



TERRAFORM GLOBAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)

 
Controlling Interests
 
 
Non-controlling Interests
 
Net SunEdison Investment
Class A Common Stock
Class B Common Stock
Treasury Stock
Additional Paid-in Capital
Accumulated Deficit
Accumulated Other Comprehensive Income (Loss)
 
 
 
Accumulated Deficit
Accumulated Other Comprehensive Income (Loss)
 
Total Stockholders’ Equity
 
Shares
Amount
Shares
Amount
Shares
Amount
Total
 
Capital
Total
Balance at December 31, 2015
$

114,630

$
1,146

61,343

$
613

5

$
(28
)
$
923,740

$
(213,210
)
$
(11,181
)
$
701,080


$
609,225

$
(117,975
)
$
(9,678
)
$
481,572

$
1,182,652

Class A shares forfeited on termination of employment

(1,376
)
(14
)




14




 





Treasury Shares





254

(4,711
)



(4,711
)
 



 
(4,711
)
Stock-based compensation







3,646



3,646

 




3,646

Net loss








(53,032
)

(53,032
)
 

(25,466
)

(25,466
)
(78,498
)
Net SunEdison Investment











 
39,170



39,170

39,170

Other comprehensive income









23,300

23,300

 


11,378

11,378

34,678

Dividends paid







(30,674
)


(30,674
)
 




(30,674
)
Dividends payable - SUNE Class B











 
(550
)


(550
)
(550
)
Transfer of Equity interest from NCI to CI







14,781



14,781

 
(14,781
)


(14,781
)

Equity reallocation







28,898



28,898

 
(28,898
)


(28,898
)

Balance at December 31, 2016
$

113,254

$
1,132

61,343

$
613

259

$
(4,739
)
$
940,405

$
(266,242
)
$
12,119

$
683,288

 
$
604,166

$
(143,441
)
$
1,700

$
462,425

$
1,145,713

Class A shares forfeited on termination of employment

(428
)
(4
)




4










Class A shares - RSUs Vested

145

1





(1
)



 





Treasury Shares





850

(427
)



(427
)





(427
)
Stock-based compensation







1,818



1,818






1,818

Net loss








(12,094
)

(12,094
)


(7,604
)

(7,604
)
(19,698
)
Net SunEdison Investment







5,258



5,258


2,502



2,502

7,760

Other comprehensive loss









(10,099
)
(10,099
)



(4,160
)
(4,160
)
(14,259
)
Transfer of Equity interest from NCI to CI







11,740



11,740


(11,740
)


(11,740
)

Equity reallocation







(1,292
)


(1,292
)

1,292



1,292


Balance at June 30, 2017
$

112,971

$
1,129

61,343

$
613

1,109

$
(5,166
)
$
957,932

$
(278,336
)
2,020

$
678,192

 
$
596,220

$
(151,045
)
$
(2,460
)
$
442,715

$
1,120,907

See accompanying notes to unaudited condensed consolidated financial statements.

7



TERRAFORM GLOBAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)


Six Months Ended June 30,
 
2017
 
2016
Cash flows from operating activities:
 
 
 
Net loss
$
(19,698
)
 
$
(567
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Amortization of deferred financing costs
1,284

 
1,768

Depreciation, amortization and accretion
36,310

 
27,597

Stock-based compensation expense
1,818

 
1,972

Change in fair value of interest rate swaps
1,814

 
4,638

Loss on disposal of property
885

 

Loss (gain) on extinguishment of debt
6,767

 
(5,735
)
Unrealized gains on foreign currency, net
(29,823
)
 
(21,239
)
Deferred tax benefit
(557
)
 
(511
)
Other non-cash items
(2,348
)
 

Changes in assets and liabilities:
 
 
 
Accounts receivable
1,324

 
3,366

Prepaid expenses and other current assets
(15,094
)
 
7,037

Accounts payable, accrued expenses, and other current liabilities
10,224

 
(11,544
)
Due to/from affiliates, net
(6,338
)
 
(3,192
)
Net cash (used in) provided by operating activities
(13,432
)
 
3,590

Cash flows from investing activities:
 
 
 
Capital expenditures
(3,486
)
 
(47,105
)
Change in restricted cash
2,778

 
57,103

Cash paid for acquisitions, net of cash acquired

 
(32,128
)
Cash acquired upon FERSA consolidation

 
8,022

Returns from BioTherm escrow and deposits
2,430

 
3,775

Net cash provided by (used in) investing activities
1,722

 
(10,333
)
Cash flows from financing activities:


 
 
Repayments of the Senior Notes

 
(35,441
)
Repayments of system debt financing
(7,906
)
 
(29,477
)
Net SunEdison investment

 
48,983

Dividends paid

 
(30,674
)
Net cash used in financing activities
(7,906
)
 
(46,609
)
Net decrease in cash and cash equivalents
(19,616
)
 
(53,352
)
Effect of exchange rate changes on cash and cash equivalents
(11,036
)
 
1,528

Cash and cash equivalents at beginning of period
680,893

 
922,318

Cash and cash equivalents at end of period
$
650,241

 
$
870,494

See accompanying notes to unaudited condensed consolidated financial statements.

8



TERRAFORM GLOBAL, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS
Overview
TerraForm Global, Inc. and its subsidiaries (together, the “Company”) is a controlled affiliate of SunEdison, Inc. (together with its consolidated subsidiaries excluding the Company, "SunEdison"). TerraForm Global, Inc. is a holding company and its sole asset is an equity interest in TerraForm Global, LLC (“Global LLC”), a globally diversified renewable energy company that owns, through its subsidiaries, wind and solar power plants and long-term contractual arrangements to sell the electricity generated by such power plants to third parties. TerraForm Global, Inc. is the managing member of Global LLC and operates, controls and consolidates the business affairs of Global LLC.
Entry into a Definitive Merger Agreement with Brookfield Asset Management Inc.
On March 6, 2017, TerraForm Global, Inc. entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Orion US Holdings 1 L.P. (“Parent”), a Delaware limited partnership and an affiliate of Brookfield Asset Management Inc. (“Brookfield”), and BRE GLBL Holdings Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), providing for the merger of Merger Sub with and into TerraForm Global, Inc. (the “Merger”), with TerraForm Global, Inc. surviving as a wholly owned subsidiary of Parent.
The proposed Merger was approved by the Board of Directors of the Company (the “Board”), following the recommendation of the Corporate Governance and Conflicts Committee of the Board (the “Conflicts Committee”). Completion of the Merger is expected to occur, subject to satisfaction of closing conditions, in the fourth quarter of 2017.
As a result of the Merger, each share of Class A common stock of TerraForm Global, Inc., par value $0.01 per share (the “Class A Shares”), issued and outstanding immediately prior to the effective time of the Merger (other than Class A Shares that are (i) owned by TerraForm Global, Inc., Parent or any of their direct or indirect wholly owned subsidiaries and not held on behalf of third parties, (ii) owned by stockholders who have perfected and not withdrawn a demand for appraisal rights pursuant to Section 262 of the Delaware General Corporation Law or (iii) held by any direct or indirect wholly owned subsidiary of the Company that is taxable as a corporation, will be converted into the right to receive per share Merger consideration equal to $5.10 per Class A Share in cash, without interest.
Concurrently with the execution and delivery of the Merger Agreement, SunEdison and certain of its affiliates executed and delivered a voting and support agreement with Brookfield and TerraForm Global, Inc. (the “Voting and Support Agreement”) pursuant to which SunEdison agreed to vote or cause to be voted any shares of common stock of TerraForm Global, Inc. held by it or any of its controlled affiliates in favor of the Merger and to take certain other actions to support the consummation of the Merger and the other transactions contemplated by the Merger Agreement (collectively, the "Brookfield Transaction"). The Voting and Support Agreement was approved by the bankruptcy court overseeing the SunEdison Bankruptcy (as defined below) on June 7, 2017.
The Merger Agreement includes a non-waivable condition to closing that the Merger Agreement and the transactions contemplated by the Merger Agreement be approved by holders of a majority of the outstanding Class A Shares, excluding all Class A Shares held by SunEdison or any of its affiliates (“SunEdison Class A Shares”) and Parent or any of its affiliates.
Closing of the Merger also is subject to certain other conditions, including the adoption of the Merger Agreement by the holders of a majority of the total voting power of the outstanding shares of common stock of TerraForm Global, Inc. entitled to vote on the Merger and receipt of certain regulatory approvals. The entry by the bankruptcy court overseeing the SunEdison Bankruptcy of orders authorizing and approving the entry by SunEdison (and, if applicable, SunEdison’s debtor affiliates) into the Settlement Agreement, the Voting and Support Agreement and any other agreement entered into in connection with the Merger or the other transactions contemplated by the Merger Agreement to which SunEdison or any other debtor will be a party (the “Bankruptcy Court Order”) is also a condition to the closing of the Merger. The bankruptcy court overseeing the SunEdison Bankruptcy entered the Bankruptcy Court Order on June 7, 2017 and this condition has been satisfied. In addition, Parent’s and Merger Sub’s obligations to consummate the Merger are subject to the requirement that certain litigation has been finally dismissed with prejudice or the settlement thereof has been submitted for court approval in a manner reasonably satisfactory to Parent pursuant to agreements or stipulations containing releases reasonably satisfactory to Parent, and all final approvals of courts or regulatory authorities required for the settlements and releases to become final, binding and enforceable; provided, however, that in no event will a settlement of certain claims made by Renova Energia, S.A. (“Renova”) include an aggregate payment by the Company of greater than $3.0 million (net of any amounts funded directly or indirectly by insurance proceeds). In the event that this condition has not been satisfied when all other conditions to closing are satisfied (other than

9



those that by their nature are satisfied or waived at closing), Parent and the Company have agreed to negotiate in good faith to adjust, or defer a portion of, the $5.10 in cash per Class A Share otherwise payable pursuant to the terms of the Merger Agreement so that this condition will be satisfied.
On May 26, 2017, TerraForm Global, Inc., TerraForm Global, LLC, TerraForm Global Brazil Holding B.V. and TERP GLBL Brasil I Participacoes Ltda. entered into a Settlement Agreement and Mutual Release (the “Renova Settlement Agreement”) with Renova. The Renova Settlement Agreement resolves all disputes among the Company and Renova that are the subject of an ongoing arbitration proceeding in the Center for Arbitration and Mediation of the Chamber of Commerce Brazil-Canada (the “Renova Arbitration”). Concurrently with the execution of the Renova Settlement Agreement, Renova and Parent entered into a Purchase & Sale Agreement (the “PSA”) with respect to all of the shares of Class A common stock of TerraForm Global, Inc. owned by Renova (excluding the shares to be released from escrow to TerraForm Global, Inc. pursuant to the Renova Settlement Agreement). Pursuant to the terms of the PSA, Parent agreed to purchase 19,535,004 shares of Class A common stock of TerraForm Global, Inc. from Renova for a purchase price in cash of $4.75 per share, or $92,791,269 in the aggregate.
The effectiveness of the full releases contained in the Renova Settlement Agreement was subject to certain conditions set forth in the Renova Settlement Agreement (including, but not limited to, the execution and filing of a joint stipulation with the Center for Arbitration and Mediation of the Chamber of Commerce Brazil-Canada withdrawing with prejudice all of the claims and counterclaims made in the Renova Arbitration and the purchase of Renova’s shares of Class A common stock of TerraForm Global, Inc. by Parent). Additionally, the consummation of the share purchase contemplated by the PSA was subject to customary conditions to closing and was conditioned upon the satisfaction of certain conditions set forth in the Renova Settlement Agreement, including the effectiveness of the mutual releases and release of the shares in escrow.
The conditions to the effectiveness of the full releases in the Renova Settlement Agreement, as well as the conditions to the consummation of the share purchase contemplated by the PSA, were satisfied on June 29, 2017. As a result, the full releases provided for in the Renova Settlement Agreement became effective, and the share purchase contemplated by the PSA was consummated, on June 29, 2017.
Concurrently with the execution of the Renova Settlement Agreement and the PSA, TerraForm Global, Inc. and Parent entered into a letter agreement (the “Renova Letter Agreement”), pursuant to which Parent agreed that upon the later to occur of (i) the effective time as described in the Renova Settlement Agreement and (ii) the closing of the share purchase contemplated by the PSA (as defined and described below), the condition to the obligations of Parent and Merger Sub to effect the Merger set forth in Section 7.2(c) (Litigation Settlement) of the Merger Agreement, solely with respect to Renova’s claims in the Renova Arbitration, has been satisfied and the aggregate payment made by the Company (net of any amounts funded directly or indirectly by insurance proceeds) under the Renova Settlement Agreement in connection with the settlement of Renova’s claims in the Renova Arbitration will be deemed to be zero. This condition to the obligations of Parent and Merger Sub to effect the merger set forth in Section 7.2(c) (Litigation Settlement) of the Merger Agreement solely with respect to Renova’s claims in the Renova Arbitration was also satisfied on June 29, 2017.
Each of the Company, Parent and Merger Sub has made customary representations and warranties in the Merger Agreement. The Company has also agreed to various agreements and covenants, including, among others, and subject to certain exceptions, to conduct its business in the ordinary course between execution of the Merger Agreement and closing of the Merger and not to engage in certain specified types of transactions during such period.
In addition, the Company is subject to a “no change of recommendation” restriction limiting its ability to change its recommendation in respect of the Merger except as permitted by the Merger Agreement and a “no shop” restriction on its ability to solicit alternative acquisition proposals from third parties and to provide information to, and engage in discussions with, third parties regarding alternative acquisition proposals.
The Merger Agreement contains specified termination rights, including the right for each of the Company and Parent to terminate the Merger Agreement if the Merger is not consummated by December 6, 2017 (subject to a three-month extension under certain circumstances at the discretion of either the Company or Parent). The Merger Agreement provides for other customary termination rights for both the Company and Parent (including, for Parent, if the Board changes its recommendation in respect of the Merger) as more particularly set forth in the Merger Agreement. The Company is required to pay Parent a termination fee equal to $30.0 million following termination of the Agreement in the following circumstances: (i) the requisite stockholder approval has not been obtained by the termination date, and an alternative acquisition proposal to acquire the Company has been made or announced, and within 12 months of the termination of the Merger Agreement, the Company enters into a definitive agreement or consummates any alternative acquisition (as defined in the Merger Agreement), in such case, net of any expense fee paid by the Company to Parent in connection with the Merger; (ii) if either party terminates the Merger Agreement because the Bankruptcy Court Order has not been entered by the bankruptcy court by the date provided for such

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approval in the Settlement Agreement, and within 12 months of the termination of the Merger Agreement, the Company enters into a definitive agreement or consummates any alternative acquisition (as defined in the Merger Agreement), in such case, net of any expense fee paid by the Company to Parent in connection with the Merger; (iii) if either party terminates the Merger Agreement because the requisite stockholder approval has not been obtained or because the Agreement has not been consummated by the termination date, and at the time of termination, the Board has changed its recommendation in respect of the Merger; or (iv) if Parent terminates the Merger Agreement because the Board has made and not withdrawn a change of recommendation in respect of the Merger and at the time of Parent’s termination the Company has not obtained the requisite stockholder approval of the Merger or the Bankruptcy Court Order has not been entered by the bankruptcy court. In addition, if the Merger Agreement is terminated under certain circumstances, the Company has agreed to pay to Parent an $8.0 million expense reimbursement fee.
The representations, warranties and covenants of the Company contained in the Merger Agreement have been made solely for the benefit of Parent and Merger Sub. In addition, such representations, warranties and covenants (a) have been made only for purposes of the Merger Agreement, (b) have been qualified by confidential disclosures made to Parent and Merger Sub in connection with the Merger Agreement, (c) are subject to materiality qualifications contained in the Merger Agreement that may differ from what may be viewed as material by investors and (d) have been included in the Merger Agreement for the purpose of allocating risk among the contracting parties rather than establishing matters as facts. Accordingly, the representations, warranties and covenants in the Merger Agreement have been disclosed only to provide investors with information regarding the terms of the Merger Agreement, and not to provide investors with any other factual information regarding the Company or its business. Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or any of its subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties may have changed after the date of the Merger Agreement and may continue to change in the future, which subsequent information may or may not be fully reflected in the Company’s public disclosures.
The Company's entry into the Merger Agreement, and its exploration of strategic alternatives generally, involve certain risks and uncertainties, which may, among other things, disrupt its business or adversely impact its revenue, operating results and financial condition. A change of control of the Company without the consent of the lenders under the Company’s corporate level revolving credit facility (the “Revolver”) would constitute an event of default under the Revolver and, pursuant to the indenture governing the Company's 9.75% Senior Notes due 2022 (the “Senior Notes”), would require TerraForm Global Operating, LLC, a wholly-owned subsidiary of Global LLC (“Global Operating LLC”), to offer to repurchase its outstanding Senior Notes at 101.0% of their principal amount, plus accrued and unpaid interest, if any, to the repurchase date. Additionally, the occurrence of such changes may trigger change of control provisions in certain of the Company’s Power Purchase Agreements (“PPAs”). There can be no assurance that the Company will be able to complete the Merger, and failure to complete the Merger may adversely impact its business.
The foregoing description of the Merger Agreement, the Voting and Support Agreement, the Renova Settlement Agreement and the Renova Letter Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement, the Voting and Support Agreement, the Renova Settlement Agreement and the Renova Letter Agreement.
SunEdison Bankruptcy and Settlement Agreement with SunEdison
The Company's controlling shareholder, SunEdison, Inc., and certain of its affiliates voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code on April 21, 2016 (the “SunEdison Bankruptcy”). As discussed elsewhere in the Company’s unaudited condensed consolidated financial statements and the notes thereto contained in this Quarterly Report on Form 10-Q, the SunEdison Bankruptcy may have a material adverse effect on the Company. No assurance can be given on the outcome of the SunEdison Bankruptcy or its impact on the Company. The Company’s Conflicts Committee is responsible for oversight and approval of the business and affairs of the Company relating to or involving SunEdison and any of its affiliates (other than the Company), including in connection with the SunEdison Bankruptcy. The matters described in this section entitled “SunEdison Bankruptcy and Settlement Agreement with SunEdison” and other matters that presented conflict of interest issues between the Company and SunEdison have been approved and authorized pursuant to this authority by those members of the Conflicts Committee in place at the time the applicable decision was made.
The Company is not a part of the SunEdison Bankruptcy and does not rely substantially on SunEdison for funding, liquidity, or operational or staffing support. The Company continues to participate actively in the SunEdison Bankruptcy proceedings, and the SunEdison Bankruptcy will continue to have a negative impact on the Company given its complex relationship with SunEdison.

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During the SunEdison Bankruptcy, SunEdison has not performed substantially as obligated under its agreements with the Company, including under sponsorship arrangements consisting of the various corporate level agreements put in place at the time of the Company’s IPO (collectively, the “Sponsorship Arrangement”) and certain operation and maintenance ("O&M") and asset management arrangements. SunEdison’s failure to perform substantially as obligated under its agreements with the Company, including under the Sponsorship Arrangement, project level O&M and asset management agreements and other support agreements may have a material adverse effect on the Company. Despite these adverse effects, the Company operates its business without significant support from SunEdison pursuant to plans for transitioning away from reliance on SunEdison that the Company is in the process of implementing. These plans include, among other things, establishing stand-alone information technology, accounting and other critical systems and infrastructure, directly hiring the Company's employees, and retaining third parties to provide O&M and asset management services for the Company's power plants where the Company does not perform these services itself. In addition to the one-time costs of implementing a stand-alone organization, the Company will be adversely affected to the extent it is unsuccessful in implementing the relevant plans or the resulting ongoing long-term costs are higher than the costs the Company expected to incur with SunEdison as a sponsor.
The project level financing agreements for the Company’s two remaining levered power plants in India and its three power plants in South Africa contain provisions that provide the lenders with the right to accelerate debt maturity due to the SunEdison Bankruptcy because SunEdison is an original sponsor of the project and/or a party to certain material project agreements, such as O&M and engineering, procurement and construction related contracts. In addition, certain audited financial statements at the project level were delayed and may be delayed again in the future. Future delays would create defaults at the project level for the Company's levered power plants. If not cured or waived, these defaults may restrict the ability of the project companies to make distributions to the Company and may provide the lenders with the right to accelerate debt maturity. However, neither the Revolver nor the indenture governing the Senior Notes includes an event of default provision triggered by the SunEdison Bankruptcy, and none of the Company's PPAs includes a provision that would permit the offtake counterparty to terminate the PPA as a result of the SunEdison Bankruptcy.
On September 25, 2016, the Company filed its initial proof of claim in the SunEdison Bankruptcy, and filed an amended proof of claim on October 7, 2016. As set forth in the proofs of claim, the Company believes it has unsecured claims against SunEdison that it estimates are in excess of $2.0 billion. These claims include, without limitation, claims for damages relating to breach of SunEdison's obligations under the Sponsorship Arrangement between the Company and SunEdison and other agreements; contribution and indemnification claims arising from litigation; claims relating to SunEdison’s breach of fiduciary, agency and other duties; and claims for interference with and the disruption of the business of the Company and its subsidiaries, including the loss of business opportunities, loss of business records, failure to provide timely audited financials, and the increased cost of financing and commercial arrangements. Many of these claims are contingent, unliquidated and/or disputed by SunEdison and other parties in interest in the SunEdison Bankruptcy, and the estimated amounts of these claims may change substantially as circumstances develop and damages are determined. In addition, recoveries on unsecured claims in the SunEdison Bankruptcy are expected to be significantly impaired.
In addition, the Company believes that it may have claims entitled to administrative priority against SunEdison, including, without limitation, claims with respect to certain expenses that the Company has incurred after the commencement of the SunEdison Bankruptcy; however, the Company expects SunEdison and other parties in interest in the SunEdison Bankruptcy to dispute both the amount of these claims and whether or not these claims are entitled to administrative priority over other claims against SunEdison.
On November 7, 2016, the unsecured creditors’ committee in the SunEdison Bankruptcy case filed a motion with the bankruptcy court seeking standing to assert against the Company, on behalf of SunEdison, avoidance claims arising from intercompany transactions between the Company and SunEdison. If the Settlement Agreement becomes effective, the Company expects this standing motion will be withdrawn. If the Settlement Agreement is terminated or if the standing motion is not withdrawn, the Company expects to vigorously contest this standing motion and, if standing is granted, the underlying avoidance claims.
On March 6, 2017, the Company entered into a settlement agreement with SunEdison in connection with the SunEdison Bankruptcy and the Merger Agreement (the “Settlement Agreement”). The Settlement Agreement was approved by the bankruptcy court overseeing the SunEdison Bankruptcy on June 7, 2017; however, its effectiveness is conditional on the completion of the Brookfield Transaction. The Settlement Agreement contains certain terms to resolve the complex legal relationship between the Company and SunEdison, including, among other things, an allocation of the total consideration paid in connection with the Brookfield Transaction and, with certain exceptions, the full mutual release of all claims between SunEdison and its affiliated debtors and non-debtors, on the one hand, and the Company and its subsidiaries, on the other hand. Under the settlement terms, following the exchange of all of its Class B shares in TerraForm Global, Inc. and the Class B units in Global LLC for Class A Shares, SunEdison will receive consideration equal to 25.0% of the total consideration paid to all of the Company's shareholders, reflecting the settlement of intercompany claims and cancellation of incentive

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distribution rights. The remaining 75.0% of the consideration will be distributed to existing Class A shareholders. In addition, upon the effectiveness of the Settlement Agreement, with certain limited exceptions, all agreements between the Company and its subsidiaries, on the one hand, and SunEdison and its subsidiaries, on the other hand, including the agreements comprising the Sponsorship Arrangement, would be terminated. There can be no assurance that the Settlement Agreement will become effective, and such failure may adversely impact the Company's business. The foregoing description of the Settlement Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Settlement Agreement.
On July 28, 2017, the bankruptcy court overseeing the SunEdison Bankruptcy entered an order confirming a plan of reorganization for SunEdison (the “SunEdison Plan”). Among other things, the SunEdison Plan would further implement the settlements, releases and terminations contemplated by the Settlement Agreement. If the SunEdison Plan becomes effective, a reorganized SunEdison would emerge from the SunEdison Bankruptcy and operate outside of the supervision of the bankruptcy court. There are numerous conditions to the effectiveness of the SunEdison Plan, including the completion of the Brookfield Transaction, and accordingly there can be no assurance that the SunEdison Plan will become effective, and such failure may adversely impact the Company’s business. However, the effectiveness of the SunEdison Plan is not a condition to the completion of the Brookfield Transaction.

Nasdaq Compliance

On March 20, 2017, the Company received a notification letter from a Hearings Advisor from the Nasdaq Office of General Counsel informing the Company that the hearings panel granted the Company's request for an extension until June 30, 2017 to regain compliance with Nasdaq’s continued listing requirements with respect to its Form 10-K for the year ended December 31, 2016 and its Form 10-Q for the first quarter of 2017. The hearings panel reserved the right to reconsider the terms of the extension and the Nasdaq Listing and Hearing Review Council may determine to review the hearing panel’s decision. On May 15, 2017, the Company received a notification letter from a Senior Director of Nasdaq Listing Qualifications stating that because the Company has not yet filed its Form 10-Q for the period ended March 31, 2017, this serves as an additional basis for delisting the Company’s securities from the Nasdaq Stock Market under Nasdaq Listing Rule 5250(c)(1).
In addition, because the Company did not hold an annual meeting during 2016, the Company was not in compliance with Nasdaq Listing Rule 5620(a) (the “Annual Meeting Rule”), which requires the Company to hold an annual meeting of shareholders within twelve months of the end for the Company's fiscal year. On January 4, 2017, the Company received a notification letter from a Senior Director of Nasdaq Listing Qualification, which stated that the Company's failure to hold its annual meeting by December 31, 2016 serves as an additional basis for delisting the Company's securities and that the hearings panel would consider this matter in their decision regarding the Company's continued listing on the Nasdaq Global Select Market. On January 11, 2017, the Company submitted a response requesting an extension to hold an annual meeting and regain compliance with the Annual Meeting Rule. On March 20, 2017, the Company received a notification letter from a Hearings Advisor from the Nasdaq Office of General Counsel informing the Company that the hearings panel granted the Company's request for an extension until June 30, 2017 to regain compliance with Nasdaq’s continued listing requirements with respect to holding its annual meeting during the year ended December 31, 2016.
The Company filed its Annual Report on Form 10-K for the year ended December 31, 2016 with the Securities and Exchange Commission (the “SEC”) on June 15, 2017, filed its Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 with the SEC on June 27, 2017 and held its 2017 Annual Meeting on June 29, 2017. On June 30, 2017, the Company received a notification letter from a Hearings Advisor from the Nasdaq Office of General Counsel informing the Company that the Company has regained compliance with Nasdaq’s continued listing requirements and that the hearings panel has determined to continue the listing of the Company’s securities on the Nasdaq Stock Market.
Going Concern
The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The unaudited condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
The Company believes that it has observed formalities and operating procedures to maintain its separate existence, that the Company's assets and liabilities can be readily identified as distinct from those of SunEdison and that the Company does not rely substantially on SunEdison for funding or liquidity and will have sufficient liquidity to support the Company's ongoing operations. The Company's contingency planning with respect to the SunEdison Bankruptcy has included and will include, among other things, establishing stand-alone information technology, accounting and other critical systems and infrastructure, directly hiring employees necessary to operate its business and establishing employee retention efforts, retaining third parties to

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provide O&M and asset management services for the Company's power plants where it does not perform these services itself and the pursuit of strategic alternatives.
However, there is a risk that an interested party in the SunEdison Bankruptcy could request that the assets and liabilities of the Company be substantively consolidated with SunEdison and that the Company and/or its assets and liabilities be included in the SunEdison Bankruptcy. While it has not been requested to date and the Company believes there is no basis for substantive consolidation in its circumstances, there can be no assurance that substantive consolidation will not be requested in the future or that the bankruptcy court would not consider it. Substantive consolidation is an equitable remedy in bankruptcy that results in the pooling of assets and liabilities of the debtor and one or more of its affiliates solely for purposes of the bankruptcy case, including for purposes of distributions to creditors and voting on and treatment under a reorganization plan. Bankruptcy courts have broad equitable powers, and as a result, outcomes in bankruptcy proceedings are inherently difficult to predict. To the extent the bankruptcy court were to determine that substantive consolidation was appropriate under the Company's facts and circumstances, the assets and liabilities of the Company could be made available to help satisfy the debt or contractual obligations of SunEdison.

