| Item 1.01. | Entry into a Material Definitive Agreement. |
As previously disclosed, in April 2023, the U.S. Department of Energy (the “DOE”) announced a conditional commitment to guarantee certain future financing arrangements of Sunnova Energy International Inc., a Delaware corporation (the “Company”). On September 27, 2023, Sunnova Energy Corporation (“SEC”), a wholly owned, direct subsidiary of the Company, entered into a Loan Guarantee Agreement (the “Loan Guarantee Agreement”) with Sunnova ABS Management, LLC, a wholly owned, direct subsidiary of SEC, and the DOE, acting by and through the Secretary of Energy, pursuant to which the DOE agreed to provide guarantees over three years of up to 90% of the initial principal balance of certain loans to be issued in the future by subsidiaries of the Company (“Guaranteed Loans”) secured by consumer loans originated by the Company under a new solar loan channel (the “Hestia Program”), subject to a maximum aggregate amount of $3.0 billion of guarantees on $3.33 billion aggregate principal amount of Guaranteed Loans. These guarantees, if issued, are expected to support the Hestia Program by facilitating the Company’s origination of consumer loans associated with solar, storage, or other Sunnova Adaptive Home™ technologies that utilize the Company’s purpose-built demand response and virtual power plant enabling software.
Certain conditions must be satisfied before the DOE issues any such loan guarantees, including finalization of definitive financing documents and satisfaction of applicable regulatory requirements. There can be no assurances that the DOE will issue guarantees of the Company’s loans on these terms or at all.
Guarantee Issuances and Guarantee Suspension Events
Proceeds from the Guaranteed Loans will be used to reimburse the Company for a portion of certain costs of financing the installation of energy systems outfitted with the Company’s purpose-built technology (“Eligible Project Costs”). Any guarantees issued under the Loan Guarantee Agreement will be subject to the satisfaction of customary conditions, including certification of compliance with specified applicable legal requirements, the accuracy of project-related representations and warranties, compliance with project-related covenants, delivery of updated project-related information, and certification from the DOE’s consulting engineer that proceeds of the Guaranteed Loans are used to reimburse Eligible Project Costs. The DOE’s obligation to provide new individual guarantees from time to time under the Loan Guarantee Agreement is also subject to the absence of certain events customary in nature for transactions of this type, including (i) the occurrence of an event of default or amortization event under a Guaranteed Loan, (ii) the failure to maintain or certify as to certain financial thresholds, including working capital and tangible net worth of the Company and SEC, (iii) failure to pay certain transaction costs, expenses or fees when due and payable, (iv) with respect to SEC’s securitization transactions, the termination of a manager or servicer or an event of default that results in acceleration of the related asset-backed notes and (v) certain material changes in the nature or conduct of the Company’s or SEC’s business, including a change of control of SEC or its subsidiaries.
Representations, Warranties and Covenants
The Loan Guarantee Agreement contains customary representations and warranties including, among other things, representations and warranties regarding (i) SEC’s ownership of certain subsidiaries, (ii) compliance with applicable law and (iii) the use of federal funds by SEC and its subsidiaries in connection with the project. Under the Loan Guarantee Agreement, SEC is subject to customary borrower affirmative and negative covenants including, among other things, covenants regarding (i) changes of control of SEC and its subsidiaries, (ii) project-related reporting and information requirements, (iii) utilization priority of the Company’s loans which are eligible as collateral for a Guaranteed Loan and (iv) compliance with the requirements of applicable law.
The foregoing description of the Loan Guarantee Agreement is qualified in its entirety by reference to the Loan Guarantee Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated into this Item 1.01 by reference.
| Item 7.01. | Regulation FD Disclosure. |
On September 28, 2023, the Company issued a press release announcing the entry into the Loan Guarantee Agreement. A copy of this press release is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information in Item 7.01 of this Current Report on Form 8-K and the press release attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.
