Item 1.01. Entry into a Material Definitive Agreement.
On July 27, 2021, a wholly owned, indirect subsidiary (the "Issuer") of Sunnova
Energy International Inc., a Delaware corporation (the "Company"), entered into
an indenture (the "Indenture") with Wilmington Trust, National Association, as
the indenture trustee, and completed an issuance of solar loan backed notes that
were issued pursuant to the Indenture (the "Transaction").
The Issuer issued $106,200,000 aggregate principal amount of 1.62% Solar Loan
Backed Notes, Series 2021-B Class A (the "Class A Notes") and $106,200,000
aggregate principal amount of 2.01% Solar Loan Backed Notes, Series 2021-B Class
B (the "Class B Notes" and, collectively with the Class A Notes, the "Notes").
The Notes have an anticipated repayment date of July 20, 2028.
The Notes were offered and sold within the United States only to persons
reasonably believed to be qualified institutional buyers pursuant to Rule 144A
under the Securities Act of 1933, as amended (the "Securities Act") and to
persons outside of the United States in compliance with Regulation S under the
Securities Act. The Notes have not been registered under the Securities Act or
the securities laws of any other jurisdiction. The Class A Notes have been rated
AA- (sf) and the Class B Notes have been rated A- (sf) by Kroll Bond Rating
The Notes are secured by the trust estate which consists primarily of all right,
title and interest of the Issuer in a portfolio of solar loans made to consumers
for the purpose of installing residential photovoltaic and/or energy storage
Sunnova ABS Management, LLC, a Delaware limited liability company and a wholly
owned, direct subsidiary of the Company (the "Manager"), will act as manager and
servicer pursuant to the terms of a Management Agreement and Servicing Agreement
between the Issuer and the Manager. The Manager will provide, or cause to be
provided, all operations, maintenance, administrative, collection and other
management and servicing services for the Issuer and in respect of the solar
Events of Default and Amortization Events
The Indenture contains events of default that are customary in nature for solar
securitizations of this type, including, among other things, (a) the non-payment
of interest, (b) material violations of covenants, (c) material breaches of
representations and warranties and (d) certain bankruptcy events. An event of
default will also occur with respect to the Notes if they are not paid in full
at their rated final maturity. The Notes are also subject to amortization events
that are customary in nature for solar securitizations of this type, including
(a) the occurrence of an event of default, (b) the bankruptcy or insolvency of
the Manager, (c) failure to deposit the amount required to be deposited in the
collections account, (d) the amount of funds available for distribution falling
below certain levels and (e) the cumulative default level rising above certain
levels. The occurrence of an amortization event or an event of default could
result in accelerated amortization of the Notes, and the occurrence of an event
of default could, in certain instances, result in the liquidation of the
collateral securing the Notes. In connection with the Transaction, Sunnova
Energy Corporation, a wholly owned, direct subsidiary of the Company, issued a
performance guaranty covering (a) the performance of certain obligations of its
affiliates, (b) the performance obligations of the Manager under the Management
Agreement and Servicing Agreement and (c) the payment of certain expenses
incurred by the Issuer and the Indenture Trustee.
The foregoing description of the Indenture is qualified in its entirety by
reference to the full text of the Indenture, a copy of which the Company plans
to file as an exhibit to its Quarterly Report on Form 10-Q for the quarter
ending September 30, 2021.
Use of Proceeds
The Company intends to use the net proceeds from the sale of the notes to
finance or refinance, in whole or in part, existing or new Eligible Green
Projects, including to simultaneously repay a portion of one or more currently
existing financing arrangements of the Company's subsidiaries and for general
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information relating to the Transaction set forth in Item 1.01 above is
incorporated herein by reference.
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