On July 28, 2017, the bankruptcy court overseeing the SunEdison Bankruptcy entered an order confirming the SunEdison Plan. If the SunEdison Plan (which includes the completion of the Brookfield Transaction as a condition to its effectiveness) becomes effective, interested parties in the SunEdison Bankruptcy would no longer be able to seek substantive consolidation of the Company with SunEdison.
There have also been covenant defaults under certain of the Company's project level financing arrangements, mainly because of delays in the delivery of project level audited financial statements and the SunEdison Bankruptcy, which resulted in defaults because SunEdison, Inc. and certain of its affiliates have been serving as O&M and asset management service providers or as guarantors under relevant contracts. The Company has been working diligently with its lenders to cure or waive instances of default, including through the completion of project level audits and the retention of replacement service providers. However, there can be no assurance that all remaining defaults will be cured or waived. All of the Company's project level financing arrangements are on a non-recourse basis, and therefore these defaults do not directly affect the financial position of the Company. However, if the remaining defaults are not cured or waived, this would continue to restrict the ability of the relevant project companies to make distributions to the Company, and may entitle certain project level lenders to demand repayment or enforce their security interests or other remedies.
Additionally, covenant defaults may occur in the future under the indenture governing the Senior Notes in the event of delays in the filing of the Company’s periodic reports with the SEC. There can be no assurance that the Company will be able to file its periodic reports with the SEC within the periods currently required under the indenture governing the Senior Notes or that holders of the Senior Notes will agree to any required extension of financial statement filing dates on acceptable terms or at all. A default on the Senior Notes would permit the trustee or the holders of at least 25.0% in aggregate principal amount of notes outstanding to accelerate the Senior Notes. The Company would likely not have sufficient liquidity to meet this obligation, which could have a material adverse effect on its business, results of operations, financial condition and ability to pay dividends.
The risk of substantive consolidation of the Company with SunEdison and inclusion in the SunEdison Bankruptcy, as well as the risk of future covenant defaults under the indenture governing the Senior Notes, raise substantial doubt about the Company’s ability to continue as a going concern.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with SEC regulations for interim financial information. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America ("U.S. GAAP") for complete financial statements. The financial statements should be read in conjunction with the accounting policies and other disclosures as set forth in the notes to the Company’s annual financial statements for the year ended December 31, 2016, filed with the SEC on Form 10-K on June 15, 2017.
Certain solar power plants in the Company’s current portfolio have been contributed from SunEdison (also referred to as a “dropdown”) and are reflected in the accompanying unaudited condensed consolidated balance sheets at SunEdison’s historical cost. When power plants are contributed or acquired from SunEdison, the Company is required to recast its historical financial statements to reflect the assets and liabilities of the acquired power plants for the period such power plants were owned by SunEdison in accordance with rules applicable to transactions between entities under common control.

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The accompanying unaudited condensed consolidated financial statements represent the results of TerraForm Global, Inc., which consolidates Global LLC through its controlling interest. Corporate expenses represent those costs allocated to the Company under the Management Services Agreement, as more fully described in Note 16 - Related Parties.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all material adjustments consisting of normal and recurring adjustments necessary to present fairly the Company’s unaudited condensed consolidated financial position as of June 30, 2017, and the results of operations, comprehensive income and cash flows for the three and six months ended June 30, 2017 and 2016.
Use of Estimates
In preparing the unaudited condensed consolidated financial statements in conformity with U.S. GAAP, the Company used estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements. Such estimates also affect the reported amounts of revenues, expenses and cash flows during the reporting period. To the extent there are material differences between the estimates and actual results, the Company's future results of operations would be affected.
Restricted Cash
Restricted cash consists of cash on deposit in financial institutions that is restricted to satisfy the requirements of certain debt and acquisition agreements and funds held within the Company's project companies that are restricted for current debt service payments and other purposes in accordance with the applicable debt agreements. These restrictions include: (i) cash on deposit in collateral accounts, debt service reserve accounts, and maintenance reserve accounts; and (ii) cash on deposit in operating accounts but subject to distribution restrictions due to debt defaults, as of the balance sheet date.
New Accounting Standards
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. ASU 2014-09 is effective for the Company on January 1, 2018. Early adoption is permitted but not before January 1, 2017. ASU 2014-09 permits the use of either a retrospective or cumulative effect transition method. The Company has not determined which transition method it will adopt, and it is currently evaluating the impact that ASU 2014-09 will have on its consolidated financial statements and related disclosures upon adoption. The Company does not plan to adopt this standard prior to January 1, 2018.
In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which describes how an entity should assess its ability to meet obligations and sets rules for how this information should be disclosed in the financial statements. ASU 2014-15 provides accounting guidance that will be used along with existing auditing standards. ASU 2014-15 applies to all entities for the first annual period ending after December 15, 2016, and interim periods thereafter. The Company adopted ASU 2014-15 as of January 1, 2017 and this standard did not have a material effect on the Company's consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which primarily changes the lessee’s accounting for operating leases by requiring recognition of lease right-of-use assets and lease liabilities. This standard is effective for annual reporting periods beginning after December 15, 2018, with early adoption permitted. The Company is evaluating the effect of the standard on its consolidated financial statements.
In March 2016, the FASB issued ASU 2016-05, Derivatives and Hedging (Topic 815), which clarifies that a change in one of the parties to a derivative contract (through novation) that is part of a hedge accounting relationship does not, by itself, require designation of that relationship, as long as all other hedge accounting criteria continue to be met. This standard is effective for annual and interim periods in fiscal years beginning after December 15, 2016, with early adoption permitted. The Company evaluated the standard and determined that it did not have a material effect on its consolidated financial statements.
In March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging (Topic 815), which clarifies that determining whether the economic characteristics of a put or call are clearly and closely related to its debt host requires only an assessment of the four-step decision sequence outlined in FASB ASC paragraph 815-15-25-24. Additionally, entities are not required to separately assess whether the contingency itself is clearly and closely related. This standard is effective for annual and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. The Company does not expect this standard to have a material effect on its consolidated financial statements.

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On March 30, 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718), which is intended to improve the accounting for share-based payment transactions as part of the FASB’s simplification initiative. ASU 2016-09 changes seven aspects of the accounting for share-based payment award transactions, including but not limited to: (1) accounting for income taxes; (2) classification of excess tax benefits on the statement of cash flows; (3) forfeitures; (4) minimum statutory tax withholding requirements; and (5) classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax-withholding purposes. This standard is effective for annual and interim periods in fiscal years beginning after December 15, 2016, with early adoption permitted. The Company evaluated the standard and determined that it did not have a material effect on its consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments. The amendments of ASU 2016-15 were issued to address eight specific cash flow issues for which stakeholders have indicated to the FASB that a diversity in practice existed in how entities were presenting and classifying these items in the statement of cash flows. The issues addressed by ASU 2016-15 include but are not limited to the classification of debt prepayment and debt extinguishment costs, payments made for contingent consideration for a business combination, proceeds from the settlement of insurance proceeds, distributions received from equity method investees and separately identifiable cash flows and the application of the predominance principle. The amendments of ASU 2016-15 are effective for public entities for fiscal years beginning after December 15, 2017 and interim periods in those fiscal years. Early adoption is permitted, including adoption in an interim fiscal period with all amendments adopted in the same period. The adoption of ASU 2016-15 is required to be applied retrospectively. The Company is evaluating the impact of the standard on its consolidated statements of cash flows.
In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other Than Inventory, which eliminates the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party exception for an intra-entity transfer of an asset other than inventory. ASU 2016-16 is effective for annual periods beginning after December 15, 2017, and for annual periods and interim periods thereafter with early adoption permitted. The Company is evaluating the effect of the standard on its consolidated financial statements.
In October 2016, the FASB issued ASU 2016-17, Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control. ASU 2016-17 updates ASU 2015-02. Under the amendments, a single decision maker is not required to consider indirect interests held through related parties that are under common control with the single decision maker to be the equivalent of direct interests in their entirety. Instead, a single decision maker is required to include those interests on a proportionate basis consistent with indirect interests held through other related parties. ASU 2016-17 is effective for annual periods beginning after December 15, 2017, and for annual periods and interim periods thereafter with early adoption permitted. The Company is evaluating the effect of the standard on its consolidated financial statements.
In November 2016, the FASB issued ASU 2016-18, Statement of Cashflows (Topic 320): Restricted Cash a Consensus of the FASB Emerging Issues Task Force. The amendments require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this update do not provide a definition of restricted cash or restricted cash equivalents. ASU 2016-18 is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The Company is evaluating the effect of this standard on its consolidated financial statements.
In December 2016, the FASB issued ASU 2016-19, Technical Corrections and Improvements. The amendments cover a wide range of topics in the Accounting Standards Codification, including differences between original guidance and the Accounting Standards Codification, guidance clarification and reference corrections, simplification and minor improvements. The adoption of ASU 2016-19 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2016. The Company evaluated the standard and determined that it did not have a material effect on its consolidated financial statements.
In December 2016, the FASB issued ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. The amendments in this update are of a similar nature to the items typically addressed in the ASU 2016-19, Technical Corrections and Improvements. However, the FASB decided to issue a separate update for technical corrections and improvements to Topic 606 and other Topics amended by ASU 2014-09 to increase stakeholders’ awareness of the proposals and to expedite improvements to ASU 2014-09. The adoption of ASU 2016-20 is effective from the periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company evaluated the standard and determined that it did not have a material effect on its consolidated financial statements.

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In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The amendment seeks to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting, including acquisitions, disposals, goodwill and consolidation. The adoption of ASU 2017-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The amendments should be applied prospectively on or after the effective dates. The Company is evaluating the effect of this standard on its consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. To simplify the subsequent measurement of goodwill, the FASB eliminated Step 2 from the goodwill impairment test. Under the amendments in this update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The standard will be applied prospectively and is effective for annual and interim impairment tests performed in periods beginning after December 15, 2019. The Company is evaluating the effect of this standard on its consolidated financial statements.
In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting. The amendment clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. The new guidance is expected to reduce diversity in practice and result in fewer changes to the terms of an award being accounted for as modifications. Changes that do not impact the award’s fair value, vesting conditions, or classification as an equity or liability instrument will not to be assessed modification accounting. The guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The Company is evaluating the effect of this standard on its consolidated financial statements.

2. ACQUISITIONS
2017 Pending Acquisition
Acquisition of BioTherm
In April 2015, the Company entered into purchase and sale agreements to acquire a controlling interest in three operating power plants located in South Africa with an aggregate net capacity of 32.6 MW from BTSA Netherlands Coöperatie U.A. (“BioTherm”). The aggregate consideration payable for the controlling interests in these three power plants is approximately $75.3 million in cash, comprised of approximately $67.6 million and ZAR 100.4 million ($7.7 million as of June 30, 2017), plus 544,055 shares of the Company’s Class A common stock, which is fixed in accordance with the purchase and sale agreements. The aggregate consideration includes amounts for certain additional rights and services. No further consents are required with respect to the completion of the acquisition of the Klipheuwel wind power plant. However, the completion of the acquisition of the Aries and Konkoonsies solar power plants remains subject to obtaining consents from project lenders. The completion of these acquisitions is expected to occur in the second half of 2017.
In August 2015, the Company paid $65.6 million in cash for the interests in the Aries and Konkoonsies solar power plants and the Klipheuwel wind power plant, as well as certain additional rights. In addition to the cash consideration, the Company provided 544,055 shares of its Class A common stock as consideration for the interests in the three power plants. Approximately $20.3 million of the cash payment and all of the 544,055 shares of the Company’s Class A common stock were deposited into an escrow account. The remaining cash portion of this escrow deposit is reported as non-current restricted cash on the Company’s unaudited condensed consolidated balance sheet as of June 30, 2017. The remaining paid consideration of $41.2 million in cash and the August 2015 fair value of the 544,055 shares are reported as a deposit for acquisitions on the Company’s unaudited condensed consolidated balance sheet as of June 30, 2017.
As of June 30, 2017, the remaining balance due was approximately $9.7 million, comprised of $2.0 million and ZAR 11.6 million ($0.9 million) due to BioTherm and ZAR 88.9 million ($6.8 million) due to minority interests. Prior to the completion of the BioTherm transaction, BioTherm is required to direct payment of all of BioTherm's pro rata share of the distributions from the Klipheuwel wind power plant to the Company, and the Company and BioTherm are required to jointly direct the release of amounts equal to BioTherm's pro rata share of the distributions from the Aries and Konkoonsies solar power plants from the escrow to the Company.

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Pending receipt of the consents from the lenders to the Aries and Konkoonsies solar power plants, the Company may at its discretion direct a sale of these power plants to a third party. Due to the fact that the closing of the acquisition of these power plants did not occur by November 30, 2016, the parties have engaged in discussion to agree upon an alternative structure that would permit release of the escrowed funds as required pursuant to the applicable purchase and sale agreements. Failure to complete these acquisitions, or to reach agreement upon an alternative structure that would permit release of the escrowed funds, by August 31, 2017 would entitle BioTherm to sell the Aries and Konkoonsies solar power plants to a third party. Upon closing of a sale to a third party, all sale proceeds are required to be paid to the Company, any amounts remaining in the escrow account are required to be released to BioTherm and the Company is required to pay the remainder of the purchase price.
2016 Acquisitions and Dropdowns
Dropdown of NPS Star and WXA
On February 24, 2016, SunEdison transferred to the Company a 49.0% equity interest, constituting a controlling interest and substantially all of the economic interest, in each of NPS Star and WXA, each of which consists of three solar power plants located in Thailand. These solar power plants, which achieved commercial operation in December 2015 and represent 35.6 MW of aggregate net capacity, were required to be contributed to the Company, without further payment, pursuant to the Project Investment Agreement between SunEdison and the Company.
Acquisition of Alto Cielo
On April 8, 2016, the Company completed the acquisition of a 100.0% ownership interest in the Alto Cielo solar power plant located in Uruguay with an aggregate net capacity of 26.4 MW from Solarpack Corporación Tecnológica, S.L. The power plant reached commercial operation in March 2016. The aggregate cash consideration paid for the Alto Cielo power plant was $32.3 million, of which $1.1 million was being held in escrow accounts as of June 30, 2017 until certain conditions are met.
The acquisition date allocation of assets and liabilities for the Alto Cielo solar power plant is as follows:
 
2016
(In thousands)
Alto Cielo
Cash and cash equivalents
$
190

Restricted cash
1,923

Accounts receivable
311

Power plants
35,414

Other assets
2,738

Total assets acquired
40,576

Accrued expenses and other current liabilities
3,670

Deferred tax liabilities
557

Long-term debt, including current portion
4,031

Total liabilities assumed
8,258

Fair value of net assets acquired
$
32,318

Transfer of Balance of Equity in Certain Power Plants in India
In April 2016, SunEdison transferred to the Company the balance of 51.0% of the equity interests in the NSM Suryalabh, NSM Sitara and NSM L’Volta solar power plants in India following the expiration of the equity lock-up period in the applicable PPAs. Consideration for the transfer of the balance of 51.0% of the equity interests in these power plants was received by SunEdison in the form of shares of the Company’s Class B common stock that were issued to SunEdison at the time of the Company's IPO, and there was no further payment made by the Company to SunEdison at the time of the transfer.
In October 2016, SunEdison sold to the Company 11.0% of the equity interests in the Millenium solar power plant in India for cash consideration of approximately $1.0 million. In addition, SunEdison transferred to the Company the balance of 51.0% of the equity interests in the Focal solar power plant in India following the expiration of the equity lock-up period in the applicable PPAs, at which time the Company was required to make a cash payment of $0.5 million to the original project developer, a third party. Consideration for the transfer of the balance of 51.0% of the equity interests in the Focal power plant was received by SunEdison in the form of shares of the Company’s Class B common stock that were issued to SunEdison at the time of the Company's IPO, and there was no further payment made by the Company to SunEdison at the time of the transfer.

18



In October 2016, the Company also entered into arrangements with SunEdison for the transfer of the balance of the equity interests in the Millenium, Azure, ESP Urja and SE 25 solar power plants in India, in each case following the expiration of the equity lock-up period in the applicable PPAs (ranging from November 2016 to March 2017) and without further action by SunEdison. Consideration for the transfer of the balance of the equity interests in these power plants was received by SunEdison in the form of shares of the Company’s Class B common stock that were issued to SunEdison at the time of the Company's IPO, and there was no further payment made by the Company to SunEdison at the time of the transfers. In accordance with these arrangements, in November 2016, December 2016 and January 2017, the balance of 26.0% of the equity interests in Azure, ESP Urja and Millenium, respectively, was transferred to the Company. In March 2017, 100.0% of the equity interests in SE 25 were transferred to the Company.
Termination of Renova - ESPRA
On March 29, 2016, the Company entered into a Termination Agreement (the “Termination Agreement”) with Renova with respect to the Securities Purchase Agreement dated July 15, 2015 among the Company, SunEdison and Renova relating to the ESPRA hydro-electric power plant (the “ESPRA SPA”). The Termination Agreement provides that, subject to the satisfaction of certain conditions, the ESPRA SPA will be terminated by mutual agreement of the Company and Renova. These conditions were satisfied on March 31, 2016 and the ESPRA SPA has been terminated. The Termination Agreement provides that the Company will pay Renova $10.0 million in connection with the termination of the ESPRA SPA. The Company made this payment to Renova on April 1, 2016. Pursuant to the Termination Agreement, the Company and Renova have granted each other full releases of any further obligations under the ESPRA SPA.

3. POWER PLANTS
Power plants, net consists of:
(In thousands)
June 30, 2017
 
December 31, 2016
Land
$
10,301

 
$
9,787

Solar power plants
767,282

 
763,147

Wind power plants
708,900

 
676,824

     Total power plants in service, at cost
1,486,483

 
1,449,758

Less: accumulated depreciation
(131,248
)
 
(94,634
)
     Total power plants in service, net
1,355,235

 
1,355,124

Construction in progress

 
238

     Total power plants, net
$
1,355,235

 
$
1,355,362

The Company recorded depreciation expense related to power plants of $20.0 million and $34.0 million for the three and six months ended June 30, 2017, respectively, as compared to $12.1 million and $25.8 million, respectively, for the same periods in the prior year.
Construction in progress represents costs incurred to complete the construction of the power plants in the Company’s current portfolio that were either contributed to the Company by SunEdison or acquired from SunEdison. When power plants are contributed or sold to the Company after completion by SunEdison, the Company retroactively recasts its historical financial statements to present the construction activity as if it consolidated the power plants at inception of the construction. All construction in progress costs are stated at SunEdison’s historical cost.
Certain of the Company's solar power plants in India are entitled to receive viability gap funding support in an amount determined through a competitive bidding process. The viability gap funding support is funded by India’s National Clean Energy Fund and is paid by the offtake counterparty to these solar power plants, the Solar Energy Corporation of India ("SECI"), a not-for-profit company established by the Ministry of New and Renewable Energy to facilitate solar energy generation capacity in India. The program is expected to provide viability gap funding subsidies to the applicable solar power plants in the aggregate amount of INR 1,189.4 million, 50.0% of which is payable as early as three months after each power plant's commissioning, and 10.0% of which is payable each year for five years thereafter, subject to the plant meeting certain requirements. SECI is contractually obligated to establish an irrevocable letter of credit to secure its payment obligations.
The Company recorded the awarded viability gap funding in full as a reduction to the cost of power plants in service, with a $2.4 million and $2.3 million receivable included in current other assets, and $3.6 million and $3.4 million in other

19



assets in the unaudited condensed consolidated balance sheet as of June 30, 2017 and December 31, 2016, respectively. The current portion of the viability gap funding includes the initial 50.0% receivable following the solar power plant’s commercial operation date and the 10.0% receivable in the first year thereafter. The initial 50.0% receivable, or $8.9 million, was received in cash during 2016. The remaining portion of the current receivable is expected to be received in the third quarter of 2017. It is possible that $3.1 million of the remaining receivable balance of one of the power plants will not be received due to a lower capacity utilization factor than required under the applicable PPA. As the result, the Company reserved this amount against property, plant and equipment.

4. DEPOSITS FOR ACQUISITIONS
Deposits for acquisitions consist of:
 
As of
June 30,
 
As of December 31,
(In thousands)
2017
 
2016
India PSA payment to SunEdison
$
231,000

 
$
231,000

BioTherm payment
51,101

 
51,101

Total deposits for acquisitions
282,101

 
282,101

Less: provision for contingent loss
(231,000
)
 
(231,000
)
Less: BioTherm distributions
(4,082
)
 
(2,827
)
Total deposits for acquisitions, net
$
47,019

 
$
48,274

425 MW India Projects
On November 20, 2015, the Company and SunEdison Holdings Corporation entered into an Equity Interest Purchase and Sale Agreement pursuant to which the Company agreed to acquire from SunEdison Holdings Corporation a portfolio of 17 solar energy projects in India with an aggregate nameplate capacity of 425 MW (the “425 MW India Projects”). This agreement was subsequently amended and restated on December 1, 2015. Pursuant to the Amended and Restated Equity Interest Purchase and Sale Agreement (the “India PSA”), the Company paid $231.0 million in cash to SunEdison Holdings Corporation in the fourth quarter of 2015 in exchange for the 425 MW India Projects, which projects would be transferred to the Company upon satisfaction of certain conditions precedent.
During 2016, and beginning prior to the SunEdison Bankruptcy, the Company became aware that there was substantial risk that the 425 MW India Projects would not be completed and transferred to the Company in accordance with the India PSA.
In April 2016, the Company filed a verified complaint against SunEdison, SunEdison Holdings Corporation (collectively with SunEdison, the “SunEdison Defendants”), Ahmad Chatila, Martin Truong and Brian Wuebbels in the Court of Chancery in the State of Delaware (see Note 15 - Commitments and Contingencies). The complaint asserts claims for breach of fiduciary duty, breach of contract and unjust enrichment relating to the failure by SunEdison to transfer the equity interests in the 425 MW India Projects, for which the Company paid $231.0 million in the fourth quarter of 2015. The complaint seeks various forms of relief, including a constructive trust upon the equity interests of SunEdison in the 425 MW India Projects, money damages from the defendants, restoration of the $231.0 million to the Company and such other relief as the Court may deem just and proper. The claims against SunEdison have been stayed as a result of the SunEdison Bankruptcy. The individual defendants filed an answer to the complaint on June 30, 2016. On July 19, 2017, the Company entered into a settlement agreement with the individual defendants, pursuant to which the parties exchanged mutual releases. The Court entered an order dismissing the individual defendants with prejudice on July 20, 2017.
The Settlement Agreement includes a release by the Company of its claims against the SunEdison Defendants, including all of the Company’s claims relating to the 425 MW India Projects, and if the Settlement Agreement becomes effective the Company will not recover any amounts on these claims outside of the consideration received under the terms of the Settlement Agreement. If the Settlement Agreement is terminated, the Company expects to continue to pursue its claims against the SunEdison Defendants.
The $231.0 million paid by the Company in accordance with the India PSA is reported as a deposit for acquisitions on the Company’s unaudited condensed consolidated balance sheets as of June 30, 2017 and December 31, 2016. The Company determined that the deposit for acquisition of the 425 MW India Projects was impaired as of December 31, 2015, and recorded a provision for contingent loss of the full $231.0 million in the consolidated balance sheet as of December 31, 2015. The

20



Company also recorded a corresponding charge in the consolidated statement of operations for the year ended December 31, 2015. The provision for contingent loss remained on the unaudited condensed consolidated balance sheet as of June 30, 2017.
In September 2016, the Company reached an agreement with certain subsidiaries of SunEdison pursuant to which the Company consented to the sale of certain of SunEdison’s subsidiaries’ assets to a third party buyer (the “Third Party Sale Transaction”). The Third Party Sale Transaction was conducted in connection with SunEdison’s bankruptcy process and included the 17.4 MW Del Litoral and 57.4 MW El Naranjal solar power projects in Uruguay, the 24.1 MW Bora Bora Poly wind power project in India and the 425 MW India Projects. The Company has agreed not to pursue claims against a third party buyer of these projects, however the Company has retained all of its claims against SunEdison and its affiliated persons. As a condition to the Company’s consent to the Third Party Sale Transaction, the Company and certain subsidiaries of SunEdison that directly or indirectly own the assets that are subject to the Third Party Sale Transaction have entered into a proceeds sharing arrangement pursuant to which the Company is entitled to receive a portion of the cash proceeds received by the SunEdison parties in the Third Party Sale Transaction. In September 2016, the Company received $6.7 million in cash proceeds from this arrangement. The Company has not received, and does not expect to receive, any additional cash proceeds from this arrangement going forward.
BioTherm
In August 2015, the Company paid $65.6 million in cash for the interests in the Aries and Konkoonsies solar power plants and the Klipheuwel wind power plant, as well as certain additional rights. In addition to the cash consideration, the Company provided 544,055 shares of its Class A common stock as consideration for the interests in the three power plants. In accordance with the funding arrangements, during the first quarter of 2017, the Company received $1.3 million from the escrow account holding the purchase consideration for the Aries and Konkoonsies solar power plants, which reduced the outstanding balance of the escrow account from $16.4 million as of December 31, 2016 to $15.1 million as of June 30, 2017. Cash paid to the escrow account is reported as non-current restricted cash in the Company’s unaudited condensed consolidated balance sheet. Additionally, in the first quarter of 2017, the Company received a $1.2 million distribution from BioTherm with respect to the Klipheuwel wind power plant.
There were no payments received under the BioTherm transaction funding arrangements during the second quarter of 2017. The remaining paid consideration of $41.2 million in cash and the August 2015 fair value of the 544,055 shares are reported as a deposit for acquisitions on the Company’s unaudited condensed consolidated balance sheet as of June 30, 2017. See Note 2 - Acquisitions for additional details related to this acquisition.

5. INTANGIBLE ASSETS
The following table presents the gross carrying amount and accumulated amortization of intangible assets as of June 30, 2017:
(In thousands, except weighted average amortization period)
 
Remaining Weighted Average Amortization Period (Years)
 
Gross Carrying Amount
 
Accumulated Amortization
 
Accumulated Currency Translation Adjustment
 
Net Book Value
In-place value of market rate revenue contracts
 
17
 
$
94,612

 
$
(9,501
)
 
$
18

 
$
85,129

The following table presents the gross carrying amount and accumulated amortization of intangible assets as of December 31, 2016:
(In thousands, except weighted average amortization period)
 
Remaining Weighted Average Amortization Period (Years)
 
Gross Carrying Amount
 
Accumulated Amortization
 
Accumulated Currency Translation Adjustment
 
Net Book Value
In-place value of market rate revenue contracts
 
18
 
$
93,943

 
$
(5,932
)
 
$
(5,561
)
 
$
82,450

As of June 30, 2017, the Company had revenue contracts in the form of PPAs that were obtained through acquisitions. PPAs are amortized on a straight line basis over the useful life of the agreements, which range from 19 to 25 years. Amortization expense related to revenue contracts is recognized in the unaudited condensed consolidated statements of operations as either a reduction or increase of revenue when the contract rate is above or below market rates (favorable or

21



unfavorable) or within depreciation, accretion and amortization expense when the contract rate is equal to market rates (in-place).
As such, the amortization expense for the three and six months ended June 30, 2017 was $1.2 million and $2.4 million, respectively. For the three and six months ended June 30, 2017, $0.4 million and $0.8 million, respectively, was recorded as a reduction of revenue while the remaining $0.8 million and $1.6 million, respectively, was recorded within the depreciation, accretion, and amortization line item in the unaudited condensed consolidated statement of operations.
During the three months ended June 30, 2017, the Company capitalized $0.7 million of internally developed software. As of June 30, 2017, the software was not ready for its intended use, and as such, there was no amortization charged.

