| Item 1.01. | Entry into a Material Definitive Agreement. |
On August 17, 2021, Sunnova Energy Corporation (the “Issuer”), a wholly owned subsidiary of Sunnova Energy International Inc. (“Sunnova”), issued $400 million aggregate principal amount of 5.875% senior notes due 2026 (the “Notes”), under an indenture, dated as of August 17, 2021 (the “Indenture”), among the Issuer, the Guarantors (as defined below) and Wilmington Trust, National Association, as trustee for the Notes. The Notes were issued in a private offering exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act and to persons outside of the United States pursuant to Regulation S under the Securities Act, at an issue price equal to 98.76% of the principal amount thereof.
The Issuer will allocate an amount equal to the net proceeds from the offering to finance or refinance, in whole or in part, existing or new eligible green projects as described in Sunnova’s recently launched new green financing framework, and pending such use, will maintain or apply the net proceeds in accordance with the Issuer’s normal liquidity practices.
The Notes are unsecured senior obligations of the Issuer, guaranteed by the Guarantors, and will mature on September 1, 2026. Each Note will bear interest at a rate per annum of 5.875%, payable semi-annually in arrears on March 1 and September 1 of each year, commencing on March 1, 2022. Interest will be payable to holders of record on the immediately preceding February 15 and August 15, as the case may be. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.
The following is a brief description of the terms of the Notes and the Indenture.
Ranking
The Notes will be the Issuer’s senior unsecured obligations and will rank:
| | • | | senior in right of payment to any of Sunnova’s and its consolidated subsidiaries’ future indebtedness that is expressly subordinated in right of payment to the notes; |
| | • | | equal in right of payment to any of Sunnova’s and its consolidated subsidiaries’ existing and future unsecured indebtedness that is not so subordinated; |
| | • | | effectively junior in right of payment to any of Sunnova’s and its consolidated subsidiaries’ future secured indebtedness to the extent of the value of the assets securing such indebtedness; and |
| | • | | structurally junior to all existing and future indebtedness and other liabilities of Sunnova’s non-guarantor subsidiaries. |
Guarantees
The Notes will initially be guaranteed on a senior unsecured basis by Sunnova and Sunnova Intermediate Holdings, LLC, a wholly owned subsidiary of the Issuer (collectively, the “Guarantors”).
Optional Redemption
At any time prior to September 1, 2023, the Issuer may on any one or more occasions redeem all or any part of the Notes upon not less than 10 nor more than 60 days’ notice, at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus the Applicable Redemption Premium (as defined in the Indenture) as of, and accrued and unpaid interest, if any, to, but excluding, the date of redemption.
On or after September 1, 2023, the Issuer may on any one or more occasions redeem all or any part of the Notes, upon not less than 10 nor more than 60 days’ notice, at the redemption prices (expressed as a percentage of principal amount of the Notes) set forth below, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date, if redeemed during the twelve-month period beginning on September 1 of the years indicated below:
| | | | |
| Redemption Year Price | |
2023 | | | 102.938 | % |
2024 | | | 101.469 | % |
2025 and thereafter | | | 100.000 | % |
