Acquisitions (Tables)

3 Months Ended

Mar. 31, 2020

Allocation of Acquisition-Date Fair Value of Assets, Liabilities and Non-controlling Interests

The preliminary allocation of the acquisition-date fair values of assets and liabilities pertaining to this business combination as of March 31, 2020, was as follows:


(In thousands)	As of February 11, 2020
Renewable energy facilities¹	$	477,269
Accounts receivable	33,242
Other assets	7,550
Intangible assets	183,655
Deferred income taxes	14,419
Goodwill²	40,862
Total assets acquired	756,997
Accounts payable, accrued expenses and other current liabilities	16,609
Long-term debt	468,812
Asset retirement obligations	22,609
Derivative liabilities	147,536
Operating lease liabilities	17,139
Other liabilities	5,900
Total liabilities assumed	678,605
Purchase price, net of cash and restricted cash acquired³	$	78,392

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(1)Includes $17.1 million operating lease right-of-use assets.

(2)The excess purchase price over the estimated fair value of net assets acquired of $40.9 million was recorded as goodwill and was assigned to the Regulated Solar and Wind segment. Goodwill is primarily attributable to expected synergies from the Company’s growing portfolio in Spain and the acquired employee knowledge of the operation and maintenance of concentrated solar power facilities.

(3)The Company acquired cash and cash equivalents of $22.0 million and restricted cash of $26.5 million as of the acquisition date.

The preliminary allocation of the acquisition-date fair values of assets, liabilities and non-controlling interests pertaining to this business combination as of March 31, 2020 were as follows:


(In thousands)	As of September 26, 2019 reported at December 31, 2019		Adjustments¹		As of September 26, 2019 reported at March 31, 2020
Renewable energy facilities in service²	$	581,717	$	8,574	$	590,291
Intangible assets	168,825		4,625		173,450
Accounts receivable	13,160		—		13,160
Prepaid expenses and other assets	9,734		(73)		9,661
Total assets acquired	773,436		13,126		786,562
Accounts payable, accrued expenses and other current liabilities	6,806		—		6,806
Asset retirement obligations	27,338		238		27,576
Operating lease liabilities	21,663		—		21,663
Other liabilities	7,650		—		7,650
Total liabilities assumed	63,457		238		63,695
Non-controlling interests³	3,028		—		3,028
Purchase price, net of cash and restricted cash acquired⁴	706,951		12,888		719,839
Deposit on acquisitions	24,831		(11,847)		12,984
Total cash paid for the WGL Acquisition, net of cash acquired⁵	$	731,782	$	1,041	$	732,823

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(1)The adjustments for the period were related to the transfer of title of certain Delayed Projects to the company during the three months ended March 31, 2020. See above for additional details.

(2)Includes $22.5 million operating lease right-of-use assets.

(3)The fair value of the non-controlling interests was determined using an income approach representing the best indicator of fair value and was supported by a discounted cash flow technique.

(4)The Company acquired cash and cash equivalents of $3.4 million as of the acquisition date.

(5)The adjustment to the amount of cash paid for the period represents additional payment made by the Company in relation to the net working capital acquired.

Business Acquisition, Pro Forma Information

The unaudited pro forma supplementary data presented in the table below gives effect to the Termosol Acquisition, as if the transaction had occurred on January 1, 2019. The pro forma net loss includes adjustments to depreciation and amortization expense for the valuation of renewable energy facilities and intangible assets and excludes the impact of acquisition costs. The unaudited pro forma supplementary data is provided for informational purposes only and should not be construed to be indicative of the Company’s results of operations had the acquisition been consummated on the date assumed or of the Company’s results of operations for any future date.


	Three Months Ended March 31,
(In thousands)	2020		2019
Total operating revenues, net	$	256,054	$	250,352
Net loss	(71,524)		(33,599)

The unaudited pro forma supplementary data presented in the table below gives effect to the WGL Acquisition, as if the transaction had occurred on January 1, 2019. The pro forma net loss includes interest expense related to incremental borrowings used to finance the transaction and adjustments to depreciation, accretion and amortization expense for the valuation of renewable energy facilities and intangible assets, and excludes the impact of acquisition costs disclosed below. The unaudited pro forma supplementary data is provided for informational purposes only and should not be construed to be indicative of the Company’s results of operations had the acquisition been consummated on the date assumed or of the Company’s results of operations for any future date.


(In thousands)	Three Months Ended March 31, 2019
Total operating revenues, net	$	242,018
Net loss	(40,993)

Intangible Assets at Acquisition Date

The following table summarizes the estimated fair value and weighted average amortization period of the acquired intangible assets as of the acquisition date. The Company attributed intangible asset value to licensing contracts in-place from the acquired renewable energy facilities. These intangible assets are amortized on a straight-line basis over the estimated remaining useful lives of the facilities from the Company’s acquisition date.

As of February 11, 2020

Fair Value (In thousands)

Weighted Average Amortization Period¹

Intangible assets - licensing contracts

183,655

18 years

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(1)For the purposes of this disclosure, the weighted average amortization period is determined based on a weighting of the individual intangible fair values against the total fair value.

The following table summarizes the estimated fair values and the weighted average amortization periods of the acquired intangible assets and assumed intangible liabilities as of the acquisition date. The Company attributed the intangible asset values to favorable rate revenue contracts and PPAs in-place from renewable energy facilities and the intangible liabilities to unfavorable rate revenue contracts.

WGL Acquisition

Fair Value
(In thousands)

Weighted Average Amortization Period¹

Favorable rate revenue contracts

27,400

16 years

In-place value of market rate revenue contracts

146,050

15 years

Unfavorable rate revenue contracts

7,650

2 years

———(1)For the purposes of this disclosure, the weighted average amortization periods are determined based on a weighting of the individual intangible fair values against the total fair value for each major intangible asset and liability class.

TerraForm Power, Inc. 10-Q