6. VARIABLE INTEREST ENTITIES
The Company consolidates any variable interest entities (“VIEs”) in power plants in which it is the primary beneficiary. The Company is the primary beneficiary of nine VIEs in entities that were consolidated as of June 30, 2017, each of which existed and was consolidated as of December 31, 2016. The VIEs own and operate power plants in order to generate contracted cash flows.
As disclosed in Note 2 - Acquisitions, in October 2016, the Company entered into arrangements with SunEdison for the transfer of the balance of the equity interests in the Millenium and SE 25 solar power plants in India, in each case following the expiration of the equity lock-up period in the applicable PPAs in January and March 2017, respectively, and without further action by SunEdison. In accordance with these arrangements, in January 2017, the balance of 26.0% of the equity interests in Millenium was transferred to the Company. In March 2017, 100.0% of the equity interests in SE 25 were transferred to the Company. As a result of the transfer of equity interest in Millenium and SE 25, these power plants are no longer considered VIEs as of June 30, 2017.
The carrying amounts and classification of the consolidated VIEs’ assets and liabilities included in the Company’s unaudited condensed consolidated balance sheets are as follows:
(In thousands)
As of
June 30, 2017
 
As of December 31, 2016
Current assets
$
177,766

 
$
186,739

Non-current assets
379,796

 
423,315

Total assets
$
557,562

 
$
610,054

Current liabilities
$
390,603

 
$
386,297

Non-current liabilities
110,814

 
162,793

Total liabilities
$
501,417

 
$
549,090

The amounts shown in the table above exclude intercompany balances which are eliminated upon consolidation. All of the assets in the table above are restricted for settlement of the VIE obligations, and all of the liabilities in the table above can only be settled by using VIE resources.


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7. LONG-TERM DEBT
Long-term debt as of June 30, 2017 and December 31, 2016 consists of the following:
 
As of
June 30,
 
As of December 31,
 
 
 
 
 
 
 
(In thousands, except rates)
2017
 
2016
 
Interest Type
 
Current Interest Rate (%)(1)
 
Financing Type
Corporate level long-term debt:
 
 
 
 
 
 
 
 
 
 
Senior Notes
$
753,490

 
$
752,813

 
Fixed
 
9.80%
 
 
Term debt
Project level long-term debt:
 
 
 
 
 
 
 
 
 
 
Permanent financing
352,724

 
351,607

 
Blended
 
11.9%
(2) 
 
Term debt
Total long-term debt
1,106,214

 
1,104,420

 
 
 
 
 
 
 
Less: deferred financing costs, net (3)
17,136

 
18,352

 
 
 
 
 
 
 
Less: current portion of long-term debt (4)
327,749

 
327,459

 
 
 
 
 
 
 
Consolidated long-term debt, less current portion
$
761,329

 
$
758,609

 
 
 
 
 
 
 
(1)
The weighted average effective interest rate as of June 30, 2017.
(2)
As of June 30, 2017, 8.6% of this balance had fixed interest rate debt and the remaining 91.4% had variable interest rate debt, of which a portion is hedged with interest rate swaps.
(3)
Total net debt reflects the reclassification of deferred financing costs to reduce long-term debt as further described in Note 1 - Nature of Operations.
(4)
Approximately $325.4 million and $323.3 million have been classified as current due to non-compliance with certain debt covenants as of June 30, 2017 and December 31, 2016, respectively.
Corporate Level Long-Term Debt
Revolving Credit Facility
On March 31, 2017, Global Operating LLC permanently reduced to zero and terminated the revolving commitments under the Revolver and entered into a fifth amendment (the “Fifth Amendment”) to the Revolver. The Fifth Amendment provides that Global LLC will no longer be required to deliver to the administrative agent and the other lenders party to the Revolver its annual financial statements and accompanying audit reports, unaudited quarterly financial statements, annual compliance certificates, statements of reconciliation after changes in accounting principles, annual financial plans and reconciliations of non-recourse project indebtedness pursuant to the Revolver, and removes the requirement that Global LLC and its subsidiaries comply with certain financial ratios contained in the Revolver. The Fifth Amendment requires Global Operating LLC to provide the administrative agent under the Revolver with an annual collateral verification within 90 days after the end of each fiscal year.
The Company had drawn zero on the Revolver as of June 30, 2017 and December 31, 2016. The Company issued a letter of credit for $0.4 million in August 2016 under the terms of the Revolver in support of the Alto Cielo acquisition, which remained outstanding as of December 31, 2016. The outstanding letter of credit was terminated on March 23, 2017 in connection with the Fifth Amendment.
Senior Notes
The aggregate amount of the Senior Notes outstanding at June 30, 2017 was $753.5 million (or a notional amount of $760.4 million) and the aggregate amount outstanding at December 31, 2016 was $752.8 million (or a notional amount of $760.4 million).
Global Operating LLC received a notice of default, dated January 17, 2017, from the trustee under the indenture governing the Senior Notes with respect to the failure of Global Operating LLC to comply with its obligations under the indenture governing the Senior Notes to timely furnish the Company's Form 10-Q for the third quarter of 2016. However, no event of default under the indenture governing the Senior Notes occurred with respect to the Company's Form 10-Q for the third quarter of 2016 because such Form 10-Q was filed before an event of default under the indenture governing the Senior Notes would otherwise arise.
Global Operating LLC received a notice of default, dated May 16, 2017, from the trustee under the indenture governing the Senior Notes with respect to the failure of Global Operating LLC to comply with its obligations under the

23



indenture governing the Senior Notes to timely furnish the Company's Form 10-K for the year ended December 31, 2016. No event of default under the indenture governing the Senior Notes occurred due to the filing of the Company’s Form 10-K for the year ended December 31, 2016 before an event of default under the indenture governing the Senior Notes would otherwise arise.
Covenant defaults may occur in the future under the indenture governing the Senior Notes in the event of delays in the filing of the Company’s periodic reports with the SEC. There can be no assurance that the Company will be able to file its periodic reports with the SEC within the periods currently required under the indenture governing the Senior Notes or that holders of the Senior Notes will agree to any required extension of financial statement filing dates on acceptable terms or at all. A default on the Senior Notes would permit the trustee or the holders of at least 25% in aggregate principal amount of notes outstanding to accelerate the Senior Notes. The Company would likely not have sufficient liquidity to meet this obligation, which could have a material adverse effect on its business, results of operations, financial condition and ability to pay dividends.
Project Level Long-Term Debt
The Company typically finances power plants through entity specific debt secured by the power plant’s assets and equity interests with no recourse to the Company. These financing agreements typically provide for a credit facility used for construction, which upon completion is converted into term debt. The Company had $352.7 million and $351.6 million of project level debt as of June 30, 2017 and December 31, 2016, respectively. The project level debt is secured by the assets of the applicable project companies and certain intermediary holding companies.
As of June 30, 2017 and December 31, 2016, term debt for power plants in South Africa consists of variable rate loans, totaling $317.2 million and $315.2 million, respectively, with interest rates tied to the three-month LIBOR and the three-month Johannesburg Interbank Agreed Rate, as well as fixed rate loans totaling $13.3 million and $12.6 million, respectively. The interest rates on the South Africa term debt ranged from 11.4% to 13.0% as of June 30, 2017 and December 31, 2016, and the debt matures in 2031. Principal and interest are due and payable in arrears at the end of each fiscal quarter or semi-annually and on the maturity date of the credit facilities.
As of June 30, 2017 and December 31, 2016, the Witkop and Soutpan power plants, which have term debt financed with a South African rand (ZAR)-denominated term loan from The Standard Bank of South Africa Limited and other lenders, had an outstanding principal amount totaling $143.5 million and $136.6 million, respectively. This term debt matures in 2031. As of June 30, 2017 and December 31, 2016, the Witkop and Soutpan project companies were not in compliance with certain covenants due to the SunEdison Bankruptcy, as well as the expiration of a performance bond posted by a subcontractor under the engineering, procurement and construction contract. Thus, the debt balances are classified as current as of June 30, 2017 and December 31, 2016. These defaults also prevent the Soutpan and Witkop project companies from making distributions and provide the lenders with the right to accelerate the debt maturity. The Company has obtained waivers and/or forbearance agreements from the lenders for varying periods as the Company continues to work to cure such defaults. However, certain defaults were not cured prior to the expiration of the applicable waivers. As a result of these defaults, the lenders are entitled to demand, and have demanded, that the project companies pay default interest of 2.0% effective as of February 1, 2017.
As of June 30, 2017 and December 31, 2016, the Boshof power plant, which has term debt financed with a U.S. dollar-denominated term loan from the Overseas Private Investment Corporation (“OPIC”), had an outstanding principal amount of approximately $173.7 million and $178.5 million, respectively. The term debt matures in September 2031. As of June 30, 2017 and December 31, 2016, the project company was not in compliance with certain covenants due to the SunEdison Bankruptcy, as well as a delay by the contractor, a SunEdison subsidiary, in achieving final completion under the engineering, procurement and construction contract. Thus, the debt balances are classified as current as of June 30, 2017 and December 31, 2016. These defaults also prevent the Boshof project company from making distributions and provide OPIC with the right to accelerate the debt maturity. The Company is currently working with OPIC to cure such defaults.
As of June 30, 2017 and December 31, 2016, term debt for power plants in India consists of fixed rate loans totaling $16.4 million and $17.3 million, respectively, with interest rates ranging from 0.0% to 4.8%, and the debt matures in 2026. Principal and interest are due and payable in arrears monthly or quarterly and on the maturity dates of the credit facilities.
As of June 30, 2017 and December 31, 2016, the Azure and ESP Urja power plants, which have term debt financed with U.S. dollar-denominated term loans from OPIC, had a combined outstanding principal amount of approximately $16.3 million and $17.3 million, respectively. The term debt matures in September and December of 2026, respectively, and bears fixed interest at a rate of 4.5% and 4.8% per annum, respectively. Interest and principal amortization payments are made on a quarterly basis. As of June 30, 2017 and December 31, 2016, the Azure project company was not in compliance with certain financial ratio covenants due to changes in foreign currency valuations. In addition, the Azure and ESP Urja project companies were not in compliance with certain covenants due to the SunEdison Bankruptcy, as well as a delay by local authorities to

24



complete the classification of a portion of the project sites as non-agricultural use. Thus, the debt balances are classified as current as of June 30, 2017 and December 31, 2016. These defaults also prevent the Azure and ESP Urja project companies from making distributions and provide OPIC with the right to accelerate the debt maturity. The Company is currently working with OPIC to cure such defaults.
As of June 30, 2017 and December 31, 2016, the Corporate Season power plant in Malaysia has term debt from Standard Chartered Bank with an outstanding principal amount of $5.1 million and $5.1 million, respectively. The term debt matures in 2028, and bears a variable interest rate tied to the Kuala Lumpur Interbank Offered Rate. The interest rate as of June 30, 2017 and December 31, 2016 was 6.1%. Principal and interest are due and payable in arrears at the end of each fiscal quarter or on the maturity date of the credit facility.
The Silverstar Pavilion and Fortune 11 power plants in Malaysia have outstanding loans with a holder of a non-controlling interest in such power plants in the aggregate amount of $0.7 million as of June 30, 2017 and December 31, 2016 and with a fixed interest rate of 4.0%.
The Alto Cielo power plant in Uruguay has term debt from Jugler S.A. with an outstanding principal amount of $0.1 million as of June 30, 2017 and with a variable interest rate tied to value added tax.
Each of the project level financing agreements contains customary representations, covenants and warranties of the respective borrower including limitations on business activities, guarantees, environmental issues, power plant maintenance standards and a minimum debt service coverage ratio requirement. In particular, these agreements contain financial and other restrictive covenants that limit the project companies' ability to make distributions or otherwise engage in activities that may be in their long-term best interests. The project level financing agreements generally prohibit distributions from the project companies unless certain specific conditions are met, including the satisfaction of certain financial ratios.
Debt Extinguishments
On March 31, 2017, Global Operating LLC permanently reduced to zero and terminated the revolving commitments under the Revolver. As a result, a loss on extinguishment of debt of zero and $6.8 million was recognized for the three and six months ended June 30, 2017, as compared to a loss on extinguishment of debt of $0.5 million and a gain on extinguishment of debt of $5.7 million for the three and six months ended June 30, 2016, respectively.
In January 2016, the Company repurchased $41.0 million of the Senior Notes for $33.2 million and paid $1.9 million of interest and prepayment fees. In total, the Company repurchased $49.6 million of the Senior Notes for $40.0 million plus prepayment fees and interest of $2.3 million. A gain on extinguishment of debt of $6.3 million was recognized in the first quarter of 2016 related to these repurchases.
Interest Income
Interest expense in the unaudited condensed consolidated statements of operations is presented net of interest income. During the three and six months ended June 30, 2017, the Company received interest income of $1.6 million and $2.7 million, respectively, from its cash and cash equivalents balances, short-term investments and restricted deposit accounts, compared to $0.9 million and $3.2 million during the same periods in 2016.
Maturities
The aggregate amounts of contractual payments of long-term debt due after June 30, 2017, excluding amortization of debt discounts and premiums, as stated in the financing agreements, are as follows:

Maturities
(In thousands)
Within 1 Year
 
Year 1 through Year 2
 
Year 2 through Year 3
 
Year 3 through Year 4
 
Year 4 through Year 5
 
Thereafter
 
Total
Project Level
$
8,506

 
$
10,669

 
$
15,382

 
$
18,207

 
$
21,772

 
$
278,188

 
$
352,724

Corporate

 

 

 

 

 
753,490

 
753,490

Total debt
$
8,506

 
$
10,669

 
$
15,382

 
$
18,207

 
$
21,772

 
$
1,031,678

 
$
1,106,214

(1)
Represents the contractual principal payment due dates for the Company’s long-term debt and does not reflect the reclassification of $325.4 million of long-term debt to current as a result of debt defaults under a portion of its non-recourse financing agreements or deferred financing costs that are included with the net long-term balance of the unaudited condensed consolidated balance sheet.


25



8. INCOME TAXES
The income tax provision consisted of the following:
 
Three Months Ended
June 30,
Six Months Ended
 June 30,
(In thousands, except effective tax rate)
2017
 
2016
2017
 
2016
(Loss) income before income tax expense
$
(15,260
)
 
$
7,742

$
(14,748
)
 
$
2,352

Income tax expense
2,485

 
2,061

4,950

 
2,919

Effective tax rate
(16.3
)%
 
26.6
%
(33.6
)%
 
124.1
%
The Company records income tax expense each quarter using its best estimate of the full year’s effective tax rate. The Company regularly reviews its deferred tax assets for realizability, taking into consideration all available evidence, both positive and negative, including cumulative losses, projected future pre-tax and taxable income (losses), the expected timing of the reversals of existing temporary differences and the expected impact of tax planning strategies.
As of June 30, 2017, TerraForm Global, Inc. owned 64.8% of Global LLC and consolidates the results of Global LLC through its controlling interest. The Company records SunEdison's 35.2% ownership of Global LLC as a non-controlling interest in the financial statements. Global LLC is treated as a partnership for income tax purposes.
For the six months ended June 30, 2017, the overall effective tax rate was different than the statutory rate of 35.0% primarily due to valuation allowances, tax holiday benefits, taxes on non-operating income in Thailand and presumed profits taxes in Brazil. As of June 30, 2017, most jurisdictions were in a net deferred tax asset position. A valuation allowance is recorded against the deferred tax assets where appropriate, primarily because of the historical losses in those jurisdictions.
9. DERIVATIVES
As part of the Company’s risk management strategy, the Company has entered into derivative instruments which include interest rate swaps, cross currency swaps, and foreign currency contracts to mitigate interest rate and foreign currency exposure. If the Company elects to do so and if the instrument meets the criteria specified in ASC 815, Derivatives and Hedging, the Company designates its derivative instruments as cash flow hedges. The Company enters into interest rate swap agreements in order to hedge the variability of expected future cash interest payments. Cross currency swaps are used to reduce risks arising from the change in fair value of certain foreign currency denominated assets and liabilities in order to minimize the impact of foreign currency fluctuations on operating results. Foreign currency contracts are used to mitigate the economic and financial market risks of fluctuations in foreign currency exchange rates. The Company does not use derivative instruments for speculative purposes.
Activities related to derivative instruments were reported in the line items as of and for the periods indicated, as follows:
(In thousands)
 
 
Fair Value As of
Type of Instrument
Balance Sheet Classification
 
June 30, 2017
 
December 31,
2016
Derivatives designated as hedging:
 
 
 
 
Interest rate swaps
Other liabilities, net
 
$
(4,654
)
 
$
(2,237
)
 
Accumulated other comprehensive loss
 
4,654

 
2,237

Cross currency swaps
Other assets, net
 
34,646

 
41,752

 
Accumulated other comprehensive loss
 
5,450

 
6,688

 
 
 
 
 
 
Derivatives not designated as hedging:
 


 


Interest rate swaps
Other liabilities
 
$
(1,871
)
 
$
(68
)
Foreign currency forward contracts
Other liabilities
 
(18,073
)
 
(13,299
)

26



(In thousands)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
Type of Instrument
Statement of Operations Classification
 
2017
 
2016
 
2017
 
2016
Derivatives not designated as hedging:
 
 
 
 
 
 
 
 
Interest rate swaps
Interest expense (income)
 
$
1,051

 
$
(1,813
)
 
1,814

 
(4,782
)
Currency forward contracts
Other expense (income)
 
(12,934
)
 
14,021

 
(8,487
)
 
32,184

Certain derivative contracts contain provisions providing the counterparties a lien on specific assets as collateral. There was no cash collateral received or pledged as of June 30, 2017 or December 31, 2016, respectively, related to the Company’s derivative transactions.    
Derivatives Designated as Hedges
Interest Rate Swaps
The Company has entered into interest rate swap agreements to hedge variable rate project level debt. These interest rate swaps qualify for hedge accounting and are designated as cash flow hedges. Under the interest rate swap agreements, the power plant pays a fixed rate and the counterparty to the agreement pays a variable interest rate. No amounts deferred in other comprehensive income were reclassified into earnings during the three and six months ended June 30, 2017 and 2016
Cross Currency Swaps
The Company has entered into cross currency swap agreements to hedge its exposure to foreign currency fluctuations on debt denominated in U.S. dollars. These cross currency rate swaps qualify for hedge accounting and were designated as cash flow hedges. The amounts deferred in other comprehensive income and reclassified into earnings were $12.9 million income and $14.0 million loss during the three months ended June 30, 2017 and 2016, respectively, and $8.5 million income and $32.2 million loss during the six months ended June 30, 2017 and 2016, respectively. There was no ineffectiveness recorded for the periods presented.
Derivatives Not Designated as Hedges
Interest Rate Swaps
The Company has entered into interest rate swap agreements that economically hedge the cash flows for project level debt. These interest rate swaps pay a fixed rate and the counterparties to the agreements pay a variable interest rate. The changes in fair value are recorded in interest expense, net in the unaudited condensed consolidated statements of operations as these hedges are not accounted for under hedge accounting.
Foreign Currency Contracts
The Company transacts business in various foreign currencies and has established a program that primarily utilizes foreign currency contracts to offset the risks associated with the effects of certain foreign currency exposures. The Company does not use these foreign currency contracts for trading purposes nor does it designate these forward contracts as hedging instruments pursuant to ASC 815. As of June 30, 2017, the notional amounts of the foreign currency contracts the Company held to purchase U.S. dollars in exchange for other major international currencies were $127.6 million. Included in the Company’s non-operating income was $12.9 million and $8.5 million of net income related to these foreign currency contracts for the three and six months ended June 30, 2017, respectively, which was a result of devaluation as compared to the U.S. dollar in the Brazilian real (BRL), Chinese yuan renminbi (CNY), Indian rupee (INR), Malaysian ringgit (MYR), South African rand (ZAR) and Thai baht (THB). The fair value of the Company’s outstanding foreign currency forward contracts was a net liability of $18.1 million as of June 30, 2017. The cash flow related to foreign currency contracts that remain outstanding is classified as operating activities. The cash flow associated with foreign currency contract settlements is classified as investing activities. The net loss relating to investments was partially offset by the lower cost related to the cash flows related to the acquisitions and debt extinguishments that were hedged.

27



Notional Amounts
(In thousands)
Notional Amounts as of June 30, 2017
Derivatives designated as hedges:
 
   Interest rate swaps (USD)
130,740

   Cross currency swaps (USD)
173,686

Derivatives not designated as hedges:
 
   Interest rate swaps (USD)
134,838

   Currency forward contracts (BRL)
41,108

   Currency forward contracts (CNY)
16,965

   Currency forward contracts (INR)
41,071

   Currency forward contracts (MYR)
3,887

   Currency forward contracts (THB)
5,604

   Currency forward contracts (ZAR)
18,919


10. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of assets and liabilities are determined using either unadjusted quoted prices in active markets (Level 1) or pricing inputs that are observable (Level 2) whenever that information is available and using unobservable inputs (Level 3) to estimate fair value only when relevant observable inputs are not available.
The Company uses valuation techniques that maximize the use of observable inputs. Assets and liabilities are classified in their entirety based on the lowest priority level of input that is significant to the fair value measurement. Where observable inputs are available for substantially the full term of the asset or liability, the instrument is categorized in Level 2. If the inputs into the valuation are not corroborated by market data, in such instances, the valuation for these contracts is established using techniques including extrapolation from or interpolation between actively traded contracts as well as the calculation of implied volatilities. When such inputs have a significant impact on the measurement of fair value, the instrument is categorized as Level 3. The Company regularly evaluates and validates the inputs used to determine fair value by using pricing services to support the underlying market price of interest rates and foreign currency exchange rates.
Recurring Fair Value Measurements
The following table summarizes the financial instruments measured at fair value on a recurring basis classified in the fair value hierarchy (Level 1, 2 or 3) based on the inputs used for valuation in the accompanying unaudited condensed consolidated balance sheets:
 
As of June 30, 2017
 
As of December 31, 2016
Assets (liabilities) in thousands
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
Interest rate swaps
$

 
$
(6,525
)
 
$

 
$
(6,525
)
 
$

 
$
(2,305
)
 
$

 
$
(2,305
)
Foreign currency forward contracts
(18,073
)
 

 

 
(18,073
)
 
(13,299
)
 

 

 
(13,299
)
Cross currency swaps

 
34,646

 

 
34,646

 

 
41,752

 

 
41,752

Total
$
(18,073
)
 
$
28,121

 
$

 
$
10,048

 
$
(13,299
)
 
$
39,447

 
$

 
$
26,148

The Company uses a discounted valuation technique to determine the fair value of its derivative assets and liabilities. The primary inputs into the valuation of interest rate swaps, cross currency swaps and foreign currency contracts are forward interest rates, foreign currency exchange rates, and to a lesser degree, credit spreads. The Company’s interest rate swaps and cross currency swaps are considered Level 2, since all significant inputs are corroborated by market observable data. There were no transfers into or out of Level 1, Level 2 or Level 3 during the periods ended June 30, 2017 or December 31, 2016.

28



Fair Value of Long-Term Debt
The following table presents the carrying amount and estimated fair value of the Company's outstanding short-term and long-term debt obligations as of June 30, 2017 and December 31, 2016, respectively:

As of June 30, 2017
 
As of December 31, 2016
(In thousands)
Carrying Amount
 
Fair Value
 
Carrying Amount
 
Fair Value
Long-term debt, including current portion
$
1,106,214

 
$
1,251,188

 
$
1,104,420

 
$
1,209,863

The fair value of the Company’s long-term debt was determined using inputs classified as Level 2 and a discounted cash flow approach using market rates for similar debt instruments.

11. STOCKHOLDERS’ EQUITY
Outstanding Equity Securities
As of June 30, 2017, the following shares of the Company were outstanding:
Class:
Number Outstanding
 
Holders
Class A common stock
112,970,826

 
*
Class B common stock
61,343,054

 
SunEdison
Class B1 common stock

 
Not Applicable
Preferred stock

 
Not Applicable
Total shares outstanding
174,313,880

 

* Common stockholders are comprised of: public stockholders (including Brookfield, Vincent C. Smith, and Knighthead Capital Management, LLC), SunEdison, executive officers, management and employees.
Treasury Stock
As of June 30, 2017, the Company owned 1,109,273 treasury shares of Class A common stock. All of these treasury shares were acquired in exchange for the settlement of future tax obligations related to stock-based compensation arrangements, or as a result of the release of shares from escrow to the Company pursuant to the Renova Settlement Agreement.
Dividends
On February 29, 2016, the Company declared a quarterly dividend for the fourth quarter of 2015 on the Company's Class A common stock of $0.275 per share. The dividend was paid on March 17, 2016 to stockholders of record as of March 10, 2016. The Company has not declared or paid a dividend since March 17, 2016. Under the Merger Agreement, the Company is restricted from declaring or paying dividends prior to the consummation of the Brookfield Transaction.
Equity Reallocation
Equity reallocation of $1.3 million as of June 30, 2017 was due to an adjustment of capital balances to reflect respective equity ownership percentages as of each balance sheet date.

12. STOCK-BASED COMPENSATION
The TerraForm Global, Inc. 2014 Long-Term Incentive Plan (the “Incentive Plan”) provides for the award of incentive and non-qualified stock options, stock appreciation rights, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) to employees and non-employee directors, including employees and non-employee directors of SunEdison and its affiliates. The maximum contractual term of an award is 10 years from the date of grant. Shares issued under the plan may be authorized and unissued shares or treasury shares. As of June 30, 2017, the Company had authorized 17,884,910 shares for awards under the Incentive Plan and 9,433,333 shares remained available for future grant under this plan.

29



Stock-based compensation expense is recorded as a component of general and administrative expense in the Company’s unaudited condensed consolidated statements of operations and totaled $0.8 million and $1.7 million for the three and six months ended June 30, 2017, respectively, compared to $0.9 million and $2.0 million for the same periods in 2016.
Employee benefit related costs, including stock-based compensation costs related to equity awards in the stock of SunEdison, Inc. and its consolidated subsidiaries, of SunEdison employees who provide services to the Company are allocated to the Company based on the relative percentage of their time that the employee spends providing service to the Company. The amount of stock-based compensation expense related to equity awards in the stock of SunEdison and its consolidated subsidiaries which has been allocated to the Company was $0.4 million and $0.9 million for the three and six months ended June 30, 2017, respectively, and is reflected in the unaudited condensed consolidated statements of operations within general and administrative costs and has been treated as an equity contribution from SunEdison on the unaudited condensed consolidated statements of stockholders' equity. Similarly, stock-based compensation costs related to equity awards to SunEdison employees in the Company’s stock are allocated to SunEdison based on the relative percentage of their time that the employee spends providing service to SunEdison. The amount of stock-based compensation expense related to equity awards in the Company's stock which has been allocated to SunEdison was $0.6 million and $0.8 million for the three and six months ended June 30, 2017, respectively, and is recognized as a distribution to SunEdison on the unaudited condensed consolidated statements of stockholders' equity with no impact to the Company’s unaudited condensed consolidated statements of operations.
Restricted Stock Awards
RSAs provide the holder with immediate voting rights, but are restricted in all other respects until vested. Upon a termination of employment for any reason, any unvested shares of Class A common stock held by the terminated participant will be forfeited. All unvested RSAs are paid dividends and distributions.
The following table presents information regarding outstanding RSAs as of June 30, 2017 and changes during the six months then ended:
 
Number of RSAs Outstanding
 
Weighted Average Grant Date Fair Value Per Share
 
Aggregate Intrinsic Value
(in millions)
Balance at January 1, 2017
4,688,975

 
$
0.18

 
 
Converted
(35,212
)
 
 
 
 
Forfeited
(427,561
)
 
0.21

 
 
Balance at June 30, 2017
4,226,202

 
$
0.17

 
$
21.3

As of June 30, 2017, $0.4 million of total unrecognized compensation cost related to RSAs is expected to be recognized over a weighted average period of approximately 2.2 years.
The weighted average fair value of RSAs on the date of grant was $0.17 for the six months ended June 30, 2017 and 2016.
Restricted Stock Units
RSUs do not entitle the holders to voting rights and holders of the RSUs do not have any right to receive dividends or distributions.
The following table presents information regarding outstanding RSUs as of June 30, 2017 and changes during the six months then ended:
 
Number of RSUs Outstanding
 
Aggregate Intrinsic Value
(In millions)
 
Weighted Average 
Remaining
Contractual Life (In years)
Balance at January 1, 2017
2,311,687

 
 
 
 
Granted
648,207

 
 
 
 
Converted
(144,706
)
 
 
 
 
Forfeited
(478,673
)
 
 
 
 
Balance at June 30, 2017
2,336,515

 
$
11.8

 
1.2

30



As of June 30, 2017, $5.6 million of total unrecognized compensation cost related to RSUs is expected to be recognized over a weighted average period of approximately 2.2 years.

