| Item 1.01. | Entry into a Material Definitive Agreement. |
On September 26, 2023, Sunnova Energy Corporation (the “Issuer”), a wholly owned subsidiary of Sunnova Energy International Inc. (the “Company”), issued $400 million aggregate principal amount of 11.750% Senior Notes due 2028 (the “Notes”) under an indenture, dated as of September 26, 2023 (the “Indenture”), among the Issuer, the Company, Sunnova Intermediate Holdings, LLC (the “Subsidiary Guarantor”) 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 97.262% of the principal amount thereof.
The Issuer intends to 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, and pending such use, will maintain or apply the net proceeds in accordance with the Company’s normal liquidity practices.
The Notes are unsecured senior obligations of the Issuer, guaranteed by the Company and the Subsidiary Guarantor, and will mature on October 1, 2028. Each Note will bear interest at a rate per annum of 11.750%, payable semi-annually in arrears on April 1 and October 1 of each year, commencing on April 1, 2024. Interest will be payable to holders of record on the immediately preceding March 15 and September 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 our future indebtedness that is expressly subordinated in right of payment to the Notes; |
| | • | | equal in right of payment to any of our existing and future unsecured indebtedness that is not so subordinated; |
| | • | | effectively junior in right of payment to any of our 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 our non-guarantor subsidiaries. |
Guarantees
The Notes will initially be guaranteed on a senior unsecured basis by the Company and the Subsidiary Guarantor.
Optional Redemption
At any time prior to April 1, 2028 (the “Par Call Date”), 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 the Par Call Date, 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 accrued and unpaid interest, if any, to, but excluding, the date of redemption.
Change of Control Triggering Event; Asset Sales
If a specified change of control triggering event occurs, each holder of Notes will have the right to require the Issuer to repurchase that holder’s Notes for a payment in cash equal to 101% of the aggregate principal amount of Notes repurchased, plus accrued and unpaid interest, if any, on the Notes repurchased to, but excluding, the date of purchase. In connection with certain asset sales, the Issuer will be required to use the net cash proceeds of the asset sale to make an offer to purchase the Notes at 100% of the principal amount, together with any accrued and unpaid interest to, but excluding, the date of purchase.
