Business Context and Reporting Period
This Form 8-K Current Report was filed by Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI) on August 25, 2020. The filing discloses the entry into a material definitive agreement regarding the issuance of senior notes.
Key Financial Metrics
The filing details a specific debt financing transaction rather than periodic operating results. Key metrics include:
- Debt Issuance: $375 million aggregate principal amount of 3.750% unsecured senior notes due 2030.
- Net Proceeds: Approximately $366,875,000.
- Interest Rate: 3.750% per year, payable semi-annually in arrears beginning February 15, 2021.
- Maturity Date: September 15, 2030.
- Use of Proceeds: Acquisition or refinancing of eligible green projects (neutral to negative incremental carbon emissions).
Revenue, profit, cash flow, and margin data are not provided in this filing.
Material Changes
The primary material change is the expansion of the company's capital structure through the issuance of the 2030 Senior Notes. The notes are guaranteed by the Company, its Operating Partnership, and Hannon Armstrong Capital, LLC. The issuance increases the company's unsecured indebtedness and introduces new covenants, including a requirement to maintain Total Unencumbered Assets of not less than 120% of the aggregate principal amount of outstanding Unsecured Indebtedness.
Outlook, Risks, and Unusual Items
Management Commentary and Strategy: The Company intends to utilize the net proceeds for green projects consistent with the International Capital Market Association's Green Bond Principles. Prior to full investment, proceeds will be held in interest-bearing accounts or short-term securities consistent with REIT taxation requirements.
Key Terms and Risks:
- 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: The Issuers may redeem the Notes at 100% of principal plus a "make-whole" premium. Prior to September 15, 2022, up to 40% of the Notes may be redeemed using equity offering proceeds at 103.750% of principal.
- Springing Guarantee Covenant: Additional Domestic Subsidiaries may be required to guarantee the Notes under certain circumstances, though this covenant may terminate if the Notes achieve investment-grade ratings.
- Ranking: The Notes are senior unsecured obligations, pari passu with existing senior unsecured debt, but effectively subordinated to secured indebtedness.
Investor Verification Checklist
- Verify the final closing date and confirmation of the $375 million issuance.
- Review the specific list of "eligible green projects" targeted for acquisition or refinancing with the net proceeds.
- Monitor the company's compliance with the 120% Total Unencumbered Assets covenant relative to total unsecured indebtedness.
- Check for any future credit rating actions that could trigger the termination of the Springing Guarantee Covenant.
- Confirm the status of the "make-whole" premium calculation methodology in the event of early redemption.