13. LOSS PER SHARE
Loss per share is calculated utilizing the weighted average shares outstanding. Under the two-class method, unvested RSAs that contain non-forfeitable rights to dividends are treated as participating securities and are included in the earnings per share computation to the extent that there are undistributed earnings available, but these securities do not participate in losses.
Class A Common Stock
Basic and diluted loss per share for the three and six months ended June 30, 2017 and 2016 was calculated as follows:
(In thousands, except per share amounts)
Three Months Ended
June 30, 2017
 
Three Months Ended
June 30, 2016
 
Six
Months Ended
June 30, 2017
 
Six
Months Ended
June 30, 2016
Basic and diluted (loss) income per share:
 
 
 
 
 
 
 
Net (loss) income attributable to Class A common stockholders
$
(10,381
)
 
$
1,097

 
(12,094
)
 
$
(3,535
)
Less: dividends paid on Class A common stock and participating RSAs

 

 

 
30,674

Undistributed (loss) income attributable to Class A stockholders
$
(10,381
)
 
$
1,097

 
$
(12,094
)
 
$
(34,209
)

 
 
 
 
 
 
 
Weighted-average shares outstanding
112,943,815

 
106,855,764

 
113,099,037

 
106,855,764


 
 
 
 
 
 
 
Distributed earnings per share
$

 
$

 
$

 
$
0.29

Undistributed (loss) income per share
(0.09
)
 
0.01

 
(0.11
)
 
(0.32
)
Basic and diluted (loss) earnings per share
$
(0.09
)
 
$
0.01

 
$
(0.11
)
 
$
(0.03
)
The computations for diluted loss per share for the three and six months ended June 30, 2017 exclude 61,343,054 shares of Class B common stock, 4,226,202 unvested RSAs and 2,336,515 unvested RSUs because the effect would have been anti-dilutive. The computations for diluted loss per share for the three and six months ended June 30, 2016 exclude 61,343,054 shares of Class B common stock, 6,245,398 unvested RSAs and 2,515,947 unvested RSUs because the effect would have been anti-dilutive.

14. NON-CONTROLLING INTERESTS
Non-controlling interests represent the portion of net assets in consolidated entities that are not owned by the Company. The following table presents the non-controlling interest balances by entity, reported in stockholders’ equity in the unaudited condensed consolidated balance sheets as of June 30, 2017 and December 31, 2016:
(in thousands)
As of
June 30, 2017
 
As of December 31, 2016
SunEdison’s non-controlling interests in Global LLC
$
368,242

 
$
370,117

Non-controlling interests in power plants
74,473

 
92,308

Total non-controlling interests
$
442,715

 
$
462,425

As of June 30, 2017, TerraForm Global, Inc. owned 64.8% of Global LLC and consolidated the results of Global LLC through its controlling interest, with SunEdison's 35.2% interest shown as a non-controlling interest.



31



15. COMMITMENTS AND CONTINGENCIES
Commitments to Acquire Power Plants
In April 2015, the Company entered into purchase and sale agreements to acquire controlling interests in three operating power plants located in South Africa with an aggregate net capacity of 32.6 MW from BioTherm. The aggregate consideration payable for these three power plants is approximately $75.3 million. See Note 2 - Acquisitions for additional discussion of these commitments.    
Legal Proceedings Initiated Against the Company
Project Litigation
GUVNL Litigation
The Company is subject to litigation with Gujarat Urja Vikas Nigam Limited (“GUVNL”), the offtake counterparty for certain power plants in India, which is seeking a reduction of the tariff set forth in the applicable PPAs. In separate litigation, GUVNL also claims that there has been a violation of the terms of certain PPAs between GUVNL and the applicable project companies on account of a change in stockholders since execution of such PPAs, and as such GUVNL is entitled to terminate such PPAs. The Company successfully defended each case at the first court level and an appeal of each case was dismissed by the appellate level, but GUVNL has appealed to the Supreme Court of India on each matter. The cases are currently pending with the Supreme Court of India. The Company believes that the likelihood of an unfavorable outcome is remote.
Honiton Litigation
The Company was subject to litigation proceedings with Suzlon Energy (Tianjin) Limited (“SETL”) with respect to alleged breaches of a turbine supply contract relating to the Honiton wind power plants in China. The operation and maintenance service contracts claim pending before an arbitral tribunal was resolved on December 3, 2015, pursuant to which the Company was required to pay an award of $0.5 million, which was paid in January 2016. On June 3, 2016, SETL and the Company reached a settlement resolving all remaining disputes relating to the turbine contracts. The terms of this final settlement resulted in SETL assigning all rights as a creditor it held against the Company to Beijing Aliyun Investment and Consulting Co. Ltd. (“Aliyun”). In addition, the Company agreed to pay Aliyun $7.1 million (RMB 47.0 million), of which RMB 45.0 million was paid during the second quarter of 2016, and the remaining RMB 2.0 million is due no later than July 2018, subject to various conditions set forth in the settlement agreement. In accordance with the settlement agreement, SETL withdrew its pending claims against the Company. As of June 30, 2017, a liability was recognized related to the proceedings in the amount of $0.3 million (RMB 2.0 million).
Bankruptcy Court Action
Motion to Stay and Motion to Compel Mediation
On November 2, 2016, the unsecured creditors’ committee in the SunEdison Bankruptcy filed an adversary complaint against the Company and others with the U.S. Bankruptcy Court for the Southern District of New York. The complaint and contemporaneous motion to stay seek to stay pending litigation against current and former directors and officers of SunEdison and the Company, including TerraForm Global, Inc. v. SunEdison, Inc., et al., the Company’s action against SunEdison described below. The unsecured creditors’ committee intended to file a derivative action on behalf of the SunEdison bankruptcy estate against current and former SunEdison officers and directors. It requested the stay in order to preserve the proceeds of SunEdison’s and the Company's directors’ and officers’ liability insurance policies. On November 4, 2016, the unsecured creditors’ committee filed a motion in the SunEdison Bankruptcy case for derivative standing to sue various current and former SunEdison officers and directors. The unsecured creditors’ committee filed an amended adversary complaint on November 9, 2016. As described in a motion to compel mediation filed by SunEdison on November 23, 2016, SunEdison and the unsecured creditors’ committee agreed to hold the motion to stay and any proposed claims by the unsecured creditors’ committee against various current and former SunEdison officers and directors in abeyance pending a global mediation relating to insurance issues. The Company’s objection to the motion to stay and the motion to compel mediation was filed on December 1, 2016. On December 28, 2016, pursuant to a consent order entered by the bankruptcy court, SunEdison, the unsecured creditors’ committee and the Company, among other parties, were directed to participate in the mediation process that is being conducted in connection with the SunEdison Bankruptcy. The mediation commenced on February 10, 2017. On March 27, 2017, SunEdison, the unsecured creditors’ committee and the directors and officers of SunEdison who would be defendants in the estate claims proposed to be brought by the unsecured creditors’ committee reached an agreement in principle to settle those claims in exchange for a payment of $32.0 million from the $150.0 million directors’ and officers’ liability insurance policies shared with the Company, TerraForm Power, Inc. (together with its subsidiaries, "TerraForm Power"), SunEdison and certain of

32



their respective directors and officers covering the period from July 15, 2015 to July 14, 2016. The agreement has been approved by the bankruptcy court overseeing the SunEdison Bankruptcy, but remains subject to the effectiveness of the SunEdison Plan and, as a result, the completion of the Brookfield Transaction (which is a condition to the effectiveness of the SunEdison Plan). On March 31, 2017, the limited stay expired. Given the preliminary nature of the claims, the Company is unable to provide any assurances as to the ultimate outcome of these motions or that an adverse resolution of legal proceedings would not have a material adverse effect on the Company’s consolidated financial position and results of operations.
Avoidance Actions
On November 7, 2016, the unsecured creditors’ committee in the SunEdison Bankruptcy filed a motion with the bankruptcy court seeking standing to assert against the Company, on behalf of SunEdison, avoidance claims arising from intercompany transactions between the Company and SunEdison. The Company’s objection to the standing motion was filed on November 29, 2016. The unsecured creditors’ committee filed a reply and supplemental reply in support of its standing motion on December 5, 2016 and December 21, 2016, respectively. On March 6, 2017, the Company entered into a settlement agreement with SunEdison in connection with the SunEdison Bankruptcy and the Merger Agreement (the “Settlement Agreement”), pursuant to which SunEdison would release any potential avoidance claims it may have against the Company. The Settlement Agreement was approved by the Bankruptcy Court on June 7, 2017; however, its effectiveness is conditional on the completion of the Brookfield Transaction. If the Settlement Agreement becomes effective, the Company expects this standing motion will be withdrawn. If the Settlement Agreement is terminated, the Company expects to vigorously contest this standing motion and, if standing is granted, the underlying avoidance claims. The Company is unable to provide any assurances as to the ultimate outcome of these claims or that an adverse resolution of a legal proceeding, if commenced, would not have a material adverse effect on the Company’s consolidated financial position and results of operations.
Renova Arbitration
On July 14, 2016, Renova Energia, S.A. (“Renova”) filed a request for arbitration against TerraForm Global, Inc., TerraForm Global, LLC, TerraForm Global Brazil Holding B.V. and TERP GLBL Brasil I Participacoes S.A. (collectively, the “TerraForm Global Parties”) in the Center for Arbitration and Mediation of the Chamber of Commerce Brazil-Canada (the “Renova Arbitration”). Renova alleges, among other things, that TerraForm Global, Inc. and certain of its subsidiaries listed above: (i) fraudulently induced Renova to enter into the acquisition agreements related to the Salvador and Bahia wind power plants, the omnibus closing agreement with respect to such acquisitions, and the put/call arrangement entered into between SunEdison and Renova in connection with the Renova Transaction based on misleading and false representations about their and SunEdison’s financial condition and prospects; (ii) aided and abetted SunEdison’s fraud; (iii) negligently misrepresented their and SunEdison’s financial conditions and prospects; (iv) committed related violations of federal and state securities laws; (v) breached express warranties under the applicable acquisition agreements; (vi) wrongfully refused to repurchase from Renova seven million shares of TerraForm Global, Inc. Class A common stock pursuant to Renova’s put exercise notice of March 31, 2016, in breach of the put/call arrangement entered into between SunEdison and Renova in connection with the Renova Transaction; and (vii) unjustly enriched themselves. Renova seeks, among other relief, rescission of the Salvador and Bahia transactions, and/or damages in an amount to be determined in the arbitration of not less than $250 million, representing the drop in value of the 20,327,499 shares of TerraForm Global, Inc. Class A common stock Renova received in the Salvador transaction, from its $15/share IPO price to its trading level of $3.38/share at the time the request for arbitration was filed, as well as other related losses. 
On May 26, 2017, the TerraForm Global Parties entered into a Settlement Agreement and Mutual Release (the “Renova Settlement Agreement”) with Renova. The Renova Settlement Agreement resolves all disputes among the TerraForm Global Parties and Renova that are the subject of the Renova Arbitration.
Pursuant to the Renova Settlement Agreement, the TerraForm Global Parties have agreed to make a one-time settlement payment in the aggregate amount of $15.0 million, in exchange for and contingent on the withdrawal with prejudice of all claims and counterclaims made in the Renova Arbitration and termination of the Renova Arbitration. In addition, 792,495 shares of TerraForm Global, Inc. Class A common stock issued to Renova and currently held in escrow pursuant to the acquisition agreements for the Salvador wind power plant acquired by a subsidiary of the Company will be returned to the Company. None of the parties to the Renova Arbitration has admitted to any wrongdoing or liability with respect to the claims asserted in the Renova Arbitration. Subject to the satisfaction of certain conditions set forth in the Renova Settlement Agreement (including the purchase of Renova’s shares of TerraForm Global, Inc. Class A common stock by an affiliate of Brookfield as described below), the parties have granted each other full releases with respect to any claims arising in connection with the previously completed acquisitions by the Company of the Salvador and Bahia wind power plants from Renova and all related transactions and any other disputes that could arise in the future among the TerraForm Global Parties and Renova concerning or related in any way to such transactions and events, which are the subject of the Renova Arbitration.

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Also, concurrently with the execution of the Renova Settlement Agreement, Renova and affiliates of Brookfield entered into a Purchase & Sale Agreement (the “PSA”) with respect to all of the shares of Class A common stock of TerraForm Global, Inc. owned by Renova (excluding the shares to be released from escrow to TerraForm Global, Inc. pursuant to the Renova Settlement Agreement). Pursuant to the terms of the PSA, an affiliate of Brookfield agreed to purchase 19,535,004 shares of Class A common stock of TerraForm Global, Inc. from Renova for a purchase price in cash of $4.75 per share, or $92,791,269 in the aggregate. The consummation of the share purchase contemplated by the PSA is subject to customary conditions to closing and is conditioned upon the satisfaction of certain conditions set forth in the Renova Settlement Agreement described above, including the effectiveness of the mutual releases and release of the shares in escrow.
The conditions to the effectiveness of the full releases in the Renova Settlement Agreement, as well as the conditions to the consummation of the share purchase contemplated by the PSA, were satisfied on June 29, 2017. As a result, on June 29, 2017, the Company made a one-time settlement payment to Renova in the aggregate amount of $15.0 million, 792,495 shares of TerraForm Global, Inc. Class A common stock issued to Renova were returned from escrow to the Company, the TerraForm Global Parties and Renova executed and filed a joint stipulation with the Center for Arbitration and Mediation of the Chamber of Commerce Brazil-Canada withdrawing with prejudice all of the claims and counterclaims made in the Renova Arbitration, the full releases provided for in the Renova Settlement Agreement became effective, and the share purchase contemplated by the PSA was consummated.
The Company recognized $3.8 million of general and administrative expenses as of December 31, 2016 as a result of this settlement.
Securities Litigation
Multidistrict Litigation
On July 27, 2016, lead plaintiff Municipal Employees’ Retirement System of Michigan in the Horowitz et. al v. SunEdison, Inc. et al. action (E.D. Mo.) moved to transfer various actions pending in federal district courts to the U.S. District Court for the Southern District of New York (the "SDNY") for consolidated or coordinated pretrial proceedings before the Multidistrict Litigation Panel. On October 4, 2016, the Multidistrict Litigation Panel issued an order transferring the following cases to the SDNY for consolidated or coordinated pretrial proceedings:
Fraser v. Wuebbels et al.
Iron Workers Mid-South Pension Fund v. TerraForm Global, Inc. et al.
Badri v. TerraForm Global, Inc. et al.
Patel v. TerraForm Global, Inc. et al.
Pyramid Holdings, Inc. v. TerraForm Global, Inc. et al.
Beltran v. TerraForm Global, Inc. et al.
Oklahoma Firefighters Pension & Retirement System v. SunEdison, Inc. et al.
Glenview Capital Partners, L.P. et al. v. SunEdison, Inc. et al.
Omega Capital Investors et al. v. SunEdison, Inc. et al.

Four of these actions, Fraser v. Wuebbels et al., Iron Workers Mid-South Pension Fund v. TerraForm Global, Inc. et al., Badri v. TerraForm Global, Inc. et al., and Patel v. TerraForm Global, Inc. et al., were initially filed in the Superior Court of the State of California for the County of San Mateo on October 23, 2015, December 3, 2015, December 9, 2015 and January 4, 2016, respectively. These four separate purported class actions were filed against the Company, certain of its officers and directors, each of the underwriters of the Company’s IPO, and SunEdison. A separate class action, Agrawal v. TerraForm Global, Inc. et al., was filed in the Superior Court of the State of California for the County of San Mateo on October 30, 2015. This action was voluntarily dismissed without prejudice in February 2016. Additionally, two separate purported class action lawsuits, Beltran v. TerraForm Global, Inc. et al. and Pyramid Holdings, Inc. v. TerraForm Global, Inc. et al., were filed on October 29, 2015 and November 5, 2015, respectively, in the U.S. District Court for the Northern District of California against the same defendants. The class action plaintiffs assert claims under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, as amended (the “Securities Act”). The class action complaints allege, among other things, that the defendants made false and materially misleading statements and failed to disclose material information in the Company's registration statement for the IPO regarding SunEdison and its recent operating results and business strategy. Among other relief, the class action complaints seek class certification, unspecified compensatory damages, rescission, attorneys’ fees, costs, and such other relief as the Court should deem just and proper. On April 26, 2016, in light of SunEdison’s voluntary petition for bankruptcy on April 21, 2016, the Company and the other defendants removed the remaining state actions to the U.S. District Court for the Northern District of California. On May 27, 2016, the plaintiffs in the cases removed from state court filed motions to remand. On June 1, 2016, the defendants filed motions to transfer the cases to the SDNY, the jurisdiction in which SunEdison’s bankruptcy is pending. The previous briefing schedule has been vacated as a result of the October 4, 2016 transfer order issued by the Multidistrict

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Litigation Panel. On November 3, 2016, Plaintiff in Patel v. TerraForm Global, Inc. et al. voluntarily dismissed the case. On December 20, 2016, Plaintiff in Beltran v. TerraForm Global, Inc. et al. voluntarily dismissed the case. On December 22, 2016, the Court consolidated Pyramid Holdings, Inc. v. TerraForm Global, Inc. et al., Badri v. TerraForm Global, Inc. et al., Iron Workers Mid-South Pension Fund v. TerraForm Global, Inc. et al., and Fraser v. Wuebbels et al. as In re TerraForm Global, Inc. Securities Litigation and ordered the plaintiffs to file a consolidated complaint. On January 16, 2017, the plaintiffs filed the Consolidated Class Action Complaint. On April 21, 2017, the plaintiffs filed a Consolidated Second Amended Class Action Complaint. The Company is in the preliminary stages of reviewing the allegations made in the remaining complaints and, as a result, is unable to provide any assurances as to the ultimate outcome of these lawsuits or that an adverse resolution of these lawsuits would not have a material adverse effect on the Company’s consolidated financial position and results of operations.
On March 29, 2016, plaintiff filed Oklahoma Firefighters Pension & Retirement System v. SunEdison, Inc. et al., in the Superior Court of the State of California for the County of San Mateo against the Company, SunEdison, certain officers and directors of the Company and SunEdison, and the underwriters of the Company’s IPO. The plaintiff asserts claims under Sections 11, 12(a)(2), and 15 of the Securities Act. The complaint alleges, among other things, that the defendants made false and materially misleading statements and failed to disclose material information in the Company's registration statement for the IPO regarding SunEdison and its recent operating results and business strategy. The complaint seeks compensatory damages, rescission, and such other relief (including equitable or injunctive relief) as the Court may deem just and proper. On April 26, 2016, in light of SunEdison’s voluntary petition for bankruptcy on April 21, 2016, the Company and the other defendants removed the action to the U.S. District Court for the Northern District of California. On May 27, 2016, the plaintiffs moved to remand. On June 1, 2016, the defendants moved to transfer the case to the SDNY, the jurisdiction in which SunEdison’s bankruptcy is pending. The Company is in the preliminary stages of reviewing the allegations made in the complaint and, as a result, is unable to provide any assurances as to the ultimate outcome of this lawsuit or that an adverse resolution of this lawsuit would not have a material adverse effect on the Company’s consolidated financial position and results of operations.
On March 29, 2016, plaintiffs filed Glenview Capital Partners, L.P. et al. v. SunEdison, Inc. et al., in the Superior Court of the State of California for the County of San Mateo against the Company, SunEdison, certain officers and directors of the Company and SunEdison, and the underwriters of the Company’s August 5, 2015 bond offering and SunEdison’s August 18, 2015 preferred stock offering. The plaintiffs assert claims under Sections 11, 12(a)(2), and 15 of the Securities Act, as well as the Maryland Securities Act. The plaintiffs allege, among other things, that they purchased securities pursuant to offering documents that contained untrue statements of material fact and omitted other material facts necessary to make the statements in the offering documents not misleading. The complaint further alleges that these false and misleading statements led to the forced conversion of the plaintiffs’ Class D securities into restricted common stock, that the Company breached the June 9, 2015 Class D Purchase Agreement between the Company and the plaintiffs, and that the defendants made negligent misrepresentations in connection with the Company’s Class D registration statement. The complaint seeks unspecified damages, rescission, and such other relief (including equitable or injunctive relief) as the Court may deem just and proper. On April 26, 2016, in light of SunEdison’s voluntary petition for bankruptcy on April 21, 2016, the Company and the other defendants removed the action to the U.S. District Court for the Northern District of California. On May 26, 2016, the plaintiffs filed a motion to remand. On May 27, 2016, the defendants moved to transfer the case to the SDNY, the jurisdiction in which SunEdison’s bankruptcy is pending. The Court held a hearing on the motion to remand and the motion to transfer on August 18, 2016. On August 26, 2016, the Court issued an order denying the plaintiffs’ motion to remand and granting the defendants’ motion to transfer. The Court also certified a legal issue for interlocutory review, and on September 2, 2016, the plaintiffs filed a petition for permission to appeal with the U.S. Court of Appeals for the Ninth Circuit. On November 17, 2016, the Ninth Circuit issued an order requiring all parties to file statements addressing the effect of the Multidistrict Litigation Panel’s transfer order on the motion for permission to appeal. On December 8, 2016, the parties filed their responses. The Company is in the preliminary stages of reviewing the allegations made in the complaint and, as a result, is unable to provide any assurances as to the ultimate outcome of this lawsuit or that an adverse resolution of this lawsuit would not have a material adverse effect on the Company’s consolidated financial position and results of operations.
On March 30, 2016, plaintiffs filed Omega Capital Investors et al. v. SunEdison, Inc. et al., in the Superior Court of the State of California for the County of San Mateo against the Company, SunEdison, certain officers and directors of the Company and SunEdison, and the underwriters of SunEdison’s preferred stock offering. The plaintiffs assert claims under Sections 11, 12(a)(2), and 15 of the Securities Act, as well as the Maryland Securities Act. The plaintiffs allege, among other things, that the defendants made false and misleading statements in connection with the Company’s IPO, and that these false and misleading statements led to the forced conversion of their Class D securities into restricted common stock. The complaint further alleges that the Company breached the June 9, 2015 Class D Purchase Agreement between the Company and the plaintiffs and made negligent misrepresentations in connection with the Company’s Class D registration statement. The complaint seeks unspecified damages, rescission, and such other relief (including equitable or injunctive relief) as the Court may deem just and proper. On April 26, 2016, in light of SunEdison’s voluntary petition for bankruptcy on April 21, 2016, the Company and the other defendants removed the action to the U.S. District Court for the Northern District of California. On

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May 26, 2016, the plaintiffs filed a motion to remand. On June 1, 2016, the defendants moved to transfer the case to the SDNY, the jurisdiction in which SunEdison’s bankruptcy is pending. The Court held a hearing on the motion to remand and the motion to transfer on August 18, 2016. On August 26, 2016, the Court issued an order denying the plaintiffs’ motion to remand and granting the defendants’ motion to transfer. The Court also certified a legal issue for interlocutory review, and on September 2, 2016, the plaintiffs filed a petition for permission to appeal with the U.S. Court of Appeals for the Ninth Circuit. On November 17, 2016, the Ninth Circuit issued an order requiring all parties to file statements addressing the effect of the Multidistrict Litigation Panel’s transfer order on the motion for permission to appeal. On December 8, 2016, the parties filed their responses. The Company is in the preliminary stages of reviewing the allegations made in the complaint and, as a result, is unable to provide any assurances as to the ultimate outcome of this lawsuit or that an adverse resolution of this lawsuit would not have a material adverse effect on the Company’s consolidated financial position and results of operations.
Conditional Transfer Cases
On October 5, 2016, the Multidistrict Litigation Panel issued conditional transfer orders in three cases, Kingdon Associates et al. v. TerraForm Global, Inc. et al., VMT II LLC v. TerraForm Global, Inc. et al., and Canyon Capital Advisors LLC et al. v. TerraForm Global, Inc. et al.
On July 14, 2016, plaintiffs filed Kingdon Associates et al. v. TerraForm Global, Inc. et al. in the Superior Court of the State of California for the County of San Mateo against the Company, TerraForm Global, LLC, certain officers and directors of the Company and SunEdison, and the underwriters of the Company’s IPO. The plaintiffs assert claims under Sections 11, 12(a)(2), and 15 of the Securities Act, as well as state law claims for breach of contract, negligent misrepresentation, and violation of Maryland securities laws. The plaintiffs allege, among other things, that the defendants made false and materially misleading statements and failed to disclose material information in the Company's registration statement for the IPO regarding SunEdison and its recent operating results and business strategy and that these false and misleading statements led to the forced conversion of their Class D securities into restricted common stock. The complaint further alleges that the Company breached the June 9, 2015 Class D Purchase Agreement between the Company and the plaintiffs and made negligent misrepresentations in connection with the Company’s Class D registration statement. The complaint seeks compensatory damages, rescission, and such other relief (including equitable or injunctive relief) as the Court may deem just and proper. On September 26, 2016, in light of SunEdison’s voluntary petition for bankruptcy on April 21, 2016, the Company and the other defendants removed the action to the U.S. District Court for the Northern District of California. Plaintiffs did not oppose the Multidistrict Litigation Panel's conditional transfer order, and the matter was transferred to the multidistrict litigation on October 20, 2016. The Company is in the preliminary stages of reviewing the allegations made in the complaint and, as a result, is unable to provide any assurances as to the ultimate outcome of this lawsuit or that an adverse resolution of this lawsuit would not have a material adverse effect on the Company’s consolidated financial position and results of operations.
On August 8, 2016, plaintiffs filed Canyon Capital Advisors LLC et al. v. TerraForm Global, Inc. et al. in the Superior Court of the State of California for the County of San Mateo against the Company, certain officers and directors of the Company and SunEdison, and the underwriters of the Company’s IPO and SunEdison’s August 18, 2015 preferred stock offering. The plaintiffs assert claims under Sections 11, 12(a)(2), and 15 of the Securities Act, as well as the California Corporate Securities Law. The plaintiffs allege, among other things, that they purchased securities pursuant to offering documents that contained untrue statements of material fact and omitted other material facts necessary to make the statements in the offering documents not misleading. The complaint seeks unspecified damages, rescission, and such other relief (including equitable or injunctive relief) as the Court may deem just and proper. On September 8, 2016, in light of SunEdison’s voluntary petition for bankruptcy on April 21, 2016, the Company and the other defendants removed the action to the U.S. District Court for the Northern District of California. On September 26, 2016, plaintiffs filed a motion to remand. On October 6, 2016, plaintiffs filed an amended motion to remand. On October 20, 2016, defendants filed their opposition to that motion, and on November 2, 2016, plaintiffs filed their reply. On October 19, 2016, defendants filed a motion to stay the case until a final transfer determination could be made by the Multidistrict Litigation Panel. On November 2, 2016, plaintiffs filed an opposition to the motion to stay. The Court held a hearing on the motion to remand and the motion to stay on November 10, 2016. On October 26, 2016, plaintiffs filed a motion to vacate the conditional transfer order. On November 16, 2016, defendants filed an opposition to the motion to vacate. On November 17, 2016, the parties filed a stipulation withdrawing the motions to stay and vacate, which the Court entered. On November 22, 2016, the Multidistrict Litigation Panel transferred the case to the SDNY for consolidated or coordinated pretrial proceedings. The Company is in the preliminary stages of reviewing the allegations made in the complaint and, as a result, is unable to provide any assurances as to the ultimate outcome of this lawsuit or that an adverse resolution of this lawsuit would not have a material adverse effect on the Company’s consolidated financial position and results of operations.
On September 16, 2016, plaintiff filed VMT II LLC v. TerraForm Global, Inc. et al. in the Superior Court of the State of California for the County of San Mateo against the Company, certain officers and directors of the Company and SunEdison, and the underwriters of SunEdison’s preferred stock offering. The plaintiff asserts claims under Sections 11, 12(a)(2), and 15 of

