Pattern Energy Group Inc. - 10-Q filing on 2018-08-09

Variable Interest Entities

6 Months Ended

Jun. 30, 2018

Variable Interest Entities [Abstract]

The Company consolidates variable interest entities (VIEs) in which it holds a variable interest and is the primary beneficiary. The Company has determined that Logan's Gap, Panhandle 1, Panhandle 2, Post Rock, Amazon Wind and Broadview Energy Holdings LLC (a subsidiary of Broadview Project) are VIEs. The Company determined that as the managing member of the VIEs, it is the primary beneficiary by reference to the power and benefits criterion under ASC 810, Consolidation, and therefore, consolidates VIEs. The Company considered responsibilities within the contractual agreements, which grant it the power to direct the activities of the VIE that most significantly impact the VIE's economic performance. Such activities include management of the wind farms' operations and maintenance, budgeting, policies and procedures. In addition, the Company has the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIEs on the basis of the income allocations and cash distributions.

The Company’s equity method investment in Pattern Development 2.0 is considered to be a VIE primarily because the total equity at risk is not sufficient to permit Pattern Development 2.0 to finance its activities without additional subordinated financial support by the equity holders. The Company does not hold the power or benefits to be the primary beneficiary and does not consolidate the VIE. The carrying value of its unconsolidated investment in Pattern Development 2.0 was $107.9 million as of June 30, 2018. The Company's maximum exposure to loss is equal to the carrying value of the investment.

The following table summarizes the carrying amounts of major consolidated balance sheet items for consolidated VIEs as of June 30, 2018 and December 31, 2017. All assets (excluding deferred financing costs, net and finite-lived intangible assets, net) and liabilities of a consolidated VIE presented below are (1) assets that can be used only to settle obligations of the VIE or (2) liabilities for which creditors do not have recourse to the general credit of the primary beneficiary.



	June 30, 2018			December 31, 2017
Assets
Current assets:
Cash and cash equivalents	$	31,395		$	33,273
Restricted cash	4,336			4,314
Trade receivables	12,759			12,769
Prepaid expenses	7,050			4,965
Other current assets	1,513			2,597
Deferred financing costs, net	135		150	150
Total current assets	57,188			58,068

Restricted cash	614			3,330
Property, plant and equipment, net	1,935,581			1,984,606
Deferred financing costs, net	1,489			1,549
Finite-lived intangible assets, net	11,903			12,210
Other assets	12,830			12,984
Total assets	$	2,019,605		$	2,072,747

Liabilities
Current liabilities:
Accounts payable and other accrued liabilities	$	17,001		26,826
Accrued construction costs	13			759
Accrued interest	127			78
Other current liabilities	3,867			4,789
Total current liabilities	21,008			32,452

Finite-lived intangible liability, net	49,460			51,194
Contingent liabilities	—			87
Other long-term liabilities	56,345			47,345
Total liabilities	$	126,813		$	131,078