Business Context and Reporting Period
Company: Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI)
Filing Type: Form 8-K (Current Report)
Date of Report: December 7, 2023
Event: Entry into a Material Definitive Agreement regarding the issuance of debt securities.
Key Financial Metrics
This filing details a specific capital raising event rather than periodic financial performance. Key metrics related to the transaction include:
- Debt Issuance: $550,000,000 aggregate principal amount of 8.00% Green Senior Unsecured Notes due 2027.
- Interest Rate: 8.00% per annum, payable semi-annually in arrears (June 15 and December 15).
- Maturity Date: June 15, 2027.
- Issuers: HAT Holdings I LLC and HAT Holdings II LLC (indirect subsidiaries).
- Guarantors: The Company, Hannon Armstrong Sustainable Infrastructure, L.P., and Hannon Armstrong Capital, LLC.
- Use of Proceeds: Net proceeds will be used to acquire, invest in, or refinance eligible green projects and for general corporate purposes. Uninvested proceeds will be held in interest-bearing accounts or short-term securities.
Note: The filing text does not provide values for revenue, net profit, operating cash flow, or existing liquidity positions.
Material Changes
The primary material change is the expansion of the Company's capital structure through the private offering of $550 million in senior unsecured notes. This increases the Company's total indebtedness and establishes new fixed interest obligations commencing June 15, 2024.
Terms, Covenants, and Risks
Redemption and Change of Control
- Change of Control: If a Change of Control Triggering Event occurs, the Issuers must offer to repurchase the Notes at 101% of the principal amount plus accrued interest.
- Optional Redemption (Make-Whole): Prior to March 15, 2027, the Issuers may redeem Notes at 100% of principal plus a "make-whole" premium.
- Optional Redemption (Par): On or after March 15, 2027, the Issuers may redeem Notes at 100% of principal plus accrued interest.
- Equity Redemption: Prior to March 15, 2027, up to 40% of the Notes may be redeemed using proceeds from certain equity offerings at 108% of principal plus accrued interest.
Covenants and Guarantees
- Ranking: Notes are senior unsecured obligations, pari passu with existing senior unsecured debt, and effectively subordinated to secured indebtedness.
- Springing Guarantee: Additional Domestic Subsidiaries may be required to guarantee the Notes under certain circumstances, subject to exceptions.
- Asset Coverage: The Company must maintain Total Unencumbered Assets of not less than 120% of the aggregate principal amount of outstanding Unsecured Indebtedness.
- Covenant Termination: Certain covenants and guarantees may terminate if the Notes achieve investment-grade credit ratings from two specified agencies and no Default exists.
Investor Verification Checklist
- Verify the specific "eligible green projects" identified for the allocation of net proceeds.
- Review the full Indenture (Exhibit 4.1) for detailed definitions of "Change of Control Triggering Event" and "Default."
- Assess the impact of the new 8.00% interest expense on the Company's future earnings and cash flow coverage ratios.
- Confirm the Company's current Total Unencumbered Assets to ensure compliance with the 120% asset coverage covenant immediately post-issuance.
- Monitor credit rating agency actions to determine if the "Covenant Termination Date" conditions are met in the future.