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the Securities Act, as well as the Maryland Securities Act. The plaintiff alleges, among other things, that the defendants made false and misleading statements in connection with the Company’s IPO, and that these false and misleading statements led to the forced conversion of their Class D securities into restricted common stock. The complaint further alleges that the Company breached the June 9, 2015 Class D Purchase Agreement between the Company and the plaintiffs and made negligent misrepresentations in connection with the Company’s Class D registration statement. The complaint seeks unspecified damages, rescission, and such other relief (including equitable or injunctive relief) as the Court may deem just and proper. On September 28, 2016, in light of SunEdison’s voluntary petition for bankruptcy on April 21, 2016, the Company and the other defendants removed the action to the U.S. District Court for the Northern District of California. Plaintiffs did not oppose the Multidistrict Litigation Panel's conditional transfer order, and the matter was transferred to the multidistrict litigation on October 20, 2016. The Company is in the preliminary stages of reviewing the allegations made in the complaint and, as a result, is unable to provide any assurances as to the ultimate outcome of this lawsuit or that an adverse resolution of this lawsuit would not have a material adverse effect on the Company’s consolidated financial position and results of operations.
On December 19, 2016, an initial case management conference was held in the multidistrict litigation proceedings in the SDNY. The Court entered a partial stay of all proceedings through March 31, 2017, and entered an order requiring all parties to the multidistrict litigation, including the parties to the conditional transfer cases, to participate in the mediation process that is being conducted in connection with the SunEdison Bankruptcy, which also includes the derivative claim described below. The mediation commenced on February 10, 2017.
On February 6, 2017, the Company filed pre-motion letters with the Court describing the grounds for anticipated motions to dismiss in the following matters: In re TerraForm Global, Inc. Securities Litigation, Oklahoma Firefighters Pension & Retirement System v. SunEdison, Inc. et al., Glenview Capital Partners, L.P. et al. v. SunEdison, Inc. et al., Omega Capital Investors et al. v. SunEdison, Inc. et al., Kingdon Associates et al. v. TerraForm Global, Inc. et al., Canyon Capital Advisors LLC et al. v. TerraForm Global, Inc. et al., and VMT II LLC v. TerraForm Global, Inc. et al. The plaintiffs in those matters filed responses on February 20, 2017.
On March 31, 2017, the partial stay expired. On April 13, 2017, the Court held a status conference and entered a briefing schedule for the Company’s anticipated motion to dismiss the Consolidated Second Amended Class Action Complaint in In re TerraForm Global, Inc. Securities Litigation. The Company filed its motion to dismiss on June 9, 2017, and Plaintiffs filed their opposition on July 21, 2017. The Company’s reply brief is due on August 18, 2017. Further proceedings in the remaining multidistrict litigation matters described above have been stayed pending resolution of the initial motion to dismiss.
On March 22, 2017, the Multidistrict Litigation Panel issued conditional transfer orders in Domenech v. TerraForm Global, Inc. et al. and Perez v. TerraForm Global, Inc. et al., and these matters were transferred to the multidistrict litigation on April 13, 2017 and May 31, 2017, respectively. These matters are further described below.
Derivative Claim
Aldridge v. Blackmore et al.
On April 12, 2016, a verified stockholder derivative complaint on behalf of the Company was filed against four directors of the Company in the Court of Chancery of the State of Delaware. The lawsuit alleges that the directors breached their fiduciary duties by authorizing the Company’s $231.0 million payment to SunEdison for the 425 MW India Projects. The complaint seeks unspecified compensatory damages and such other relief that the Court may deem just and equitable. The Company filed its answer to the complaint on June 30, 2016. On July 6, 2016, the Company served its responses to the plaintiff’s discovery requests. On December 28, 2016, the parties agreed to stay the litigation and participate in the mediation process that is being conducted in connection with the SunEdison Bankruptcy, which also includes the securities litigation cases pending before the Multidistrict Litigation Panel. The mediation commenced on February 10, 2017. On March 31, 2017, the agreed upon stay expired. On April 17, 2017, the Court entered a scheduling order. On July 21, 2017, the parties executed a Stipulation of Settlement, which, subject to Court approval, will settle the litigation for a total aggregate settlement amount of $20.0 million and will be paid out of proceeds from the Company’s directors’ and officers’ liability insurance policies. On July 25, 2017, the Court authorized distribution of notice of the settlement to current stockholders of the Company and stayed all non-settlement-related proceedings. A final settlement hearing is scheduled to occur on October 10, 2017.
Retaliation Claims
Francisco Perez Gundin Claim
On May 18, 2016, the Company’s former director, Francisco Perez Gundin, filed a complaint against the Company, TerraForm Power, Inc., and certain individuals, with the United States Department of Labor. The complaint alleges that the defendants engaged in a retaliatory termination of Mr. Gundin’s employment after he allegedly voiced concerns to SunEdison’s

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board of directors about public representations made by SunEdison officers regarding SunEdison’s liquidity position, and after he allegedly voiced his opposition to transactions that he alleges were self-interested and which he alleges SunEdison forced on the Company. He alleges that the Company participated in SunEdison’s retaliatory termination by constructively terminating his position as a member of the board of directors of the Company in connection with SunEdison’s constructive termination of his employment. He seeks lost wages, bonuses, benefits, and other money that he alleges that he would have received if he had not been subjected to the allegedly retaliatory termination.
The matter will now be adjudicated in an administrative proceeding before the Occupational Safety and Health Administration of the United States Department of Labor (“OSHA”). On October 17, 2016, the Company filed its Position Statement, which seeks dismissal of the matter in full, in response to the Complaint. On March 6, 2017, Mr. Gundin filed a response to the Company’s Position Statement and an additional Statement of Facts in support of the claim. The Company has not yet been asked by OSHA to provide a response to Mr. Gundin’s submission.
On February 21, 2017, Mr. Gundin filed a complaint against the Company, TerraForm Power, Inc., and certain individuals, with the United States District Court for the District of Maryland. The complaint asserts claims under Section 922 of the Dodd Frank Act, as well as related common law claims, based on allegations that Mr. Gundin was terminated in retaliation for raising concerns to the SunEdison, Inc. board of directors about conduct that he believed constituted violations of federal securities laws. On March 22, 2017, the Multidistrict Litigation Panel issued a conditional transfer order, which Mr. Gundin did not oppose, and the matter was transferred to the multidistrict litigation on April 13, 2017.
On July 21, 2017, the Court held a scheduling conference and entered an initial scheduling order. The Court ordered the Company to file a pre-motion letter describing the grounds for its anticipated motion to dismiss by August 11, 2017. Plaintiff’s response to the pre-motion letter is due on August 25, 2017. The court scheduled a further scheduling conference for October 6, 2017.
The Company is in the preliminary stages of reviewing the allegations made in the complaint. As a result, the Company is unable to predict with certainty the ultimate resolution of this proceeding.
Carlos Domenech Zornoza Claim
On May 10, 2016, the Company’s former director and Chief Executive Officer, Carlos Domenech Zornoza, filed a complaint against the Company, TerraForm Power, Inc., and certain individuals, with the United States Department of Labor. The complaint alleges that the defendants engaged in a retaliatory termination of Mr. Domenech Zornoza’s employment on November 20, 2015 after he allegedly voiced concerns to SunEdison’s board of directors about public representations made by SunEdison officers regarding SunEdison’s liquidity position, and after he allegedly voiced his opposition to transactions that he alleges were self-interested and which he alleges SunEdison forced on the Company. He alleges that the Company participated in SunEdison’s retaliatory termination by terminating his position as Chief Executive Officer of the Company in connection with SunEdison’s termination of his employment. He seeks lost wages, bonuses, benefits, and other money that he alleges that he would have received if he had not been subjected to the allegedly retaliatory termination.
The matter will now be adjudicated in an administrative proceeding before OSHA. On October 17, 2016, the Company filed its Position Statement, which seeks dismissal of the matter in full, in response to the Complaint. On March 3, 2017, Mr. Domenech Zornoza filed a response to the Company’s Position Statement and an additional Statement of Facts in support of the claim. The Company has not yet been asked by OSHA to provide a response to Mr. Domenech Zornoza’s submission.
On February 21, 2017, Mr. Domenech Zornoza filed a complaint against the Company, TerraForm Power, Inc., and certain individuals, with the United States District Court for the District of Maryland. The complaint asserts claims under Section 922 of the Dodd Frank Act, as well as related common law claims, based on allegations that Mr. Domenech Zornoza was terminated in retaliation for raising concerns to the SunEdison, Inc. board of directors about conduct that he believed constituted violations of federal securities laws. On March 22, 2017, the Multidistrict Litigation Panel issued a conditional transfer order with respect to the complaint. On April 12, 2017, Mr. Domenech Zornoza filed a motion to vacate the Multidistrict Litigation Panel’s conditional transfer order, which the defendants opposed on April 28, 2017. On May 31, 2017, the matter was transferred to the multidistrict litigation.
On July 21, 2017, the Court held a scheduling conference and entered an initial scheduling order. The Court ordered the Company to file a pre-motion letter describing the grounds for its anticipated motion to dismiss by August 11, 2017. Plaintiff’s response to the pre-motion letter is due on August 25, 2017. The court scheduled a further scheduling conference for October 6, 2017.

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The Company is in the preliminary stages of reviewing the allegations made in the complaint. As a result, the Company is unable to predict with certainty the ultimate resolution of this proceeding.
United States Securities and Exchange Commission Investigation
On April 21, 2016, the Company received a subpoena for documents and information in connection with an investigation by the Enforcement Division of the staff of the SEC captioned “In the Matter of SunEdison, Inc. (HO-12908).” The Company is cooperating with the investigation, and the outcome or resolution of this matter cannot be predicted at this time.
Legal Proceeding Initiated by the Company
TerraForm Global, Inc. v. SunEdison, Inc., et al.
On April 3, 2016, the Company filed a verified complaint against SunEdison, SunEdison Holdings Corporation (collectively with SunEdison, the “SunEdison Defendants”), Ahmad Chatila, Martin Truong and Brian Wuebbels in the Court of Chancery of the State of Delaware. The complaint asserts claims for breach of fiduciary duty, breach of contract and unjust enrichment relating to the failure by the SunEdison Defendants to transfer the equity interests in the 425 MW India Projects for which the Company paid $231.0 million in the fourth quarter of 2015. The complaint seeks various forms of relief, including a constructive trust upon the equity interests of SunEdison in the 425 MW India Projects, money damages from the defendants, restoration of the $231.0 million to the Company and such other relief as the Court may deem just and proper. The claims against the SunEdison Defendants have been stayed as a result of the SunEdison Bankruptcy. The individual defendants filed an answer to the complaint on June 30, 2016. On July 19, 2017, the Company entered into a settlement agreement with the individual defendants, pursuant to which the parties exchanged mutual releases. The Court entered an order dismissing the individual defendants with prejudice on July 20, 2017.
As previously described, the Third Party Sale Transaction was conducted in connection with SunEdison’s bankruptcy process and included the 425 MW India portfolio. The Company has agreed not to pursue claims against a third party buyer, however the Company has retained all of its claims against SunEdison and its affiliated persons.
On September 25, 2016, the Company filed its initial proof of claim in the SunEdison Bankruptcy case, and filed an amended proof of claim on October 7, 2016. As set forth in the proofs of claim, the Company believes it has unsecured claims against SunEdison that it estimates are in excess of $2.0 billion. These claims include, without limitation, claims for damages relating to breach of SunEdison's obligations under the sponsorship arrangements consisting of the various corporate level agreements put in place at the time of the Company’s IPO (collectively, the “Sponsorship Arrangement”) and other agreements; contribution and indemnification claims arising from litigation; claims relating to SunEdison’s breach of fiduciary, agency and other duties; and claims for interference with and the disruption of the business of the Company and its subsidiaries, including the loss of business opportunities, loss of business records, failure to provide timely audited financials, and the increased cost of financing and commercial arrangements. Many of these claims are contingent, unliquidated and/or disputed by SunEdison and other parties in interest in the SunEdison Bankruptcy case, and the estimated amounts of these claims may change substantially as circumstances develop and damages are determined. In addition, recoveries on unsecured claims in the SunEdison Bankruptcy case are expected to be significantly impaired.
On March 6, 2017, the Company entered into the Settlement Agreement with SunEdison. The Settlement Agreement was approved by the bankruptcy court overseeing the SunEdison Bankruptcy on June 7, 2017; however, its effectiveness is conditional on the completion of the Brookfield Transaction. The Settlement Agreement contains certain terms to resolve the complex legal relationship between the Company and SunEdison, including, among other things, an allocation of the total consideration paid in connection with the Brookfield Transaction and, with certain exceptions, the full mutual release of all claims between SunEdison and its affiliated debtors and non-debtors, on the one hand, and the Company and its subsidiaries, on the other hand. This release includes a release by the Company of its claims against the SunEdison Defendants. If the Settlement Agreement is terminated, the Company expects to continue to pursue its claims against the SunEdison Defendants.
Other Matters
From time to time, the Company is a party to legal proceedings arising in the ordinary course of its business. Although the Company cannot predict with certainty the ultimate resolution of such proceedings or other claims asserted against the Company, except as otherwise described above, the Company does not believe that any other currently pending legal proceeding to which the Company is a party will have a material adverse effect on its business, financial condition or results of operations.


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16. RELATED PARTIES
SunEdison Bankruptcy
On April 21, 2016, SunEdison and certain of its domestic and international subsidiaries voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code (the “SunEdison Bankruptcy”). The Company is not a part of the SunEdison Bankruptcy and does not rely substantially on SunEdison for funding, liquidity, or operational or staffing support. The Company continues to participate actively in the SunEdison Bankruptcy proceedings, and the SunEdison Bankruptcy will continue to have a negative impact on the Company given its complex relationship with SunEdison.
During the SunEdison Bankruptcy, SunEdison has not performed substantially as obligated under its agreements with the Company, including under the Sponsorship Arrangement and certain O&M and asset management arrangements. The Company believes that the Sponsorship Arrangement comprises a single integrated transaction. The agreements comprising the Sponsorship Arrangement are set forth in separate documents and discussed individually in this Quarterly Report on Form 10-Q. However, the elements of the Sponsorship Arrangement are closely related and a default under one element may be a defense to, or excuse performance under, another element. SunEdison and its various stakeholders have expressed disagreement with this view of the Sponsorship Arrangements and can be expected to contest any such assertion in connection with the SunEdison Bankruptcy.
On March 6, 2017, the Company entered into a settlement agreement with SunEdison in connection with the SunEdison Bankruptcy and Merger Agreement (the “Settlement Agreement”). The Settlement Agreement was approved by the bankruptcy court overseeing the SunEdison Bankruptcy on June 7, 2017; however, its effectiveness is conditional on the completion of the Brookfield Transaction. The Settlement Agreement contains certain terms to resolve the complex legal relationship between the Company and SunEdison, including, among other things, an allocation of the total consideration paid in connection with the Brookfield Transaction and, with certain exceptions, the full mutual release of all claims between SunEdison and its affiliated debtors and non-debtors, on the one hand, and the Company and its subsidiaries, on the other hand. Under the settlement terms, following the exchange of all of its Class B shares in TerraForm Global, Inc. and the Class B units in Global LLC for Class A Shares, SunEdison will receive consideration equal to 25.0% of the total consideration paid to all of the Company's shareholders, reflecting the settlement of intercompany claims and cancellation of incentive distribution rights. The remaining 75.0% of the consideration will be distributed to existing Class A shareholders. In addition, upon the effectiveness of the Settlement Agreement, with certain limited exceptions, all agreements between the Company and its subsidiaries, on the one hand, and SunEdison and its subsidiaries, on the other hand, including the agreements comprising the Sponsorship Arrangement, would be terminated. There can be no assurance that the Settlement Agreement will become effective, and such failure may adversely impact the Company’s business. The foregoing description of the Settlement Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Settlement Agreement.
On July 28, 2017, the bankruptcy court overseeing the SunEdison Bankruptcy entered an order confirming a plan of reorganization for SunEdison (the “SunEdison Plan”). Among other things, the SunEdison Plan would further implement the settlements, releases and terminations contemplated by the Settlement Agreement. If the SunEdison Plan becomes effective, a reorganized SunEdison would emerge from the SunEdison Bankruptcy and operate outside of the supervision of the bankruptcy court. There are numerous conditions to the effectiveness of the SunEdison Plan, including the completion of the Brookfield Transaction, and accordingly there can be no assurance that the SunEdison Plan will become effective, and such failure may adversely impact the Company’s business. However, the effectiveness of the SunEdison Plan is not a condition to the completion of the Brookfield Transaction.
Management Services Agreement
Immediately prior to the completion of the IPO on August 5, 2015, the Company entered into a Management Services Agreement (the “MSA") with SunEdison. Prior to the IPO and MSA execution, amounts were allocated from SunEdison for general corporate overhead costs attributable to the operations of the Company. The general corporate overhead expenses incurred by SunEdison include costs from certain corporate and shared services functions provided by SunEdison and are reflected in the Company’s unaudited condensed consolidated statements of operations as general and administrative expense. The amounts reflected include (i) charges that were incurred by SunEdison that were specifically identified as being attributable to the Company and (ii) an allocation of applicable remaining general corporate overhead costs based on the proportional level of effort attributable to the operation of the Company’s power plants. These costs include legal, accounting, tax, treasury, information technology, insurance, employee benefit costs, communications, human resources, and procurement. Corporate costs that were specifically identifiable to a particular operation of SunEdison have been allocated to that operation, including the Company. Where specific identification of charges to a particular operation of SunEdison was not practicable, an allocation was applied to all remaining general corporate overhead costs. The allocation methodology for all remaining

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corporate overhead costs is based on management’s estimate of the proportional level of effort devoted by corporate resources that is attributable to each of the Company’s operations. The cost allocations have been determined on a basis considered to be a reasonable reflection of all costs of doing business by the Company. The amounts that would have been or will be incurred on a stand-alone basis could differ from the amounts allocated due to economies of scale, management judgment, or other factors.
Subsequent to the IPO and pursuant to the MSA, SunEdison agreed to provide, or arrange for other service providers to provide, management and administrative services including legal, accounting, tax, treasury, project finance, information technology, insurance, employee benefit costs, communications, human resources, and procurement to the Company. As consideration for the services provided, the MSA requires the Company to pay SunEdison a base management fee as follows: (i) no fee for 2015, (ii) 2.5% of the Company’s cash available for distribution in 2016, 2017 and 2018, and (iii) an amount equal to SunEdison’s or other service provider’s actual cost in 2019 and thereafter. All costs under the MSA are reflected in the Company’s unaudited condensed consolidated statement of operations as general and administrative expense, and the difference between actual costs and the fee paid pursuant to the MSA will be treated as an equity contribution from SunEdison. No cash payments were made to SunEdison for the MSA fees during the six months ended June 30, 2017 or 2016. However, pursuant to the Settlement Agreement, the Company is required to reimburse to SunEdison for costs and expenses incurred by SunEdison for services that it performs for the Company. As of June 30, 2017, the Company had accrued $2.1 million related to services performed by SunEdison. Also pursuant to the Settlement Agreement, the Company performs certain services for SunEdison, and the Company is entitled to reimbursement by SunEdison for costs and expenses incurred by the Company for such services. As of June 30, 2017, the Company recorded an immaterial amount related to services the Company performs for SunEdison.
As a result of the SunEdison Bankruptcy, SunEdison has not performed substantially as obligated under the MSA, and as a result the Company has borne the actual costs of a substantial portion of the services that SunEdison was obligated to provide under the MSA. As discussed in Note 1 - Nature of Operations, on September 25, 2016, the Company filed its initial proof of claim in the SunEdison Bankruptcy case, which was amended on October 7, 2016. This proof of claim asserted claims based on, among other things, SunEdison's breach of the Sponsorship Arrangement between the Company and SunEdison, which included the MSA. The MSA will be terminated upon the effectiveness of the Settlement Agreement.
Included in general and administrative expense are costs incurred under the MSA and corporate allocations of zero for the three and six months ended June 30, 2017, and $16.0 million and $23.2 million for the three and six months ended June 30, 2016, respectively. General and administrative expense represents costs incurred or reimbursable by SunEdison for services provided to the Company pursuant to the MSA subsequent to the IPO and allocated to the Company in corporate allocations prior to the IPO.
Project Investment Agreement
Immediately prior to the completion of the IPO on August 5, 2015, the Company entered into the Project Investment Agreement with SunEdison. Pursuant to the Project Investment Agreement, SunEdison agreed to contribute to the Company certain projects, without further payment, once each project reached commercial operation. These projects include the 17.4 MW Del Litoral and 57.4 MW El Naranjal solar power projects in Uruguay, the 24.1 MW Bora Bora Poly wind power project in India, and the 17.8 MW NPS Star and 17.8 MW WXA solar power projects in Thailand. The NPS Star and WXA solar power projects reached commercial operation in December 2015 and were transferred by SunEdison to the Company in the first quarter of 2016.
On March 23, 2016, SunEdison and the Company entered into an amendment to the Project Investment Agreement which extended the contribution deadline for SunEdison to contribute the remaining projects pursuant to the Project Investment Agreement to July 31, 2016. As part of the SunEdison Bankruptcy, the construction on the projects was materially delayed and/or abandoned due to the lack of funding by SunEdison. There were material amounts of project costs and equity contributions for the Del Litoral and El Naranjal solar power projects in Uruguay that remained to be contributed by SunEdison in order to complete construction of these projects and disbursement of the project finance debt facilities. Additionally, SunEdison experienced delays in completing construction of the Bora Bora Poly wind power project in India, and the transfer of the project required project lender consent, which was not obtained. In light of the SunEdison Bankruptcy, the Company will not obtain these projects under the Project Investment Agreement and it will not obtain any substitute projects from SunEdison.
As discussed in Note 1 - Nature of Operations, on September 25, 2016, the Company filed its initial proof of claim in the SunEdison Bankruptcy case, which was amended on October 7, 2016. This proof of claim asserted claims based on, among other things, SunEdison's breach of the Sponsorship Arrangement between the Company and SunEdison, which included the Project Investment Agreement. The Project Investment Agreement will be terminated upon the effectiveness of the Settlement Agreement.

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Interest Payment Agreement
Immediately prior to the completion of the IPO on August 5, 2015, Global LLC and Global Operating LLC entered into an interest payment agreement (the “Interest Payment Agreement”) with SunEdison, pursuant to which SunEdison agreed to pay an aggregate amount equal to all of the scheduled interest of up to $81.2 million on the Senior Notes until December 31, 2016 and up to an aggregate amount of $40.0 million in 2017, $30.0 million in 2018, $20.0 million in 2019 and $10.0 million in 2020, plus any interest due on any payment not remitted when due. SunEdison’s interest support payments due to the Company have been reduced by $2.9 million as a result of the $49.6 million of the Senior Notes that were extinguished under the open market repurchase program that began in December 2015 and continued through January 2016. SunEdison will not be obligated to pay any amounts due under the Senior Notes in connection with an acceleration of the payment of the principal amount of such indebtedness.
Upon expiration of the distribution forbearance period applicable to the Class B common stock that were issued to SunEdison at the time of the Company's IPO, Global LLC will be entitled to set off any amounts owing by SunEdison pursuant to the Interest Payment Agreement against any and all amounts owed by Global LLC to SunEdison under the distribution provisions of the Global LLC Operating Agreement, and Global LLC may pay such amounts to Global Operating LLC. For the three months ended June 30, 2017 and 2016, SunEdison paid Global LLC zero and $41.2 million, respectively, related to interest payments on the Senior Notes.
The Interest Payment Agreement terminates upon payment by SunEdison of all amounts owing thereunder. It may, however, be terminated prior to that by mutual written agreement of SunEdison and Global Operating LLC and will automatically terminate upon the repayment in full of the outstanding principal amount of the Senior Notes or a change of control of the Company, Global LLC or Global Operating LLC. The agreement may also be terminated at the election of SunEdison, Global LLC or Global Operating LLC if any of them experiences bankruptcy or insolvency. Any decision by Global LLC or Global Operating LLC to terminate the Interest Payment Agreement must have the prior approval of the Conflicts Committee.
On July 29, 2016, the Company received a notice from SunEdison purporting to terminate the Interest Payment Agreement. The notice alleges that SunEdison's bankruptcy permits termination as of right without following the bankruptcy procedures for rejection of executory contracts. Although the Company does not expect SunEdison to perform under the Interest Payment Agreement going forward, the Company is contesting the purported termination of the Interest Payment Agreement, believes that the termination notice is invalid, and is asserting a claim in the SunEdison Bankruptcy for the full amount of damages resulting from SunEdison’s breach of the Interest Payment Agreement.
As discussed in Note 1 - Nature of Operations, on September 25, 2016, the Company filed its initial proof of claim in the SunEdison Bankruptcy case, which was amended on October 7, 2016. This proof of claim asserted claims based on, among other things, SunEdison's breach of the Sponsorship Arrangement between the Company and SunEdison, which included the Interest Support Agreement. The Interest Support Agreement will be terminated upon the effectiveness of the Settlement Agreement.
Equity Interest Purchase and Sale Agreement for 425 MW India Projects
See Note 4 - Deposits for Acquisitions for information regarding the 425 MW India Projects.
Operation and Maintenance (“O&M”) and Asset Management Services
O&M services, as well as asset management services, were provided to the Company by affiliates of SunEdison pursuant to contractual agreements. Costs incurred for these services were zero and $3.8 million for the three and six months ended June 30, 2017, and $4.7 million and $9.7 million for the three and six months ended June 30, 2016, respectively, and are reported as cost of operations in the unaudited condensed consolidated statements of operations. These agreements were all terminated as of April 1, 2017.
Engineering, Procurement and Construction Contracts and Module and Tracker Warranties
SunEdison served as the prime construction contractor for most of the Company’s power plants that were acquired from SunEdison pursuant to engineering, procurement and construction contracts with the Company’s project companies. These contracts are generally fixed price, turn-key construction contracts that include workmanship and other warranties with respect to the design and construction of the power plants that survive for a period of time after the completion of construction. These contracts or related contracts (including O&M agreements) also often include production or availability guarantees with respect to the output or availability of the power plant that survive completion of construction. Moreover, the Company also generally obtained solar module and tracker warranties from SunEdison, including material and workmanship warranties and

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output guarantees, for those solar power plants that the Company acquired from SunEdison that utilized SunEdison modules or trackers, as applicable. The SunEdison Bankruptcy will likely reduce or eliminate the Company’s potential recoveries on claims under these agreements and warranties, and all such claims or potential claims will be released upon the effectiveness of the Settlement Agreement.
Due to/from SunEdison, net
Certain of the Company’s expenses and capital expenditures related to construction in process are paid by affiliates of SunEdison and are reimbursed by the Company to the same or other affiliates of SunEdison. As of June 30, 2017 and December 31, 2016, the Company owed SunEdison and its affiliates $9.8 million and $16.1 million, net, respectively.
Depending on the nature of the activity, amounts are either reflected in operating activities or as a non-cash addition to power plants included in Due to SunEdison, net. Additionally, SunEdison provided contributions to the Company in the form of stockholder loans. Related amounts have been recognized as additional paid-in capital as there is no expectation for the Company to repay SunEdison for the contributions related to stockholder loans. These contributions totaled $7.8 million and $38.4 million for the six months ended June 30, 2017 and 2016, respectively.
Incentive Distribution Rights
Immediately prior to the completion of the IPO on August 5, 2015, Global LLC entered into the Fourth Amended and Restated Operating Agreement of Global LLC, which granted SunEdison 100.0% of the incentive distribution rights (“IDRs”) of Global LLC. IDRs represent the right to receive increasing percentages (15.0%, 25.0% and 50.0%) of Global LLC’s quarterly distributions after the Class A units, Class B units and Class B1 units of Global LLC have received quarterly distributions in an amount equal to $0.275 per unit (the “Minimum Quarterly Distribution”), and the target distribution levels have been achieved. As of June 30, 2017 and December 31, 2016, SunEdison held 100.0% of the IDRs. SunEdison has pledged the IDRs as collateral under its DIP financing and its first and second lien credit facilities and second lien secured notes. SunEdison has granted the Company a right of first refusal with respect to any proposed sale of IDRs to a third party (other than its controlled affiliates), which the Company may exercise to purchase the IDRs proposed to be sold on the same terms offered to such third party at any time within 30 days after it receives written notice of the proposed sale and its terms.
Initial IDR Structure
If for any quarter:
Global LLC has made cash distributions to the holders of its Class A units, Class B1 units and, subject to the Distribution Forbearance Period and the Subordination Period (as described below) provisions, Class B units in an amount equal to the Minimum Quarterly Distribution; and
Global LLC has distributed cash to the holders of its Class A units and Class B1 units in an amount necessary to eliminate any arrearages in payment of the Minimum Quarterly Distribution;

then, subject to the Distribution Forbearance Period provisions, Global LLC will make additional cash distributions for that quarter to holders of its Class A units, Class B units, Class B1 units and the IDRs in the following manner:
first, to all holders of Class A units, Class B1 units and Class B units, pro rata, until each holder receives a total of $0.3163 per unit for that quarter (the “First Target Distribution”) (115.0% of the Minimum Quarterly Distribution);
second, 85.0% to all holders of Class A units, Class B1 units and Class B units, pro rata, and 15.0% to the holders of the IDRs, until each holder of Class A units, Class B1 units and Class B units receives a total of $0.3438 per unit for that quarter (the “Second Target Distribution”) (125.0% of the Minimum Quarterly Distribution);
third, 75.0% to all holders of Class A units, Class B1 units and Class B units, pro rata, and 25.0% to the holders of the IDRs, until each holder of Class A units, Class B1 units and Class B units receives a total of $0.4125 per unit for that quarter (the “Third Target Distribution”) (150.0% of the Minimum Quarterly Distribution); and
thereafter, 50.0% to all holders of Class A units, Class B1 units and Class B units, pro rata, and 50.0% to the holders of the IDRs.

