Business Context and Reporting Period
Company: Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI)
Filing Type: Form 8-K (Current Report)
Date of Report: June 20, 2024
Event: Commencement of a private offering of green senior unsecured notes (the "Notes"), subject to market conditions.
Key Financial Metrics and Capital Structure
This filing is a current report regarding a capital raise and does not contain audited financial statements, revenue, profit, or cash flow data for a specific reporting period.
- Instrument: Green senior unsecured notes.
- Guarantors: Hannon Armstrong Sustainable Infrastructure, L.P., Hannon Armstrong Capital, LLC, HAT Holdings I LLC, HAT Holdings II LLC, HAC Holdings I LLC, and HAC Holdings II LLC.
- Use of Proceeds:
- Temporary repayment of outstanding borrowings under the Company's unsecured credit facility.
- Redemption of the 6.00% Senior Notes due 2025 (the "2025 Senior Notes") issued by indirect subsidiaries.
- Acquisition, investment, or refinancing of Eligible Green Projects.
- Allocation Timeline: Proceeds intended to be allocated to Eligible Green Projects within two years following the offering.
Material Changes and Strategic Initiatives
The primary material change is the initiation of the green bond offering to refinance existing debt and fund new sustainable infrastructure projects.
- Debt Refinancing: The offering aims to replace the 6.00% Senior Notes due 2025 and reduce reliance on the unsecured credit facility.
- Project Scope: Eligible Green Projects are expected to be located in the United States and align with at least seven of the United Nations Sustainable Development Goals (SDGs).
- Eligible Categories:
- Renewable Energy (Grid-Connected and Behind-The-Meter generation/storage).
- Energy Efficiency (HVAC, lighting, building shells).
- Pollution Prevention (Renewable Natural Gas/RNG).
- Clean Transportation (Fleet decarbonization).
- Terrestrial and aquatic biodiversity.
- Sustainable water and wastewater management.
Guidance, Outlook, and Risks
Management Commentary and Framework:
- Investment Policy: Investments must reduce or be neutral on carbon emissions or provide tangible environmental benefits (e.g., water reduction).
- Measurement: The Company utilizes CarbonCount® for avoided carbon emissions and WaterCount for water use reduction.
- Reporting: Annual updates on allocation and impact will be published on the Company's website. Project impacts are reported on an anonymized project level.
- External Review: The Green Bond Framework has received a Second-Party Opinion aligning with the 2021 Green Bond Principles. Annual third-party assurance of proceeds allocation is planned.
Risks and Contingencies:
- Market Conditions: The offering is subject to market conditions.
- Performance Linkage: Payment of principal and interest on the Notes is made from general funds and is not directly linked to the performance of Eligible Green Projects.
- Unallocated Proceeds: Prior to full investment, proceeds may be held in cash equivalents or used to repay indebtedness.
Investor Verification Checklist
- Verify the final terms of the green senior unsecured notes (interest rate, maturity, and total size) once the offering closes.
- Confirm the specific amount of the 6.00% Senior Notes due 2025 that will be redeemed with the proceeds.
- Review the Company's annual Sustainability & Impact Report for the first allocation of proceeds to Eligible Green Projects.
- Monitor the Second-Party Opinion and subsequent Third-Party Assurance reports to ensure compliance with the Green Bond Framework.
- Assess the impact of the new debt issuance on the Company's overall leverage ratios and liquidity position.