8point3 Enters Into A Definitive Agreement To Be Acquired By Capital Dynamics

8point3 Energy Partners LP (NASDAQ:CAFD) ("8point3" or the "Partnership") today announced it has entered into an Agreement and Plan of Merger and Purchase Agreement (the "Merger Agreement") with CD Clean Energy and Infrastructure V JV, LLC, an investment fund managed by Capital Dynamics, Inc., and certain other co-investors (collectively, "Capital Dynamics"), pursuant to which Capital Dynamics will acquire 8point3 through an acquisition of 8point3 General Partner, LLC (the "General Partner"), the general partner of the Partnership (such transaction, the "GP Transfer"), all of the outstanding Class A shares in the Partnership and all of the outstanding common and subordinated units and incentive distribution rights in 8point3 Operating Company, LLC ("OpCo"), the Partnership's operating company (the "Proposed Transactions").

Pursuant to the Proposed Transactions, the Partnership's Class A shareholders and First Solar, Inc. (NASDAQ: FSLR) ("First Solar") and SunPower Corporation (NASDAQ: SPWR) ("SunPower" and, together with First Solar, the "Sponsors"), as holders of common and subordinated units in OpCo, will receive $12.35 per share or per unit in cash, plus a preset daily amount representing cash expected to be generated from December 1, 2017 through closing less any distributions received after the execution of the Merger Agreement and prior to closing. No consideration will be received by the Sponsors for the incentive distribution rights and the GP Transfer.
  • Proposed Transactions represent about $977 million in equity value and about $1.7 billion in enterprise value
  • Culmination of an extensive and competitive marketing process with more than 130 parties contacted
  • Committed debt financing secured by Capital Dynamics enhances certainty of closing the Proposed Transactions
  • Proposed Transactions unanimously approved by the Conflicts Committee of the Board of Directors of 8point3 (the "Conflicts Committee") and approved by the Board of Directors of the General Partner as well as the Boards of Directors of First Solar and SunPower
  • Proposed Transactions expected to close in second fiscal quarter or third fiscal quarter of 2018

The completion of the Proposed Transactions is subject to a number of closing conditions, including approval by a majority of the outstanding 8point3 public Class A shareholders, the expiration of the waiting period under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976, Federal Energy Regulatory Commission (FERC) Section 203 approval and the approval of the Committee on Foreign Investment in the United States (CFIUS). The Sponsors, which are the indirect owners of our General Partner and approximately 64.5 percent of OpCo's outstanding units, have executed an agreement to vote in support of the Proposed Transactions. Additionally, the Proposed Transactions are subject to certain other customary closing conditions.

"The Partnership announced today that the Sponsors' strategic review has concluded with the signing of a definitive agreement for the Partnership to be acquired by Capital Dynamics," said Chuck Boynton, CEO of 8point3. "This transaction is the culmination of a thorough and comprehensive strategic review process that determined that Capital Dynamics's offer was the most compelling proposal for all shareholders relative to other options, including the option to continue as a stand-alone company."

The Partnership was formed to be a growth-oriented limited partnership, owning, operating and acquiring solar energy generation projects, with the primary objective of generating predictable cash distributions that grow at a sustainable rate.  The Partnership intended to achieve this objective by acquiring high-quality solar assets primarily developed by its Sponsors.

For the last several quarters, the ability of the Partnership to execute on its growth strategy has been very limited.  The evolving nature of the solar industry has enabled the Sponsors' strategies of recycling capital faster and more efficiently by selling projects at a stage of construction and development that is earlier than best suited for the Partnership.  In addition, the Partnership's higher cost of capital and difficulty in accessing the capital markets on a consistent basis resulted in several replacements of projects under the Right of First Offer (ROFO) arrangements, as well as the Partnership later waiving its rights to acquire a number of ROFO projects from the Sponsors, with such waived projects subsequently acquired by third party buyers at purchase prices higher than those offered to the Partnership. These challenges, among others, present strategic and financial implications for the Partnership's operations and prospects as a stand-alone public company without the Sponsors, and its resulting competitive position in the market for renewable energy assets.

Goldman Sachs is acting as financial advisor to SunPower, and BofA Merrill Lynch is acting as financial advisor to First Solar, and Evercore is acting as financial advisor to the Conflicts Committee. Baker Botts L.L.P. is acting as legal counsel to SunPower, Skadden, Arps, Slate, Meagher & Flom, LLP is acting as legal counsel to First Solar and Richards, Layton & Finger P.A. is acting as legal counsel to the Conflicts Committee.

Fourth Quarter 2017 Results

The Partnership also announced its fourth quarter and fiscal year 2017 results.  8point3 reported revenue of $15.8 millionand $70.1 million, net income of $8.8 million and $39.2 million, Adjusted EBITDA of $26.2 million and $121.3 million, and cash available for distribution (CAFD) of $37.8 million and $111.9 million, respectively.

The Board of Directors of the General Partner also declared a cash distribution for its Class A shares of $0.2802 per share for the fourth quarter, which was paid January 12, 2018 to shareholders of record on January 2, 2018.

The Partnership did not utilize its $125 million at-the-market (ATM) equity offering program during the fourth quarter of fiscal year 2017. 

About 8point3
8point3 Energy Partners LP (NASDAQ:CAFD) is a limited partnership formed by First Solar, Inc. and SunPower Corporationto own, operate and acquire solar energy generation projects. The Partnership owns interests in projects in the United States that generate long-term contracted cash flows and serve utility, commercial and residential customers. 

About Capital Dynamics
Capital Dynamics, Inc. is an independent, global asset manager, investing in private equity, private credit and clean energy infrastructure. We are client-focused, tailoring solutions to meet investor requirements. The Firm manages investments through a broad range of products and opportunities including separate account solutions, investment funds and structured private equity products. Capital Dynamics currently has $15 billion in assets under management and advisement.

 

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