There were no payments for IDRs made by the Company during the six months ended June 30, 2017 or the year ended December 31, 2016. As of June 30, 2017, there were no Class B1 units of Global LLC outstanding. The IDRs will be canceled upon completion of the Brookfield Transaction.

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Distributions
The Global LLC Operating Agreement restricts distributions to holders of Class B units during the Distribution Forbearance Period and the Subordination Period.
Distribution Forbearance
During the Distribution Forbearance Period, the Global LLC Operating Agreement limits distributions of cash in respect of a specific quarter to Class B units as follows:
the Class B units were not, under any circumstances, entitled to receive any distributions through the end of 2016 (i.e., distributions declared on or prior to March 31, 2017); and
thereafter, until the end of the Distribution Forbearance Period, the Class B units will not be entitled to receive any distributions to the extent the holders of Class A units and Class B1 units have not received distributions in an amount equal to the Minimum Quarterly Distribution plus any arrearages in the payment of Minimum Quarterly Distributions from prior quarters.

The Distribution Forbearance Period began on the completion of the IPO and ends on the later of March 31, 2017 or the date that the Completed CAFD Amount (as defined in the Global LLC Operating Agreement), which approximates the sum of cash available for distribution to shareholders from contributed construction projects and completed acquisition projects from the Company’s IPO portfolio, exceeds the CAFD Forbearance Threshold (as defined in the Global LLC Operating Agreement), which equals $72.1 million. Because the Completed CAFD Amount has not exceeded the CAFD Forbearance Threshold by an amount in excess of $72.1 million, the Distribution Forbearance Period has not yet ended. Any distributions forgone by the holders of Class B units pursuant to the provisions in the Global LLC Operating Agreement relating to the limitations on distributions on the Class B units during the Distribution Forbearance Period will not be distributed to holders of other classes of units and will not constitute an arrearage on the Class B units.
Subordination Period
The Global LLC Operating Agreement provides that, during the Subordination Period, the Class A units and Class B1 units (if any) have the right to receive quarterly distributions in an amount equal to $0.275 per unit, which amount is defined as the “Minimum Quarterly Distribution,” plus any arrearages in the payment of the Minimum Quarterly Distribution on the Class A units and Class B1 units from prior quarters, before any distributions may be made on the Class B units. The Class B units are deemed “subordinated” because for a period of time, referred to as the “Subordination Period,” the Class B units are not entitled to receive any distributions from Global LLC until the Class A units and Class B1 units have received the Minimum Quarterly Distribution plus any arrearages in the payment of the Minimum Quarterly Distribution from prior quarters. Furthermore, no arrearages will be paid on the Class B units. The practical effect of the subordinated Class B units is to increase the likelihood that during the Subordination Period there will be sufficient cash available for distributions to shareholders to pay the Minimum Quarterly Distribution on the Class A units and Class B1 units. The subordination of the Class B units is in addition to the provisions in the Global LLC Operating Agreement relating to the limitations on distributions on the Class B units during the Distribution Forbearance Period described above.
The Subordination Period began on the completion of the IPO and continues until each of the following tests regarding distributions of cash available for distribution to shareholders and Minimum Quarterly Distributions is met, which will be a minimum three-year period ending no earlier than the beginning of the period for which a distribution is paid for the first quarter of 2018:
distributions of cash available for distribution to shareholders on each of the outstanding Class A units, Class B units and Class B1 units of Global LLC equaled or exceeded $1.1000 per unit (the annualized Minimum Quarterly Distribution) for each of the three consecutive, non-overlapping, four-quarter periods immediately preceding that date;
the cash available for distribution to shareholders generated during each of the three consecutive, non-overlapping, four-quarter periods immediately preceding that date equaled or exceeded the sum of $1.1000 per unit (the annualized Minimum Quarterly Distribution) on all of the outstanding Class A units, Class B units and Class B1 units of Global LLC during those periods on a fully diluted basis; and
there are no arrearages in payment of the Minimum Quarterly Distribution on the Class A units or Class B1 units of Global LLC.

The Subordination Period may terminate early if each of the following tests is met:

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distributions of cash available for distribution to shareholders on each of the outstanding Class A units, Class B units and Class B1 units of Global LLC equaled or exceeded $1.65 per unit (150.0% of the annualized Minimum Quarterly Distribution) for the four-quarter period immediately preceding that date;
the cash available for distribution to shareholders generated during the four-quarter period immediately preceding that date equaled or exceeded the sum of (i) $1.65 per unit (150.0% of the annualized Minimum Quarterly Distribution) on all of the outstanding Class A units, Class B units and Class B1 units of Global LLC during such four quarters on a fully diluted basis, and (ii) the corresponding distributions on the IDRs during such four quarters; and
there are no arrearages in payment of the Minimum Quarterly Distributions on the Class A units or Class B1 units of Global LLC.

Distributions during the Subordination Period
If Global LLC makes a distribution of cash in respect of any specific quarter ending before the end of the Subordination Period, the Global LLC Operating Agreement requires that it make the distribution in the following manner:
first, to the holders of Class A units and Class B1 units, pro rata, until Global LLC distributes for each Class A unit and Class B1 unit an amount equal to the Minimum Quarterly Distribution for that quarter and any arrearages in payment of the Minimum Quarterly Distribution on such units for any prior quarters;
second, subject to the provisions in the Global LLC Operating Agreement relating to the limitations on distributions on the Class B units during the Distribution Forbearance Period, to the holders of Class B units, pro rata, until Global LLC distributes for each Class B unit an amount equal to the Minimum Quarterly Distribution for that quarter; and
thereafter, in the manner described above under Incentive Distribution Rights.

Support Agreement
Immediately prior to the completion of the IPO on August 5, 2015, Global LLC entered into a project support agreement with SunEdison (the “Support Agreement”). Pursuant to the Support Agreement, SunEdison granted the Company call rights with respect to projects identified therein by SunEdison (“Call Right Projects”) that had an aggregate net nameplate capacity of 1.6 GW (or reasonably equivalent projects), and SunEdison was contractually required to offer Global LLC additional qualifying projects through the fifth anniversary of the completion of the IPO that were projected to generate an aggregate of at least $1.4 billion of cash available for distribution during their respective first twelve months of commercial operation. At the time of the IPO, SunEdison had pending agreements with third-party developers to acquire clean energy projects that had an aggregate capacity of 4.2 GW, which were expected to be added to the call rights list under the Support Agreement. In addition, the Support Agreement granted Global LLC a right of first offer with respect to any clean energy projects (other than Call Right Projects) (“ROFO Projects”) that SunEdison elected to sell or otherwise transfer during the six-year period following the completion of the IPO and that were located in the Company’s initial target markets and other emerging markets that the parties mutually agreed upon.
Following the SunEdison Bankruptcy, SunEdison breached the Support Agreement and the Company will not acquire any of the Call Right Projects or ROFO Projects. On September 25, 2016, the Company announced that as a result of SunEdison’s breach under the Support Agreement and other agreements constituting the Sponsorship Arrangement, the Company filed claims against SunEdison in excess of $2 billion. The claims include, without limitation, claims for damages relating to breach of SunEdison's obligations under the Sponsorship Arrangement and other agreements; contribution and indemnification claims arising from litigation; claims relating to SunEdison’s breach of fiduciary, agency and other duties; and claims for interference with and the disruption of the business of the Company, including the loss of business opportunities, loss of business records, failure to provide timely audited financials, and the increased cost of financing and commercial arrangements. Many of these claims are contingent or unliquidated; estimated amounts may change substantially as circumstances develop and damages are determined. Although SunEdison has not formally rejected the Sponsorship Arrangement, it has breached its obligations thereunder and the Company has additional claims for rejection damages.
As discussed in Note 1 - Nature of Operations, on September 25, 2016, the Company filed its initial proof of claim in the SunEdison Bankruptcy case, which was amended on October 7, 2016. This proof of claim asserted claims based on, among other things, SunEdison's breach of the Sponsorship Arrangement between the Company and SunEdison, which included the Support Agreement. The Support Agreement will be terminated upon the effectiveness of the Settlement Agreement.

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Insurance Allocation Agreement
The Company, TerraForm Power, Inc., SunEdison and certain of their respective directors and officers shared $150.0 million of directors’ and officers’ liability insurance policies that covered the period from July 15, 2015 to July 14, 2016 (the “D&O Insurance”). SunEdison and the independent directors of SunEdison (the “SUNE D&O Parties”) entered into an agreement, dated March 27, 2017 and amended on June 7, 2017, with the Company, TerraForm Power, Inc. and their respective current directors and officers (the “YieldCo D&O Parties”) related to the D&O Insurance. Among other things, this agreement provides that: (i) the YieldCo D&O Parties consent to a $32.0 million payment to SunEdison from the D&O Insurance in connection with the settlement of claims proposed to be brought by the unsecured creditors’ committee in the SunEdison Bankruptcy under a motion in the SunEdison Bankruptcy case for derivative standing; (ii) for a specified period of time, the SUNE D&O Parties and the YieldCo D&O Parties agree to cooperate in trying to reach settlements of certain lawsuits pending against the YieldCo D&O Parties arising from a variety of alleged prepetition actions and transactions, including, but not limited to, the Company’s initial public offering and other securities transactions, and SunEdison agrees to consent to such proposed settlements to be funded by up to $32.0 million from the D&O Insurance; and (iii) for a specified period of time, SunEdison, its independent directors, the Company and TerraForm Power, Inc. will not assert certain payment priority provisions of the D&O Insurance. On June 29, 2017, the bankruptcy court overseeing the SunEdison Bankruptcy entered an order approving this agreement.
Arrangements with TerraForm Power
In January 2017, the Company entered into a Use and Occupancy Agreement with TerraForm Power, pursuant to which TerraForm Power granted to the Company a license to use the office space in Bethesda, Maryland that is leased by TerraForm Power and is the shared corporate headquarters of the Company and TerraForm Power until the earlier to occur of June 30, 2018 and the termination of the underlying lease. The Company has agreed to pay TerraForm Power one-third of the rent and other amounts due to the landlord under the underlying lease, which is expected to be equal to an aggregate of $0.8 million in 2017, and certain additional service fees. For the six months ended June 30, 2017, $0.4 million was accrued under this agreement.
TerraForm Power has entered into service contracts with various vendors for information technology and enterprise resource planning systems. The Company is not a party to any of these contracts and has no direct contractual liability to third parties thereunder, however the Company uses these systems in cooperation with TerraForm Power, and the costs of such systems will be allocated between TerraForm Power and the Company pursuant to an agreement that is expected to be entered into between TerraForm Power and the Company. As of June 30, 2017 and December 31, 2016, the Company capitalized $0.7 million and $0.4 million, respectively, of expenses related to development costs of the new enterprise resource planning systems, and the Company recognized less than $0.1 million as general and administrative expense related to these systems during the six months ended June 30, 2017, and $0.1 million as general and administrative expense related to these systems during the year ended December 31, 2016. For the six months ended June 30, 2017, no amounts were paid under this agreement.
In addition, certain employees of TerraForm Power provide general management services to the Company, and a portion of the costs associated with such employees is allocated to the Company. As of June 30, 2017, the cost to the Company for the services being provided to the Company by employees of TerraForm Power is $0.7 million.
Settlement Agreement with Renova
On May 26, 2017, TerraForm Global, Inc., TerraForm Global, LLC, TerraForm Global Brazil Holding B.V. and TERP GLBL Brasil I Participacoes Ltda. entered into a Settlement Agreement and Mutual Release (the “Renova Settlement Agreement”) with Renova. The Renova Settlement Agreement resolves all disputes among the Company and Renova that are the subject of an ongoing arbitration proceeding in the Center for Arbitration and Mediation of the Chamber of Commerce Brazil-Canada (the “Renova Arbitration”). Pursuant to the Renova Settlement Agreement, the TerraForm Global Parties have agreed to make a one-time settlement payment in the aggregate amount of $15.0 million, in exchange for and contingent on the withdrawal with prejudice of all claims and counterclaims made in the Renova Arbitration and termination of the Renova Arbitration. In addition, 792,495 shares of TerraForm Global, Inc. Class A common stock issued to Renova and currently held in escrow pursuant to the acquisition agreements for the Salvador wind power plant acquired by a subsidiary of the Company will be returned to the Company. None of the parties to the Renova Arbitration has admitted to any wrongdoing or liability with respect to the claims asserted in the Renova Arbitration. Subject to the satisfaction of certain conditions set forth in the Renova Settlement Agreement (including the purchase of Renova’s shares of TerraForm Global, Inc. Class A common stock by an affiliate of Brookfield as described below), the parties have granted each other full releases with respect to any claims arising in connection with the previously completed acquisitions by the Company of the Salvador and Bahia wind power plants from

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Renova and all related transactions and any other disputes that could arise in the future among the TerraForm Global Parties and Renova concerning or related in any way to such transactions and events, which are the subject of the Renova Arbitration.
Concurrently with the execution of the Renova Settlement Agreement, Renova and Parent entered into a Purchase & Sale Agreement (the “PSA”) with respect to all of the shares of Class A common stock of TerraForm Global, Inc. owned by Renova (excluding the shares to be released from escrow to TerraForm Global, Inc. pursuant to the Renova Settlement Agreement). Pursuant to the terms of the PSA, an affiliate of Brookfield agreed to purchase 19,535,004 shares of Class A common stock of TerraForm Global, Inc. from Renova for a purchase price in cash of $4.75 per share, or $92,791,269 in the aggregate.
The effectiveness of the full releases contained in the Renova Settlement Agreement was subject to certain conditions set forth in the Renova Settlement Agreement (including, but not limited to, the execution and filing of a joint stipulation with the Center for Arbitration and Mediation of the Chamber of Commerce Brazil-Canada withdrawing with prejudice all of the claims and counterclaims made in the Renova Arbitration and the purchase of Renova’s shares of Class A common stock of TerraForm Global, Inc. by Parent). Additionally, the consummation of the share purchase contemplated by the PSA was subject to customary conditions to closing and was conditioned upon the satisfaction of certain conditions set forth in the Renova Settlement Agreement, including the effectiveness of the mutual releases and release of the shares in escrow.
The conditions to the effectiveness of the full releases in the Renova Settlement Agreement, as well as the conditions to the consummation of the share purchase contemplated by the PSA, were satisfied on June 29, 2017. As a result, on June 29, 2017, the Company made a one-time settlement payment to Renova in the aggregate amount of $15.0 million, 792,495 shares of TerraForm Global, Inc. Class A common stock issued to Renova were returned from escrow to the Company, the TerraForm Global Parties and Renova executed and filed a joint stipulation with the Center for Arbitration and Mediation of the Chamber of Commerce Brazil-Canada withdrawing with prejudice all of the claims and counterclaims made in the Renova Arbitration, the full releases provided for in the Renova Settlement Agreement became effective, and the share purchase contemplated by the PSA was consummated. The Company recognized $3.8 million of general and administrative expenses as of December 31, 2016 as a result of this settlement.
Also, concurrently with the execution of the Renova Settlement Agreement, TerraForm Global, Inc. and Parent entered into a letter agreement (the “Renova Letter Agreement”), pursuant to which Parent agreed that upon the later to occur of (i) the effective time as described in the Renova Settlement Agreement and (ii) the closing of the share purchase contemplated by the PSA (as defined and described below), the condition to the obligations of Parent and Merger Sub to effect the Merger set forth in Section 7.2(c) (Litigation Settlement) of the Merger Agreement, solely with respect to Renova’s claims in the Renova Arbitration, has been satisfied and the aggregate payment made by the Company (net of any amounts funded directly or indirectly by insurance proceeds) under the Renova Settlement Agreement in connection with the settlement of Renova’s claims in the Renova Arbitration will be deemed to be zero. This condition to the obligations of Parent and Merger Sub to effect the merger set forth in Section 7.2(c) (Litigation Settlement) of the Merger Agreement solely with respect to Renova’s claims in the Renova Arbitration was also satisfied on June 29, 2017.
Employment of Related Persons
Since December 2016, the Company has directly employed Al Dahya, the son of Hanif Dahya, a member of the Company's Board, as its Senior Vice President, Corporate Development and Strategy. Prior to December 2016, Al Dahya was an employee of SunEdison and was compensated directly by SunEdison. In the fiscal year ended December 31, 2016, Al Dahya received RSUs with a fair market value at the time of their granting of $63,400 as a retention payment from the Company pursuant to the Company’s general retention program implemented following the SunEdison Bankruptcy. Since his employment by the Company, Al Dahya receives a base salary of $260,000, and may be eligible to receive an annual bonus for the year ending December 31, 2017, additional retention payments and certain bonuses relating to the closing of the Brookfield Transaction consistent with the Company’s general employee compensation practices and programs.

17. SEGMENT REPORTING    
The Company has two reportable segments: Solar Energy and Wind Energy. These segments include the Company’s entire portfolio of power plants and are determined based on the “management” approach. This approach designates the internal reporting used by management for making decisions and assessing performance as the source of the reportable segments. Corporate expenses include general and administrative expenses, acquisition costs, formation and offering related fees and expenses, interest expense on corporate level indebtedness and stock-based compensation.

47



The following tables reflect summarized financial information concerning the Company’s reportable segments for the three and six months ended June 30, 2017 and 2016:
 
 
Three Months Ended June 30, 2017
 
Three Months Ended June 30, 2016
(In thousands)
 
Solar
 
Wind
 
Corporate
 
Total
 
Solar
 
Wind
 
Corporate
 
Total
Operating revenues, net
 
$
29,283

 
$
33,219

 
$

 
$
62,502

 
$
28,878

 
$
27,552

 
$

 
$
56,430

Depreciation, accretion and amortization
 
7,078

 
14,131

 

 
21,209

 
6,509

 
6,516

 

 
13,025

Other operating costs and expenses
 
5,136

 
8,345

 
18,580

 
32,061

 
4,703

 
5,899

 
15,503

 
26,105

Interest expense (income), net
 
10,128

 
(100
)
 
18,940

 
28,968

 
10,372

 
(281
)
 
18,884

 
28,975

Other non-operating (income) expenses
 
4,666

 
1,634

 
(10,776
)
 
(4,476
)
 
14,304

 
1,053

 
(34,774
)
 
(19,417
)
Income tax expense¹
 

 

 
2,485

 
2,485

 

 

 
2,061

 
$
2,061

Net income (loss)
 
$
2,275

 
$
9,209

 
$
(29,229
)
 
$
(17,745
)
 
$
(7,010
)
 
$
14,365

 
$
(1,674
)
 
$
5,681


 
 
Six Months Ended June 30, 2017
 
Six Months Ended June 30, 2016
(In thousands)
 
Solar
 
Wind
 
Corporate
 
Total
 
Solar
 
Wind
 
Corporate
 
Total
Operating revenues, net
 
$
61,499

 
$
57,487

 
$

 
$
118,986

 
$
57,617

 
$
46,499

 
$

 
$
104,116

Depreciation, accretion and amortization
 
14,220

 
22,090

 

 
36,310

 
12,381

 
15,216

 

 
27,597

Other operating costs and expenses
 
10,269

 
16,139

 
35,961

 
62,369

 
11,273

 
13,328

 
31,925

 
56,526

Interest expense (income), net
 
20,069

 
(216
)
 
39,604

 
59,457

 
22,634

 
(2,049
)
 
42,053

 
62,638

Other non-operating (income) expenses
 
9,411

 
1,444

 
(35,257
)
 
(24,402
)
 
18,549

 
3,042

 
(66,588
)
 
(44,997
)
Income tax expense¹
 

 

 
4,950

 
4,950

 

 

 
2,919

 
$
2,919

Net income (loss)
 
$
7,530

 
$
18,030

 
$
(45,258
)
 
$
(19,698
)
 
$
(7,220
)
 
$
16,962

 
$
(10,309
)
 
$
(567
)

The following table reflects reportable segment assets as of June 30, 2017 and December 31, 2016:
Balance Sheet
 
As of June 30, 2017
 
 
 
As of December 31, 2016
 
 
(In thousands)
 
Solar
 
Wind
 
Corporate
 
Total
 
Solar
 
Wind
 
Corporate
 
Total
Total assets²
 
$
566,235

 
$
347,146

 
$
1,530,964

 
$
2,444,345

 
$
556,452

 
$
448,621

 
$
1,443,206

 
$
2,448,279

(1)
Income tax benefit is not allocated to the Company’s Solar and Wind segments.
(2)
Corporate assets include cash and cash equivalents, intercompany accounts receivable, other current assets and other assets.


18. OTHER COMPREHENSIVE INCOME (LOSS)
Comprehensive income (loss) represents a measure of all changes in equity that result from recognized transactions and other economic events other than transactions with owners in their capacity as owners. Other comprehensive income (loss) includes foreign currency translations and gains (losses) on hedging instruments.

48



The following table presents the changes in each component of accumulated other comprehensive (loss) income, net of tax:     
(In thousands)
Foreign Currency Translation Adjustments
 
Hedging Activities
 
Accumulated Other Comprehensive Income
Balance as of December 31, 2016
$
13,801

 
$
(2,972
)
 
$
10,829

Other comprehensive (loss) income

(16,230
)
 
1,570

 
(14,660
)
Less: other comprehensive (loss) income attributable to non-controlling interests
(5,480
)
 
1,054

 
(4,426
)
Balance as of June 30, 2017
$
3,051

 
$
(2,456
)
 
$
595

The following tables present the changes in each component of accumulated other comprehensive income (loss) and the related tax effects for the three months ended June 30, 2017 and 2016:
 
Three Months Ended June 30, 2017
(In thousands)
Before Tax
 
Tax Effect
 
Net of Tax
Foreign currency translation adjustments:
$
(28,811
)
 
$

 
$
(28,811
)
Unrealized gain (loss) on hedging instruments
4,037

 
(290
)
 
3,747

Net other comprehensive loss
$
(24,774
)
 
$
(290
)
 
$
(25,064
)
Less: Other comprehensive loss attributable to non-controlling interests, net of tax
 
 
 
 
(8,918
)
Other comprehensive loss attributable to Class A stockholders
 
 
 
 
$
(16,146
)
 
Three Months Ended June 30, 2016
(In thousands)
Before Tax
 
Tax Effect
 
Net of Tax
Foreign currency translation adjustments
$
33,954

 
$
271


$
34,225

Unrealized (loss) gain on hedging instruments
(2,653
)
 
4,792


2,139

Net other comprehensive income
$
31,301

 
$
5,063


$
36,364

Less: Other comprehensive income attributable to non-controlling interests, net of tax
 
 
 

14,886

Other comprehensive income attributable to Class A stockholders
 
 
 

$
21,478

The following tables present the changes in each component of accumulated other comprehensive income (loss) and the related tax effects for the six months ended June 30, 2017 and 2016:
 
Six Months Ended June 30, 2017
(In thousands)
Before Tax
 
Tax Effect
 
Net of Tax
Foreign currency translation adjustments:
$
(16,230
)
 
$

 
$
(16,230
)
Unrealized gain on hedging instruments
1,570

 
401

 
1,971

Net other comprehensive (loss) income
$
(14,660
)
 
$
401

 
$
(14,259
)
Less: Other comprehensive loss attributable to non-controlling interests, net of tax
 
 
 
 
(4,160
)
Other comprehensive loss attributable to Class A stockholders
 
 
 
 
$
(10,099
)

49



 
Six Months Ended June 30, 2016
(In thousands)
Before Tax
 
Tax Effect
 
Net of Tax
Foreign currency translation adjustments
$
38,511

 
$
271


$
38,782

Unrealized (loss) gain on hedging instruments
(17,116
)
 
4,792


(12,324
)
Net other comprehensive income
$
21,395


$
5,063


$
26,458

Less: Other comprehensive income attributable to non-controlling interests, net of tax
 
 
 
 
7,036

Other comprehensive income attributable to Class A stockholders
 
 
 

$
19,422


19. SUBSEQUENT EVENTS
See Note 1 - Nature of Operations and Note 16 - Related Parties for a description of subsequent events related to the Renova Settlement Agreement and the SunEdison Bankruptcy.
See Note 15 - Commitments and Contingencies for a description of subsequent events related to legal proceedings initiated against the Company and legal proceedings initiated by the Company.



50



Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with our audited consolidated financial statements and related notes thereto included as part of our Annual Report on Form 10-K for the year ended December 31, 2016 filed on June 15, 2017 and our unaudited condensed consolidated financial statements for the three and six months ended June 30, 2017 and other disclosures included in this Quarterly Report on Form 10-Q. The results shown herein are not necessarily indicative of the results to be expected in any future period. Unless otherwise indicated or otherwise required by the context, references to we, our, us, or the Company refer to TerraForm Global, Inc. and its consolidated subsidiaries.

Overview
We are a globally diversified renewable energy company that owns long-term contracted solar and wind power plants. Our business objective is to own and operate a portfolio of renewable energy power plants and to pay cash dividends to our stockholders. Our portfolio consists of solar and wind power plants located in Brazil, China, India, Malaysia, South Africa, Thailand and Uruguay with an aggregate net capacity (based on our share of economic ownership) of 919.2 MW as of June 30, 2017.
Recent Developments
Information regarding recent developments appears in Item 1. Business - Recent Developments in the Company's Annual Report on Form 10-K for the year ended December 31, 2016, which was filed on June 15, 2017, and in Item 1. Note 1 - Nature of Operations in this Quarterly Report on Form 10-Q, each of which is incorporated herein by reference.
Our Portfolio
Our portfolio consists of solar and wind power plants located in Brazil, China, India, Malaysia, South Africa, Thailand, and Uruguay with an aggregate net capacity (based on our share of economic ownership) of 919.2 MW as of June 30, 2017. These power plants generally have long-term Power Purchase Agreements (“PPAs”) with creditworthy counterparties. Our current portfolio has PPAs with a weighted average (based on net capacity according to share of economic ownership) remaining life of 17 years as of June 30, 2017.
Subject to market and other conditions, our long-term plan is to further expand and diversify our current portfolio by acquiring utility-scale and distributed assets located in our core markets and certain other jurisdictions, each of which we expect will also have a long-term PPA with a creditworthy counterparty. However, as discussed under Item 1. Note 1 - Nature of Operations - SunEdison Bankruptcy and Settlement Agreement with SunEdison, in connection with the Brookfield Transaction (as defined in Item 1. Note 1 - Entry into a Definitive Merger Agreement with Brookfield Asset Management Inc.), we entered into a Settlement Agreement (as defined in Item 1. Note 1 - Nature of Operations - SunEdison Bankruptcy and Settlement Agreement with SunEdison) with SunEdison (as defined in Item 1. Note 1 - Overview) to resolve our outstanding intercompany claims and defenses in connection with the SunEdison Bankruptcy (as defined in Item 1. Note 1 - Nature of Operations - SunEdison Bankruptcy and Settlement Agreement with SunEdison) and the Settlement Agreement has been approved by the bankruptcy court overseeing the SunEdison Bankruptcy. If the Settlement Agreement becomes effective, our existing rights to acquire certain projects from SunEdison will be terminated. Even if such rights are not terminated, as a result of the SunEdison Bankruptcy, we do not expect to acquire any additional projects from SunEdison. In addition, our ability to acquire additional renewable energy power plants from third parties is dependent on our ability to borrow additional funds and access the capital markets, including the project finance market for project level debt. At this time, the conditions in the capital markets for our corporate debt and equity securities have made it difficult to obtain corporate level financing in the capital markets at an attractive cost. Additionally, as a result of the SunEdison Bankruptcy and our earlier delay in filing our periodic reports with the SEC, we may have difficulty accessing the project finance market for project level debt financing. As a result of the foregoing, our ability to acquire and finance projects on attractive terms or at all may be limited. If we are unable to raise adequate proceeds when needed to fund acquisitions, our ability to grow our portfolio will be limited, which could have an adverse effect on our projected cash available for distribution, business, financial condition, results of operations and cash flows.

