I've verified this on yakkety as shown in description, using:

smoser@smoser1219y:~$ dpkg-query --show cloud-init
cloud-init      0.7.8-49-g9e904bb-0ubuntu1~16.10.1
smoser@smoser1219y:~$ cat /etc/cloud/build.info 
build_name: server
serial: 20161214


** Tags removed: verification-needed
** Tags added: verification-done

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https://bugs.launchpad.net/bugs/1611074

Title:
  Reformatting of ephemeral drive fails on resize of Azure VM

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