Business Context and Reporting Period
This Form 8-K Current Report was filed by Hannon Armstrong Sustainable Infrastructure Capital, Inc. on December 12, 2018, with the report date finalized on December 17, 2018. The filing details significant capital raising activities, including a common stock offering and the restructuring of the company's credit facilities.
Key Financial Metrics and Transactions
Equity Offering
- Shares Issued: 5,000,000 shares of common stock.
- Offering Price: $21.60 per share.
- Net Proceeds: Approximately $107.5 million after deducting offering expenses.
- Closing Date: December 17, 2018.
Debt Facilities
- New Credit Facilities: Two senior secured revolving credit facilities entered into on December 13, 2018, maturing July 19, 2023.
- Rep-Based Loan Agreement: $250 million principal amount (limited-recourse).
- Approval-Based Loan Agreement: $200 million principal amount (recourse).
- Total New Capacity: $450 million.
- Interest Rates: Variable rates based on one-month LIBOR or Federal Funds Rate plus spreads ranging from 0.40% to 2.00% depending on collateral type and facility.
- Availability Fees: 0.60% on undrawn commitments under the Rep-Based Loan Agreement.
Material Changes Versus Prior Period
The company terminated its existing credit facilities (the "Existing Credit Facilities") dated July 19, 2013, which included the G&I Loan Agreement and the PF Loan Agreement. On December 13, 2018, the company repaid $253 million of borrowings under these facilities in full using proceeds from the new credit facilities. Consequently, all commitments under the Existing Credit Facilities were canceled and the agreements terminated.
Guidance, Outlook, and Risks
The filing does not provide specific forward-looking financial guidance or management commentary regarding future earnings or market outlook. However, it outlines several material risks and covenants associated with the new debt:
- Covenants: The new Loan Agreements include affirmative and negative covenants, including maintenance of an interest coverage ratio and limitations on liens, indebtedness, investments, and fundamental organizational changes.
- Events of Default: The agreements contain customary events of default, including a cross-default provision applicable to debt obligations of the guarantors. An event of default could result in the termination of the agreements and acceleration of amounts due.
- Collateral Requirements: Borrowing capacity is determined by a discount to the value of included investments based on collateral type or valuation percentages.
Investor Verification Checklist
- Verify the final closing of the $107.5 million net equity proceeds and the impact on share count.
- Confirm the utilization rates and current borrowing capacity under the new $450 million credit facilities.
- Review the full text of the Loan Agreements (to be filed as exhibits) for specific covenant thresholds and interest rate calculations.
- Monitor compliance with the interest coverage ratio and other financial covenants in the new debt agreements.
- Assess the impact of the 0.60% availability fee on the Rep-Based Loan Agreement on future liquidity costs.