51



The following table lists the solar and wind power plants that comprise our portfolio as of June 30, 2017:
Power Plant Name
Country
Power Plant Type
Gross Nameplate Capacity (MW) (1)
Net Capacity based on share of Economic Ownership (MW)(2)
Net Capacity based on share of Equity Ownership
(MW)
(2)
# of Sites
Weighted Average Remaining Duration of PPA (Years)(3)
Salvador
Brazil
Wind
203.2
203.2
203.2
9
15
Bahia
Brazil
Wind
103.5
103.5
103.5
5
15
Honiton
China
Wind
148.5
148.5
148.5
3
12
Dunhuang
China
Solar
18.0
18.0
18.0
1
15
Hanumanhatti
India
Wind
50.4
50.4
50.4
1
14
NSM Suryalabh
India
Solar
39.0
39.0
39.0
1
23
Gadag
India
Wind
31.2
31.2
31.2
1
11
NSM Sitara
India
Solar
31.0
31.0
31.0
1
23
NSM L’Volta
India
Solar
26.0
26.0
26.0
1
23
SE 25
India
Solar
25.0
25.0
25.0
1
20
NSM 24
India
Solar
24.0
24.0
24.0
1
21
Focal
India
Solar
23.0
23.0
23.0
2
23
Bhakrani
India
Wind
20.0
20.0
20.0
1
22
Millenium
India
Solar
9.3
9.3
9.3
1
20
Brakes
India
Solar
7.7
7.7
5.4
1
13
Raj 5
India
Solar
5.0
5.0
5.0
1
20
ESP Urja
India
Solar
5.0
5.0
5.0
1
19
Azure
India
Solar
5.0
5.0
5.0
1
19
Silverstar Pavilion
Malaysia
Solar
10.0
5.1
4.8
2
17
Fortune 11
Malaysia
Solar
5.1
4.8
2.4
1
17
Corporate Season
Malaysia
Solar
4.0
2.5
1.9
1
17
Boshof
South Africa
Solar
65.9
33.6
33.6
1
17
Witkop
South Africa
Solar
32.9
16.8
16.8
1
16
Soutpan
South Africa
Solar
31.0
15.8
15.8
1
16
NPS Star
Thailand
Solar
18.0
18.0
8.7
3
28
WXA
Thailand
Solar
17.8
17.8
8.7
3
24
PP Solar
Thailand
Solar
3.6
3.6
3.6
3
24
Alto Cielo
Uruguay
Solar
26.4
26.4
26.4
1
27
Total Portfolio as of June 30, 2017
989.5
919.2
895.2
50
17
(1) Nameplate capacity represents the maximum generating capacity at standard test conditions of a facility. Revenue in the unaudited condensed consolidated financial statements is based on nameplate capacity with the exception of unconsolidated businesses.
(2) Net capacity represents the maximum generating capacity at standard test conditions of a power plant multiplied by either the Company’s percentage of economic ownership of that power plant after taking into account any redeemable preference shares and shareholder loans held by the Company or percentage of equity ownership of that power plant, as applicable.
(3) Calculated as of June 30, 2017. The number represents a weighted average (based on net capacity based on share of economic ownership) of remaining duration.

Key Metrics
Operating Metrics
Net Capacity
The Company measures the electricity-generating production capacity of its power generation assets in net capacity (measured in megawatts of direct current, or “DC,” with respect to solar power plants, and megawatts of alternating current, or “AC,” with respect to wind power plants). Net capacity represents the rated generation capacity at standard test conditions of a power plant multiplied by either the Company’s percentage of economic ownership of that power plant after taking into account any redeemable preference shares and shareholder loans held by the Company or percentage of equity ownership of

52



that power plant, as applicable. Rated capacity is the expected maximum output a power plant can produce without exceeding its design limits. The size of the Company’s power generation assets varies significantly among the assets comprising the portfolio. Management believes the aggregate net capacity of the Company’s portfolio is indicative of the overall production capacity and period-to-period comparisons of net capacity are indicative of the growth rate of the Company’s business. Our power plants had a net capacity (based on our share of economic ownership) of 919.2 MW as of June 30, 2017.
Megawatt Hour Generation
Megawatt-hour (“MWh”) generation refers to the actual amount of electricity a power generator produces over a specific period. Management tracks the aggregate generation of the Company’s power generation assets as it is indicative of the periodic production of its business operations.
Gigawatt Hours Sold
Gigawatt-hours (“GWh”) sold refers to the actual volume of electricity generated and sold by the Company’s power plants during a particular period. Management tracks gigawatt-hours sold as an indicator of the ability to recognize revenue from the generation of electricity at the Company’s power plants. Our total GWh sold for the three and six months ended June 30, 2017 was 662.8 GWh and 1,201.7 GWh, respectively, as compared to 601.9 GWh and 1,107.8 GWh for the same periods in the prior year.

Consolidated Results of Operations
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(In thousands)
2017
 
2016
 
2017
 
2016
Operating revenues, net
$
62,502

 
$
56,430

 
$
118,986

 
$
104,116

Operating costs and expenses:
 
 
 
 
 
 
 
Cost of operations
11,695

 
11,797

 
23,034

 
22,029

General and administrative
20,366

 
14,225

 
39,335

 
24,409

Acquisition, formation and related costs

 
83

 

 
10,088

Depreciation, accretion and amortization
21,209

 
13,025

 
36,310

 
27,597

Total operating costs and expenses
53,270

 
39,130

 
98,679

 
84,123

Operating income
9,232

 
17,300

 
20,307

 
19,993

Other expense (income):
 
 
 

 
 
 
 
Loss (gain) on the extinguishment of debt

 
526

 
6,767

 
(5,735
)
Interest expense, net
28,968

 
28,975

 
59,457

 
62,638

Gain on foreign currency exchange
(1,295
)
 
(13,882
)
 
(22,937
)
 
(26,231
)
Other income, net
(3,181
)
 
(6,061
)
 
(8,232
)
 
(13,031
)
Total other expenses, net
24,492

 
9,558

 
35,055

 
17,641

(Loss) income before income tax expense
(15,260
)
 
7,742

 
(14,748
)
 
2,352

Income tax expense
2,485

 
2,061

 
4,950

 
2,919

Net (loss) income
$
(17,745
)
 
$
5,681

 
$
(19,698
)
 
$
(567
)
Less:(loss) income attributable to non-controlling interests
(7,364
)
 
4,584

 
(7,604
)
 
2,968

Net (loss) income attributable to TerraForm Global, Inc. Class A common stockholders
$
(10,381
)
 
$
1,097

 
$
(12,094
)
 
$
(3,535
)
In our results of operations, we define existing power plants as any power plant which was operational from the first day of the respective reporting period. Power plants acquired from a third party relate to any power plant acquired during the respective reporting period. Power plants achieving commercial operations are power plants with a commercial operation date within the respective reporting period. Alto Cielo, which was acquired on April 8, 2016, is the only non-comparable acquisition between the six months ended June 30, 2017 and 2016.

53



Three Months Ended June 30, 2017 Compared to Three Months Ended June 30, 2016
Operating Revenues, net
Operating revenues, net for the three months ended June 30, 2017 and 2016 were as follows:
 
Three Months Ended June 30,
 
 
(In thousands, other than MW and GWh data)
2017
 
2016
 
Change
Wind
$
33,219

 
$
27,552

 
$
5,667

Solar
29,283

 
28,878

 
405

     Total
$
62,502

 
$
56,430

 
$
6,072

Net capacity (MW)(1)(2)
919.2

 
916.4

 
2.8

GWh sold
662.8

 
601.9

 
60.9

(1)
Operational at end of period.
(2)
Net capacity represents the maximum generating capacity at standard test conditions of a power plant multiplied by our percentage of economic ownership of that power plant.
Operating revenues, net increased by $6.1 million during the three months ended June 30, 2017, compared to the same period in 2016. Wind power plants accounted for $5.7 million of additional revenue, net during the three months ended June 30, 2017 compared to the same period in the prior year, due primarily to increased production and favorable currency exchange rates in Brazil and India offset by decreased production and unfavorable currency exchange rates in China. Solar power plants accounted for $0.4 million increase in revenue during the three months ended June 30, 2017 compared to the same period in the prior year, due primarily to favorable currency exchange rates in South Africa, offset by the impact of a transformer failure in one of the South African power plants.
Cost of Operations
Cost of operations for the three months ended June 30, 2017 and 2016 was as follows:
 
Three Months Ended June 30,
 
 
(In thousands)
2017
 
2016
 
Change
Cost of operations
$
11,695

 
$
11,797

 
$
(102
)

Cost of operations for the three months ended June 30, 2017 and 2016 was $11.7 million and $11.8 million, respectively. Cost of operations decreased $0.1 million during the three months ended June 30, 2017 compared to the same period in 2016 due to reduced operation and maintenance ("O&M") costs the Company realized after transitioning to third-party vendors in 2017.
General and Administrative Expense
General and administrative expense for the three months ended June 30, 2017 and 2016 was as follows:
 
Three Months Ended June 30,
 
 
 
(In thousands)
2017
 
2016
 
Change
General and Administrative Expense
$
20,366

 
$
14,225

 
$
6,141


General and administrative expense for the three months ended June 30, 2017 and 2016 was $20.4 million and $14.2 million, respectively. General and administrative expense increased by $6.1 million compared to the three months ended June 30, 2016 due to continued additional expenses related to the impact of the SunEdison Bankruptcy and the costs associated with operating as a stand-alone organization, primarily driven by consulting and professional fees.
We have historically depended significantly on SunEdison for important corporate, project, and other services, including many management services under the MSA (such as management, secretarial, accounting, banking, treasury, administrative, regulatory and reporting functions; recommending and implementing business strategy; maintenance of books and records; calculation and payment of taxes; and preparation of audited and unaudited financial statements), as well as asset management and O&M services for most of our power plants. Because of this historical reliance on SunEdison, the SunEdison Bankruptcy has created substantial risks to our business, operations and financial condition. However, we have continued to operate our business pursuant to contingency plans that we have been developing.

54



As part of the Company’s transition away from its historical reliance on SunEdison, as of January 1, 2017, substantially all employees at both the corporate and project levels who were previously employed by SunEdison were hired directly by the Company. As such, the Company no longer materially relies upon SunEdison for personnel to manage and operate our business or our power plants. The Company continues to execute on the other aspects of its plan to implement a stand-alone organization. We expect to incur higher costs associated with performing these services ourselves or hiring substitute providers than the fees we paid under the MSA.
Acquisition, Formation and Related Costs
Acquisition, formation and related costs are zero for the three months ended June 30, 2017, compared to $0.1 million for the same period in 2016, as there were no acquisitions during the three months ended June 30, 2017.
Depreciation, Accretion and Amortization
Depreciation, accretion and amortization expense increased from $13.0 million for the three months ended June 30, 2016 to $21.2 million for the three months ended June 30, 2017. The increase was primarily due to the impact of foreign currency on depreciation expense for wind power plants denominated in foreign currencies.
Loss (Gain) on Extinguishment of Debt, net
There was no gain or loss on the extinguishment of debt recognized for the three months ended June 30, 2017, compared to a loss of $0.5 million recognized for the same period in 2016. This decrease is due to the extinguishment of Indian term debt during the three months ended June 30, 2016, which resulted in a loss of $0.5 million.
Interest Expense, net
Interest expense, net for the three months ended June 30, 2017 and 2016 was as follows:
 
Three Months Ended June 30,
 
 
(In thousands)
2017
 
2016
 
Change
Corporate level
$
18,940

 
18,884

 
$
56

Project level:
 
 
 
 
 
     Solar
10,128

 
10,372

 
(244
)
     Wind
(100
)
 
(281
)
 
181

          Total interest expense, net
$
28,968

 
$
28,975

 
$
(7
)

Interest expense, net decreased by an immaterial amount during the three months ended June 30, 2017 compared to the same period in 2016.
As a result of the SunEdison Bankruptcy, we do not expect SunEdison to perform under the Interest Payment Agreement going forward, in which case we expect to continue servicing out debt obligations with current liquidity and cash flows from operations. See Item 1. Note 16 - Related Parties - Interest Payment Agreement for additional information on the Interest Payment Agreement.
Gain on Foreign Currency Exchange, net
Net gain on foreign currency exchange was $1.3 million for the three months ended June 30, 2017 versus a net gain of $13.9 million for the three months ended June 30, 2016, resulting in a decrease of $12.6 million. This change is primarily due to a loss of $27.2 million related to the impact of revaluation to the U.S. dollar of plant assets and liabilities denominated in foreign currencies and foreign currency exchange rates on intercompany loans, offset by $12.4 million on foreign currency forward contracts that matured during the three months ended June 30, 2017 versus the same period in 2016.
Other Income, net
Other income, net was $3.2 million for the three months ended June 30, 2017 compared to $6.1 million for the same period in 2016. The decrease was due to receipt of damages payments from contractors in South Africa during the second quarter of 2016, offset by an increase from the sale of PPAs in Thailand during the first and second quarters of 2017.

55



Income Tax Provision
Income tax expense was $2.5 million for the three months ended June 30, 2017, compared to $2.1 million for the three months ended June 30, 2016. For the three months ended June 30, 2017, the overall effective tax rate was different than the statutory rate of 35.0% primarily due to valuation allowances, tax holiday benefits, taxes on non-operating income in Thailand and presumed profits taxes in Brazil. As of June 30, 2017, most jurisdictions were in a net deferred tax asset position. A valuation allowance is recorded against the deferred tax assets primarily because of the historical losses in those jurisdictions.

Six Months Ended June 30, 2017 Compared to Six Months Ended June 30, 2016
Operating Revenues, net
Operating revenues, net for the six months ended June 30, 2017 and 2016 were as follows:
 
Six Months Ended June 30,
 
 
(In thousands, other than MW and GWh data)
2017
 
2016
 
Change
Wind
57,487

 
46,499

 
$
10,988

Solar
61,499

 
57,617

 
3,882

     Total
$
118,986

 
$
104,116

 
$
14,870

Net capacity (MW)(1)(2)
919.2

 
916.4

 
2.8

GWh sold
1,201.8

 
1,107.8

 
94.0

(1)
Operational at end of period.
(2)
Net capacity represents the maximum generating capacity at standard test conditions of a power plant multiplied by our percentage of economic ownership of that power plant.
Operating revenues, net increased by $14.9 million during the six months ended June 30, 2017, compared to the same period in 2016. Wind power plants accounted for $11.0 million of additional revenue, net during the six months ended June 30, 2017 compared to the same period in the prior year, due primarily to increased production and favorable currency exchange rates in Brazil offset by decreased production and unfavorable currency exchange rates in China. Solar power plants accounted for $3.9 million of additional revenue during the six months ended June 30, 2017 compared to the same period in the prior year, due primarily to the acquisition of Alto Cielo, accounting for $1.2 million of additional solar revenue, as well as favorable currency exchange rates in South Africa.
Cost of Operations
Cost of operations for the six months ended June 30, 2017 and 2016 was as follows:
 
Six Months Ended June 30,
 
 
(In thousands)
2017
 
2016
 
Change
Cost of operations
23,034

 
22,029

 
$
1,005


Cost of operations for the six months ended June 30, 2017 and 2016 was $23.0 million and $22.0 million, respectively. Cost of operations increased $1.0 million during the six months ended June 30, 2017 compared to the same period in 2016 due to $2.3 million in additional costs related to increased production from our wind power plants, partially offset by a $1.3 million reduction in O&M costs the Company realized after transitioning to third-party vendors in 2017.
General and Administrative Expense
General and administrative expense for the six months ended June 30, 2017 and 2016 was as follows:
 
Six Months Ended June 30,
 
 
(In thousands)
2017
 
2016
 
Change
General and Administrative Expense
39,335

 
24,409

 
$
14,926


General and administrative expense for the six months ended June 30, 2017 and 2016 was $39.3 million and $24.4 million, respectively. General and administrative expense increased by $14.9 million compared to the six months ended June 30, 2016 due to continued additional expenses related to the impact of the SunEdison Bankruptcy and the costs associated with operating as a stand-alone organization, primarily driven by consulting and professional fees.

56



We have historically depended significantly on SunEdison for important corporate, project, and other services, including many management services under the MSA (such as management, secretarial, accounting, banking, treasury, administrative, regulatory and reporting functions; recommending and implementing business strategy; maintenance of books and records; calculation and payment of taxes; and preparation of audited and unaudited financial statements), as well as asset management and O&M services for most of our power plants. Because of this historical reliance on SunEdison, the SunEdison Bankruptcy has created substantial risks to our business, operations and financial condition. However, we have continued to operate our business pursuant to contingency plans that we have been developing.
As part of the Company’s transition away from its historical reliance on SunEdison, as of January 1, 2017, substantially all employees at both the corporate and project levels who were previously employed by SunEdison were hired directly by the Company. As such, the Company no longer materially relies upon SunEdison for personnel to manage and operate our business or our power plants. The Company continues to execute on the other aspects of its plan to implement a stand-alone organization. We expect to incur higher costs associated with performing these services ourselves or hiring substitute providers than the fees we paid under the MSA.
Acquisition, Formation and Related Costs
Acquisition, formation and related costs are zero for the six months ended June 30, 2017, compared to $10.1 million for the same period in 2016, as there were no acquisitions terminated, completed or pending completion during the six months ended June 30, 2017.
Depreciation, Accretion and Amortization
Depreciation, accretion and amortization expense increased from $27.6 million for the six months ended June 30, 2016 to $36.3 million for the six months ended June 30, 2017. The increase was primarily due to the impact of foreign currency on depreciation expense for wind power plants denominated in foreign currencies.
Loss (Gain) on Extinguishment of Debt, net
A loss on the extinguishment of debt of $6.8 million was recognized for the six months ended June 30, 2017, a decrease of $12.5 million compared to the same period in 2016. This decrease was primarily due to Global Operating LLC permanently reducing to zero and terminating the revolving commitments under the Revolver on March 31, 2017.
For the six months ended June 30, 2016, the Company recognized a gain on extinguishment of debt of $5.7 million. This gain was due to the Company's repurchase of the Senior Notes, partially offset by a loss on the repayment of Indian term debt, as well as a loss on extinguishment of debt resulting from the cancellation of third party debt in Thailand during the first quarter of 2016.

Interest Expense, net
Interest expense, net for the six months ended June 30, 2017 and 2016 was as follows:
 
Six Months Ended June 30,
 
 
 
(In thousands)
2017
 
2016
 
Change
Corporate level
39,604

 
42,053

 
$
(2,449
)
Project level:
 
 
 
 
 
     Solar
20,069

 
22,634

 
(2,565
)
     Wind
(216
)
 
(2,049
)
 
1,833

          Total interest expense, net
59,457

 
62,638

 
$
(3,181
)

Interest expense, net decreased by $3.2 million during the six months ended June 30, 2017 compared to the same period in 2016. The decrease was primarily driven by a decrease in amortization of the deferred financing fees relating to the Revolver. In March 2017, the Company permanently reduced to zero and terminated the revolving commitments under the Revolver, and as such the Company wrote off the remaining portion of the Revolver's deferred financing fees as a loss on extinguishment of debt. Interest income decreased by $1.8 million during the six months ended June 30, 2017 compared to the same period in 2016, primarily due to distributions made from power plants in Brazil in December 2016 and April 2017.
As a result of the SunEdison Bankruptcy, we do not expect SunEdison to perform under the Interest Payment Agreement going forward, in which case we expect to continue servicing out debt obligations with current liquidity and cash flows from operations. See Item 1. Note 16 - Related Parties - Interest Payment Agreement for additional information on the

57



Interest Payment Agreement.
Gain on Foreign Currency Exchange, net
Net gain on foreign currency exchange was $22.9 million for the six months ended June 30, 2017 versus a net gain of $26.2 million for the six months ended June 30, 2016, resulting in a decrease of $3.3 million. This change is primarily due to a decrease in gain on foreign currency exchange of $21.2 million related to the impact of revaluation to the U.S. dollar value of plant assets and liabilities denominated in foreign currencies and foreign currency exchange rates on intercompany loans, in addition to the benefit of a lower net loss of $15.5 million on foreign currency forward contracts that matured during the six months ended June 30, 2017 versus the same period in 2016.
Other Income, net
Other income, net was $8.2 million for the six months ended June 30, 2017, compared to $13.0 million for the same period in 2016. The decrease was due to receipt of damages payments from contractors in South Africa during the second quarter of 2016, offset by an increase from the sale of PPAs in Thailand during the first and second quarters of 2017.
Income Tax Provision
Income tax expense was $5.0 million for the six months ended June 30, 2017, compared to $2.9 million for the six months ended June 30, 2016. For the six months ended June 30, 2017, the overall effective tax rate was different than the statutory rate of 35.0% primarily due to valuation allowances, tax holiday benefits, taxes on non-operating income in Thailand and presumed profits taxes in Brazil. As of June 30, 2017, most jurisdictions were in a net deferred tax asset position. A valuation allowance is recorded against the deferred tax assets primarily because of the historical losses in those jurisdictions.

Liquidity and Capital Resources
Liquidity Risk
The Company’s principal liquidity requirements are to finance current operations, service debt and, if and when declared by the Company, to fund cash dividends to investors. Changes in operating plans, lower than anticipated electricity sales, increased expenses, acquisitions or other events may cause management to seek additional debt or equity financing in future periods. There can be no guarantee that financing will be available on acceptable terms or at all. Debt financing, if available, could impose additional cash payment obligations and additional covenants and operating restrictions. The Company’s ability to meet its debt service obligations and other capital requirements, including capital expenditures, as well as make acquisitions, will also depend on the Company’s future operating performance which, in turn, will be subject to general economic, financial, business, competitive, legislative, regulatory and other conditions, many of which are beyond management’s control.
Specifically, our controlling shareholder, SunEdison, Inc., and certain of its affiliates voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code on April 21, 2016 (the "SunEdison Bankruptcy"). We believe that we have observed formalities and operating procedures to maintain our separate existence, that our assets and liabilities can be readily identified as distinct from those of SunEdison and that we do not rely substantially on SunEdison for funding or liquidity and will have sufficient liquidity to support our ongoing operations. Our contingency planning with respect to the SunEdison Bankruptcy has included and will include, among other things, establishing stand-alone information technology, accounting and other critical systems and infrastructure, directly hiring employees necessary to operate our business and establishing employee retention efforts, retaining third parties to provide O&M and asset management services for our power plants where we do not perform these services ourselves and the pursuit of strategic alternatives.
However, there is a risk that an interested party in the SunEdison Bankruptcy could request that the assets and liabilities of the Company be substantively consolidated with SunEdison and that the Company and/or its assets and liabilities be included in the SunEdison Bankruptcy. While it has not been requested to date and we believe there is no basis for substantive consolidation in our circumstances, we cannot assure you that substantive consolidation will not be requested in the future or that the bankruptcy court would not consider it. Substantive consolidation is an equitable remedy in bankruptcy that results in the pooling of assets and liabilities of the debtor and one or more of its affiliates solely for purposes of the bankruptcy case, including for purposes of distributions to creditors and voting on and treatment under a reorganization plan. Bankruptcy courts have broad equitable powers, and as a result, outcomes in bankruptcy proceedings are inherently difficult to predict.

58



To the extent the bankruptcy court were to determine that substantive consolidation was appropriate under the Company's facts and circumstances, the assets and liabilities of the Company could be made available to help satisfy the debt or contractual obligations of SunEdison.
There have also been covenant defaults under certain of our project level financing arrangements, mainly because of delays in the delivery of project level audited financial statements and the SunEdison Bankruptcy, which resulted in defaults because SunEdison, Inc. and certain of its affiliates have been serving as O&M and asset management service providers or as guarantors under relevant contracts. We have been working diligently with our lenders to cure or waive instances of default, including through the completion of project level audits and the retention of replacement service providers. However, there can be no assurance that all remaining defaults will be cured or waived. All of our project level financing arrangements are on a non-recourse basis, and therefore these defaults do not directly affect the financial position of the Company. However, if the remaining defaults are not cured or waived, this would continue to restrict the ability of the relevant project companies to make distributions to us, and may entitle certain project level lenders to demand repayment or enforce their security interests or other remedies.
Additionally, covenant defaults may occur in the future under the indenture governing the Senior Notes in the event of delays in the filing of our periodic reports with the SEC. There can be no assurance that we will be able to file our periodic reports with the SEC within the periods currently required under the indenture governing the Senior Notes or that the holders of the Senior Notes will agree to any required extension of financial statement filing dates on acceptable terms or at all. A default on the Senior Notes would permit the trustee or the holders of at least 25.0% in aggregate principal amount of notes outstanding to accelerate the Senior Notes. The Company would likely not have sufficient liquidity to meet this obligation, which could have a material adverse effect on our business, results of operations, financial condition and ability to pay dividends.
The risk of substantive consolidation of the Company with SunEdison and inclusion in the SunEdison Bankruptcy, as well as the risk of future covenant defaults under the indenture governing the Senior Notes, raise substantial doubt about the Company’s ability to continue as a going concern.
Liquidity Position
Total liquidity as of June 30, 2017 was approximately $650.2 million, comprised of unrestricted cash and cash equivalents. The unrestricted cash and cash equivalents balance as of June 30, 2017 was comprised of $556.4 million and $93.8 million unrestricted cash and cash equivalents at the corporate and project level, respectively. Unrestricted cash held at our project companies is available for project expenses but not available for corporate use. Total corporate liquidity excludes availability under the Revolver as a result of the reduction to zero and termination of the revolving commitments under our Revolver on March 31, 2017, as further described in Item 1. Note 7 - Long-Term Debt. On September 2, 2016, Global Operating LLC entered into a second supplemental indenture to the indenture governing the Senior Notes, under which Global Operating LLC agreed to repay the borrowing currently outstanding (other than the outstanding letters of credit) under the Revolver, as well as to restrictions on the ability of Global Operating LLC to further borrow under the Revolver until the earlier of March 8, 2017 or such time as SunEdison and its subsidiaries (other than the Company, TerraForm Power, Inc. (together with its subsidiaries, “TerraForm Power”) and their respective subsidiaries) have disposed of all or substantially all of their equity interests in the Company and an offer has been made to repurchase the outstanding Senior Notes at a purchase price in cash at least equal to 101.0% of their principal amount, plus accrued and unpaid interest, if any, to the repurchase date (or a binding agreement to make such an offer has been entered into). Subsequently, on March 31, 2017, Global Operating LLC permanently reduced to zero and terminated the revolving commitments under the Revolver and entered into a fifth amendment (the “Fifth Amendment”) to the Revolver. As a result, no availability under our Revolver was included in our liquidity position as of June 30, 2017. Management believes that the Company’s liquidity position and cash flows from operations will be adequate to finance operating and maintenance capital expenditures, service debt and other liquidity commitments. Management continues to regularly monitor the Company’s ability to finance the needs of the operating, financing and investing activities of our business in light of current conditions affecting us and within the dictates of prudent balance sheet management.
Sources of Liquidity
The Company’s principal sources of liquidity include unrestricted cash, cash generated from operations, borrowings under new and existing financing arrangements and the issuance of additional equity and debt securities. We are currently unable to access the capital markets for our debt and equity securities at costs that are attractive to us. We expect that sources of funds that are available to us, including cash on hand and cash generated from our operations, will be adequate to provide for the Company’s short-term and long-term liquidity needs. The Company’s ability to meet its debt service obligations and other capital requirements, including capital expenditures, as well as make acquisitions, will depend on the Company’s future

59



operating performance which, in turn, will be subject to general economic, financial, business, competitive, legislative, regulatory and other conditions, many of which are beyond our control.
Uses of Liquidity
Our principal requirements for liquidity and capital resources, other than for operating our business, generally consist of: (i) debt service obligations; (ii) funding acquisitions, if any; and (iii) if and when declared by the Company, cash dividends to stockholders. Generally, once commercial operation is achieved, solar and wind power plants do not require significant capital expenditures to maintain operating performance. As of June 30, 2017, the cash consideration to be paid on account of our pending BioTherm acquisition was approximately $9.7 million.
Debt Service Obligations
The aggregate amounts of payments on long-term debt due after June 30, 2017 are as follows:
(In thousands)
Maturities
Maturities of long-term debt:
Remaining in 2017
 
2018
 
2019
 
2020
 
2021
 
Thereafter
 
Total
Project level
8,506

 
10,669

 
15,382

 
18,207

 
21,772

 
278,188

 
352,724

Corporate
$

 
$

 
$

 
$

 
$

 
$
753,490

 
$
753,490

Total debt
$
8,506

 
$
10,669

 
$
15,382

 
$
18,207

 
$
21,772

 
$
1,031,678

 
$
1,106,214

Certain of our project level financing agreements contain provisions that provide the lenders with the right to accelerate debt maturity as a result of non-compliance with loan covenants. Therefore, these debt balances were reclassified from long-term to current as of December 31, 2016 and June 30, 2017. We have received waivers and/or forbearance agreements with respect to certain of these defaults, and we are currently working with our project lenders to cure such defaults; however, no assurance can be given that such defaults will be cured in a timely manner or at all.

Acquisitions

The Company expects to continue to acquire additional power plant assets. However, other than the BioTherm transaction discussed elsewhere herein, the Company has no commitments to make any such acquisitions.

Interest Payment Agreement
Immediately prior to the completion of the IPO on August 5, 2015, we entered into the Interest Payment Agreement with SunEdison (the "Interest Payment Agreement"), pursuant to which SunEdison agreed to pay an aggregate amount equal to all of the scheduled interest of up to $81.2 million on the Senior Notes until December 31, 2016, and up to an aggregate of $40.0 million in 2017, $30.0 million in 2018, $20.0 million in 2019 and $10.0 million in 2020, plus any interest due on any payment not remitted when due. SunEdison’s interest support payments due to the Company have been reduced by $2.9 million as a result of the $49.6 million of the Senior Notes that were extinguished under the open market repurchase program that began in December 2015 and continued through January 2016. SunEdison will not be obligated to pay any amounts due under the Senior Notes in connection with an acceleration of the payment of the principal amount of such indebtedness.
Upon expiration of the Distribution Forbearance Period (as described in Item 1. Note 16 - Related Parties), Global LLC will be entitled to set off any amounts owing by SunEdison pursuant to the Interest Payment Agreement against any and all amounts owed by Global LLC to SunEdison under the distribution provisions of the Global LLC Operating Agreement, and Global LLC may pay such amounts to Global Operating LLC. For the six months ended June 30, 2017, SunEdison made no payments to Global LLC related to interest payments on the Senior Notes.
The Interest Payment Agreement terminates upon payment by SunEdison of all amounts owing thereunder. It may, however, be terminated prior to that by mutual written agreement of SunEdison and Global Operating LLC and will automatically terminate upon the repayment in full of the outstanding principal amount of the Senior Notes or a change of control of the Company, Global LLC or Global Operating LLC. The agreement may also be terminated at the election of SunEdison, Global LLC or Global Operating LLC if any of them experiences certain events relating to bankruptcy or insolvency. Any decision by Global LLC or Global Operating LLC to terminate the Interest Payment Agreement must have the prior approval of the Corporate Governance and Conflicts Committee of the Company’s Board of Directors.
On July 29, 2016, the Company received a notice from SunEdison purporting to terminate the Interest Payment Agreement. The notice alleges that SunEdison's bankruptcy permits termination as of right without following the bankruptcy

60



procedures for rejection of executory contracts. Although the Company does not expect SunEdison to perform under the Interest Payment Agreement going forward, the Company is contesting the purported termination of the Interest Payment Agreement, believes that the termination notice is invalid, and is asserting a claim in the SunEdison Bankruptcy for the full amount of damages resulting from SunEdison’s breach of the Interest Payment Agreement. The Settlement Agreement provides for the termination of the Interest Payment Agreement and would result in the release of our intercompany claims against SunEdison in connection with the Interest Payment Agreement.
Cash Dividends to Investors
Prior to the execution of the Merger Agreement, as a result of the SunEdison Bankruptcy, the limitations on our ability to access the capital markets for our corporate debt and equity securities, and other risks that we face as detailed in this Quarterly Report on Form 10-Q and the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, we believed it was prudent to defer any decisions on paying dividends to our stockholders. Under the Merger Agreement, we are restricted from declaring or paying dividends prior to the consummation of the Brookfield Transaction. In the event that the Brookfield Transaction is not consummated and the Merger Agreement is terminated or expires, if and when we believe it is prudent to do so, we intend to cause Global LLC to distribute to its unit-holders in the form of a quarterly distribution a portion of the cash available for distribution that is generated each quarter after appropriate reserves for our working capital needs and the prudent conduct of our business. In turn, we expect to use the amount of cash available for distribution that we receive from such distribution to pay quarterly dividends to the holders of our Class A common stock. The cash available for distribution is likely to fluctuate from quarter to quarter and in some cases significantly if any power plants experience higher than normal downtime as a result of equipment failures, electrical grid disruption or curtailment, weather disruptions or other events beyond our control. We expect our dividend payout ratio to vary as we intend to maintain or increase our dividend despite variations in our cash available for distribution from period to period. The amount of cash available for distribution from period to period may also be adversely affected by other factors, such as SunEdison’s failure to perform substantially as obligated under its agreements with us, including the Interest Payment Agreement. As a result of the notice from SunEdison purporting to terminate the Interest Payment Agreement in July 2016, we do not expect SunEdison to perform under the Interest Payment Agreement going forward, including its obligation to pay to us up to an aggregate amount of $40.0 million in 2017, $30.0 million in 2018, $20.0 million in 2019 and $10.0 million in 2020, plus any interest due on any payment not remitted when due. See “Liquidity and Capital Resources - Interest Payment Agreement” above. We also expect to incur higher costs as we transition away from our historical dependence on SunEdison for corporate, management, administrative, project and other services and perform these services ourselves or hire substitute providers. See “Consolidated Results of Operations-Six Months Ended June 30, 2017 Compared to Six Months Ended June 30, 2016- General and Administrative Expense”. For additional information on these and other factors that may adversely affect the amount of cash available for distribution and, in turn, our ability to pay any dividend in future periods, see Item 1A. Risk Factors - Risks Inherent in an Investment in TerraForm Global, Inc. - We may not be able to pay comparable or growing cash dividends to holders of our Class A common stock in the future in our Annual Report on Form 10-K for the year ended December 31, 2016, which was filed on June 15, 2017. Please refer to the disclosures included elsewhere in this Quarterly Report on Form 10-Q for additional information about the adverse impact of the SunEdison Bankruptcy on us and other risks and uncertainties we face.
Global LLC is a holding company and will be dependent on receiving cash distributions from Global Operating LLC in order to fund quarterly distributions to its unit-holders, including the Company. Global Operating LLC is also a holding company and will in turn be dependent on receiving cash distributions from its project companies to fund any distributions to Global LLC. The ability of such project companies to make cash distributions to Global Operating LLC may be restricted by, among other things, the provisions of existing and future indebtedness or other financing agreements, applicable national, provincial, state and local corporation laws and other laws and regulations, such as capital controls that either restrict investment by foreign sources, restrict the transfer of capital to foreign recipients or both. Some of the jurisdictions in which the power plants in our portfolio are located impose material limitations on their ability to make cash distributions to Global Operating LLC.
We have not declared or paid a dividend since March 17, 2016. Under the Merger Agreement, we are restricted from declaring or paying dividends prior to the consummation of the Brookfield Transaction.
In addition, the covenants contained in the indenture governing the Senior Notes limit our ability to pay dividends and make certain investments and other restricted payments.
Cash Flow Discussion
We use traditional measures of cash flow, including net cash provided by operating activities, net cash provided by investing activities and net cash provided by financing activities to evaluate our periodic cash flow results.

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Six Months Ended June 30, 2017 Compared to Six Months Ended June 30, 2016
The following table reflects the changes in cash flows for the comparative periods:
 
Six Months Ended June 30,
 
 
(In thousands)
2017
 
2016
 
Change
Net cash (used in) provided by operating activities
$
(13,432
)
 
$
3,590

 
$
(17,022
)
Net cash provided by (used in) investing activities
1,722

 
(10,333
)
 
12,055

Net cash used in financing activities
(7,906
)
 
(46,609
)
 
38,703

Net Cash (Used in) Provided by Operating Activities
Net cash used in operating activities for the six months ended June 30, 2017 was $13.4 million, compared to net cash provided by operating activities for the six months ended June 30, 2016 of $3.6 million. The increase in net cash used in operations of $17.0 million was primarily driven by increased general and administrative costs associated with operating as a stand-alone organization, including consulting, professional and legal fees.
Net Cash Provided by (Used in) Investing Activities
Net cash provided by investing activities for the six months ended June 30, 2017 was $1.7 million, compared to $10.3 million used in investing activities for the six months ended June 30, 2016. The decrease in net cash used in investing activities of $12.1 million was driven by a decrease in capital expenditure of $43.6 million, as more projects were under development during 2016, and a decrease in cash paid for acquisitions of $32.1 million compared to the same period in 2016. This was partially offset by an increase in restricted cash of $54.3 million as less cash became available for use in the six months ended June 30, 2017 as compared to the six months ended June 30, 2016, and a decrease in cash acquired from acquisitions of $8.0 million due to the consolidation of the wind power plants in India acquired from FERSA in 2016.
Net Cash Used in Financing Activities
Net cash used in financing activities for the six months ended June 30, 2017 was $7.9 million, compared to $46.6 million for the six months ended June 30, 2016. The decrease in net cash used in financing activities of $38.7 million was driven by $35.4 million of cash used to repay the Senior Notes, $30.7 million of cash used to pay dividends and a net $21.6 million borrowed for project debt financing in the six months ended June 30, 2016, offset by cash provided by net parent investments in the amount of $49.0 million for the same period.
Off-Balance Sheet Arrangements
As of June 30, 2017, the Company did not have any off-balance sheet arrangements. As of December 31, 2016, the Company had one outstanding $0.4 million letter of credit issued in August 2016 under the Revolver in support of the Alto Cielo acquisition. This letter of credit was terminated on March 23, 2017 in connection with the Fifth Amendment.

Recently Issued Accounting Standards
See Item 1. Note 1 - Nature of Operations for information regarding recently issued accounting standards that are relevant to the Company.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This communication contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. These statements involve estimates, expectations, projections, goals, assumptions, known and unknown risks, and uncertainties and typically include words or variations of words such as “expect,” “anticipate,” “believe,” “intend,” “plan,” “seek,” “estimate,” “predict,” “project,” “goal,” “guidance,” “outlook,” “objective,” “forecast,” “target,” “potential,” “continue,” “would,” “will,” “should,” “could,” or “may” or other comparable terms and phrases. All statements that address operating performance, events, or developments that TerraForm Global, Inc. and its subsidiaries (together, the “Company”) expect or anticipate will occur in the future are forward-looking statements. They may include estimates of cash available for distribution to shareholders, earnings, revenues, capital expenditures, liquidity, capital structure, future growth, financing arrangements and other financial performance items (including future dividends per share), descriptions of management’s plans or objectives for future operations, products, services, or descriptions of assumptions

62



underlying any of the above. Forward-looking statements provide the Company’s current expectations or predictions of future conditions, events, or results and speak only as of the date they are made. Although the Company believes its expectations and assumptions are reasonable, it can give no assurance that these expectations and assumptions will prove to have been correct and actual results may vary materially.
Some of the important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are listed below and further disclosed under the section entitled Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, which was filed on June 15, 2017:
risks related to the closing of the transactions contemplated by the merger agreement entered into with certain affiliates of Brookfield Asset Management Inc. (the “Brookfield Transaction”) and the consequences to the Company if the Brookfield Transaction is not consummated;
risks related to our relationship with SunEdison, Inc. (“SunEdison”);
risks related to the voluntary filing by SunEdison and certain of its domestic and international subsidiaries for protection under Chapter 11 of the U.S. Bankruptcy Code (the “SunEdison Bankruptcy”), including our transition away from reliance on SunEdison for management, corporate and accounting services, employees, critical systems and information technology infrastructure, and the operation, maintenance and asset management of our power plants, and the risk of recovery on our claims against SunEdison;
risks related to the settlement agreement entered into among the Company, SunEdison and certain of their respective affiliates to resolve, among other things, the intercompany claims between the Company and SunEdison in the SunEdison Bankruptcy;
risks related to events of default and potential events of default arising under (i) the indenture governing our 9.75% Senior Notes due 2022 (the “Senior Notes”) and/or (ii) project level financings and other agreements related to the SunEdison Bankruptcy, our failure to complete corporate and/or project level audits, SunEdison’s failure to perform its obligations under project level agreements, and/or related adverse effects on our business and operations (including the delay in the filing of our periodic reports with the SEC and other factors;
the condition of the debt and equity capital markets and our ability to borrow additional funds and access the capital markets, as well as our substantial indebtedness and the possibility that we may incur additional indebtedness going forward;
risks related to our failure to satisfy the requirements of Nasdaq, which could result in the delisting of our common stock;
our ability to integrate the power plants we acquire from third parties or otherwise and realize the anticipated benefits from such acquisitions;
our ability to distribute cash from our project companies to the United States;
fluctuations in exchange rates of the currencies in which we generate our revenue and incur our expenses;
our ability to complete our pending acquisition;
the willingness and ability of the counterparties to our offtake agreements to fulfill their obligations under such agreements;
price fluctuations and termination provisions related to our offtake agreements;
our ability to successfully identify, evaluate and consummate acquisitions;
risks related to conducting operations in emerging markets;
government regulation, including compliance with regulatory and permit requirements and changes in market rules, rates, tariffs, environmental laws and policies affecting renewable energy;
operating and financial restrictions placed on us and our subsidiaries related to agreements governing our indebtedness and other agreements of certain of our subsidiaries and project companies, including the indenture governing the Senior Notes;
our ability to compete against traditional and renewable energy companies;
hazards customary to the power production industry and power generation operations such as unusual weather conditions, catastrophic weather-related or other damage to facilities, unscheduled generation outages, maintenance or repairs, interconnection problems or other developments, environmental incidents, or electric transmission constraints and curtailment and the possibility that we may not have adequate insurance to cover losses as a result of such hazards;
the variability of wind and solar resources, which may result in lower than expected output of our renewable energy facilities;
our ability to expand into new business segments or new geographies;
departure of some or all of the employees providing services to us, particularly executive officers, key employees, or O&M or asset management personnel;
pending and future litigation;

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our ability to operate our business efficiently, to operate and maintain our information technology, technical, accounting and generation monitoring systems, to manage capital expenditures and costs tightly, to manage risks related to international operations, and to generate earnings and cash flows from our asset-based businesses in relation to our debt and other obligations, including in light of the SunEdison Bankruptcy and the ongoing process to establish separate information technology systems; and
potential conflicts of interests due to the fact that certain of our directors and executive officers are also directors and executive officers of TerraForm Power, Inc.

The Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions, factors, or expectations, new information, data, or methods, future events, or other changes, except as required by law. The foregoing list of factors that might cause results to differ materially from those contemplated in the forward-looking statements should be considered in connection with information regarding risks and uncertainties, which are described in this Quarterly Report on Form 10-Q and the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, as well as additional factors we may describe from time to time in other filings with the SEC. You should understand that it is not possible to predict or identify all such factors and, consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.


Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to several market risks in our normal business activities. Market risk is the potential loss that may result from market changes associated with our business or with an existing or forecasted financial or commodity transaction. The types of market risks we are exposed to include interest rate risk, foreign currency risk, liquidity risk and credit risk. We do not use derivative financial instruments for speculative or trading purposes.
Interest Rate Risk
As of June 30, 2017, our corporate level debt consisted of the Senior Notes (fixed rate). The estimated fair value of our corporate level debt was approximately $855.3 million and the outstanding amount of our corporate level debt was $753.5 million. We estimate that a 100 bps, or 1.0%, increase or decrease in market interest rates for this debt would have decreased or increased the fair value of our long-term debt by $34.0 million.
As of June 30, 2017, our project level debt was at both fixed and variable rates. The estimated fair value of our project level debt was $395.9 million and the outstanding amount of our project level debt was $352.7 million. We have entered into interest rate derivatives to swap certain of our variable rate project level debt to a fixed rate. Although we intend to use hedging strategies to mitigate our exposure to interest rate fluctuations, we may not hedge all of our interest rate risk and, to the extent we enter into interest rate hedges, our hedges may not necessarily have the same duration as the associated indebtedness. Our exposure to interest rate fluctuations will depend on the amount of indebtedness that bears interest at variable rates, the time at which the interest rate is adjusted, the amount of the adjustment, our ability to prepay or refinance variable rate indebtedness when fixed rate debt matures and needs to be refinanced and hedging strategies we may use to reduce the impact of any increases in rates. We estimate that a hypothetical 100 bps, or 1.0%, increase or decrease in our variable interest rates pertaining to interest rate swaps would have decreased or increased the fair value of the swaps respectively by $13.5 million and $12.5 million for the three months ended June 30, 2017.
Foreign Currency Risk
During the six months ended June 30, 2017 and the year ended December 31, 2016, all of our revenues were generated outside of the United States in Brazilian real, Chinese yuan renminbi, Indian rupee, Malaysian ringgit, South African rand, Thai baht, and U.S. dollars, and were translated into the U.S. dollar, which is our reporting currency. The PPAs, O&M agreements, financing agreements and other contractual arrangements in our current portfolio are denominated in Brazilian real, Chinese yuan renminbi, Indian rupee, Malaysian ringgit, South African rand, Thai baht, U.S. dollars and Uruguayan pesos.
We use currency forward contracts in certain instances to mitigate the financial market risks of fluctuations in foreign currency exchange rates. We manage our foreign currency exposures through the use of these currency forward contracts to reduce risks arising from the change in fair value of certain assets and liabilities denominated in foreign currencies. The objective of these practices is to minimize the impact of foreign currency fluctuations on our operating results. We estimate that a hypothetical 100 bps, or 1.0%, increase and decrease in foreign currency exchange rates against the U.S. dollar would have the following impacts on our earnings for the six months ended June 30, 2017:

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(In thousands)
-100 BPS
 
+100 BPS
Brazilian real
(509)
 
499
Chinese yuan renminbi
(161)
 
158
Indian rupee
(447)
 
438
Malaysian ringgit
(38)
 
37
South African rand
(203)
 
199
Thai baht
(62)
 
61
   Total impact
(1,421)
 
1,393
Liquidity Risk
The Company’s principal liquidity requirements are to finance current operations, service debt and, if and when declared by the Company, to fund cash dividends to investors. Changes in operating plans, lower than anticipated electricity sales, increased expenses, acquisitions or other events may cause management to seek additional debt or equity financing in future periods. There can be no guarantee that financing will be available on acceptable terms or at all. Debt financing, if available, could impose additional cash payment obligations and additional covenants and operating restrictions. The Company’s ability to meet its debt service obligations and other capital requirements, including capital expenditures, as well as make acquisitions, will also depend on the Company’s future operating performance which, in turn, will be subject to general economic, financial, business, competitive, legislative, regulatory and other conditions, many of which are beyond management’s control.
Specifically, our controlling shareholder, SunEdison, Inc., and certain of its affiliates voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code on April 21, 2016. We believe that we have observed formalities and operating procedures to maintain our separate existence, that our assets and liabilities can be readily identified as distinct from those of SunEdison and that we do not rely substantially on SunEdison for funding or liquidity and will have sufficient liquidity to support our ongoing operations. Our contingency planning with respect to the SunEdison Bankruptcy has included and will include, among other things, establishing stand-alone information technology, accounting and other critical systems and infrastructure, directly hiring employees necessary to operate our business and establishing employee retention efforts, retaining third parties to provide O&M and asset management services for our power plants where we do not perform these services ourselves and the pursuit of strategic alternatives.
However, there is a risk that an interested party in the SunEdison Bankruptcy could request that the assets and liabilities of the Company be substantively consolidated with SunEdison and that the Company and/or its assets and liabilities be included in the SunEdison Bankruptcy. While it has not been requested to date and we believe there is no basis for substantive consolidation in our circumstances, we cannot assure you that substantive consolidation will not be requested in the future or that the bankruptcy court would not consider it. Substantive consolidation is an equitable remedy in bankruptcy that results in the pooling of assets and liabilities of the debtor and one or more of its affiliates solely for purposes of the bankruptcy case, including for purposes of distributions to creditors and voting on and treatment under a reorganization plan. Bankruptcy courts have broad equitable powers, and as a result, outcomes in bankruptcy proceedings are inherently difficult to predict.
To the extent the bankruptcy court were to determine that substantive consolidation was appropriate under the Company's facts and circumstances, the assets and liabilities of the Company could be made available to help satisfy the debt or contractual obligations of SunEdison.
There have also been covenant defaults under certain of our project level financing arrangements, mainly because of delays in the delivery of project level audited financial statements and the SunEdison Bankruptcy, which resulted in defaults because SunEdison, Inc. and certain of its affiliates have been serving as O&M and asset management service providers or as guarantors under relevant contracts. We have been working diligently with our lenders to cure or waive instances of default, including through the completion of project level audits and the retention of replacement service providers. However, there can be no assurance that all remaining defaults will be cured or waived. All of our project level financing arrangements are on a non-recourse basis, and therefore these defaults do not directly affect the financial position of the Company. However, if the remaining defaults are not cured or waived, this would continue to restrict the ability of the relevant project companies to make distributions to us, and may entitle certain project level lenders to demand repayment or enforce their security interests or other remedies.
Additionally, covenant defaults may occur in the future under the indenture governing the Senior Notes in the event of delays in the filing of our periodic reports with the SEC. There can be no assurance that we will be able to file our periodic reports with the SEC within the periods currently required under the indenture governing the Senior Notes or that the holders of

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the Senior Notes will agree to any required extension of financial statement filing dates on acceptable terms or at all. A default on the Senior Notes would permit the trustee or the holders of at least 25.0% in aggregate principal amount of notes outstanding to accelerate the Senior Notes. The Company would likely not have sufficient liquidity to meet this obligation, which could have a material adverse effect on our business, results of operations, financial condition and ability to pay dividends.
The risk of substantive consolidation of the Company with SunEdison and inclusion in the SunEdison Bankruptcy, as well as the risk of future covenant defaults under the indenture governing the Senior Notes, raise substantial doubt about the Company’s ability to continue as a going concern.
Credit Risk
Credit risk relates to the risk of loss resulting from non-performance or non-payment by offtake counterparties or SunEdison under the terms of their contractual obligations, thereby impacting the amount and timing of expected cash flows. We monitor and manage credit risk through credit policies that include a credit approval process and the use of credit mitigation measures such as having a diversified portfolio of offtake counterparties. However, there are a limited number of offtake counterparties under offtake agreements in each region that we operate, and this concentration may impact the overall exposure to credit risk, either positively or negatively, in that the offtake counterparties may be similarly affected by changes in economic, industry or other conditions. If any of these receivable balances in the future should be deemed uncollectible, it could have a material adverse effect on our forecasted cash flows.

Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016, which was filed on June 15, 2017, management identified material weaknesses in the Company’s internal control over financial reporting. We carried out an evaluation as of June 30, 2017, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were ineffective as of June 30, 2017 due to previously identified material weaknesses, as described in Item 9A. Controls and Procedures in our Annual Report on Form 10-K for the year ended December 31, 2016.
Notwithstanding such material weaknesses in internal control over financial reporting, our management concluded that our unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q fairly present, in all material respects, the Company’s financial position, results of operations and cash flows as of the dates, and for the periods presented, in conformity with generally accepted accounting principles.
Remediation Plan

The Company continues to develop and implement our remediation plan as described in Item 9A. Controls and Procedures in our Annual Report on Form 10-K for the year ended December 31, 2016.

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PART II. Other Information
Item 1. Legal Proceedings.
For a description of our legal proceedings, see Item 1. Note 15 - Commitments and Contingencies to our unaudited condensed consolidated financial statements.
Item 1A. Risk Factors.
In addition to the information set forth elsewhere in this Quarterly Report on Form 10-Q, you should carefully consider the factors under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016, which was filed on June 15, 2017. These risks could materially and adversely affect our business, financial condition and results of operations. There have been no material changes in the Company's risk factors from those described in our Form 10-K for the year ended December 31, 2016.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
Senior Notes
See Item 1. Note 7 - Long-Term Debt to our unaudited condensed consolidated financial statements for a description of notices of default received by the Company under the Senior Notes.

Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
See the Exhibit Index following the signature page of this report.

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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 
 
TERRAFORM GLOBAL, INC.
 
 
 
 
 
 
 
 
 
 
 
By:
/s/ Rebecca J. Cranna
Date:
August 8, 2017
 
 
 
Name:
Rebecca J. Cranna
 
 
 
 
 
Title:
Executive Vice President and Chief Financial Officer (Principal financial officer)


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EXHIBIT INDEX
Number
 
Description
2.1
 
Agreement and Plan of Merger, dated as of March 6, 2017, among TerraForm Global, Inc., Orion US Holdings 1 L.P., and BRE GLBL Holdings Inc. (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on March 7, 2017)
2.2
 
Settlement Agreement, dated as of March 6, 2017, among TerraForm Global, Inc., TerraForm Global, LLC, TerraForm Global Operating, LLC, certain direct and indirect subsidiaries of TerraForm Global, Inc. party thereto, SunEdison, Inc., the non-debtor direct and indirect subsidiaries of SunEdison, Inc. party thereto (incorporated by reference to Exhibit 2.2 to the Registrant’s Current Report on Form 8-K filed on March 7, 2017)
2.3
 
Voting and Support Agreement, dated as of March 6, 2017, among Orion US Holdings 1 L.P., BRE GLBL Holdings Inc., SunEdison, Inc., SunEdison Holdings Corporation and TerraForm Global, Inc. (incorporated by reference to Exhibit 2.3 to the Registrant’s Current Report on Form 8-K filed on March 7, 2017)
10.1
 
Fifth Amendment to Credit and Guaranty Agreement, dated as of March 31, 2017, by and among TerraForm Global Operating, LLC, and other credit parties party thereto, Goldman Sachs Bank USA, as a lender and as a representative agent and the other lenders party thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on April 6, 2017)
10.2
 
Settlement Agreement and Mutual Release, dated as of May 26, 2017, by and between TerraForm Global, Inc., TerraForm Global, LLC, TerraForm Global Brazil Holding B.V., TERP GLBL Brasil I Participacoes Ltda. and Renova Energia, S.A. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 30, 2017)
10.3
 
Letter Agreement, dated as of May 26, 2017, between Orion US Holdings 1 L.P. and TerraForm Global, Inc. (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on May 30, 2017)
31.1
 
Certification by the Chief Executive Officer of TerraForm Global, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
 
Certification by the Chief Financial Officer of TerraForm Global, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32*
 
Certification by the Chief Executive Officer and the Chief Financial Officer of TerraForm Global, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS
 
XBRL Instance Document
101.SCH
 
XBRL Taxonomy Extension Schema Document
101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
 
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase Document

* This information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.


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