Item 1.01. |
Entry into a Material Definitive Agreement. |
Indenture, Supplemental Indenture and 0.00% Green Exchangeable Senior Notes due 2025
On April 13, 2022 Hannon Armstrong Sustainable Infrastructure Capital, Inc., a Maryland corporation (the “Company”), through its indirect subsidiaries HAT Holdings I LLC, a Maryland limited liability company (“HAT I”), and HAT Holdings II LLC, a Maryland limited liability company (“HAT II”, and together with HAT I, the “Issuers”), issued $200 million aggregate initial principal amount of 0.00% green exchangeable senior notes due 2025 (the “Notes”) under an indenture, dated as of April 13, 2022 (the “Base Indenture”), between the Issuers and the Company, Hannon Armstrong Sustainable Infrastructure, L.P., a Delaware limited partnership (the “Operating Partnership”) and Hannon Armstrong Capital, LLC, a Maryland limited liability company (“HAC,” and collectively with the Company and the Operating Partnership, the “Guarantors”), as guarantors, and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), as supplemented by a supplemental indenture, dated as of April 13, 2022, between the Issuers, the Guarantors and the Trustee (the “Supplemental Indenture” and, together with the Base Indenture, the “Indenture”). The Notes were issued in a private offering exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), to qualified institutional buyers within the United States in accordance with Rule 144A under the Securities Act. The Notes are subject to restrictions on transfer and may only be offered or sold in transactions exempt from or not subject to the registration requirements of the Securities Act and other applicable securities laws. The Issuers have granted to the initial purchasers of the Notes an option to purchase, during the 13-day period beginning on, and including the first date on which the Notes are issued, up to $30 million additional aggregate initial principal amount of the Notes.
The Issuers intend to allocate an amount equal to the net proceeds of the offering to acquire or refinance, in whole or in part, new and/or existing eligible green projects. In addition, these projects may include projects with disbursements made during the twelve months preceding the issue date of the Notes and projects with disbursements to be made following the issue date. Prior to the full allocation of such net proceeds, the Issuers intend to invest such net proceeds in interest-bearing accounts and short-term, interest-bearing securities which are consistent with the Company’s intention to qualify for taxation as a real estate investment trust (“REIT”).
The Notes will not bear regular interest and the principal amount of the Notes will accrete at a rate that provides holders with an aggregate yield to maturity of 3.25% if the Notes are not exchanged for the Company’s common stock, par value $0.01 per share (“Common Stock”) at or prior to maturity. The Issuers may be required to pay special interest, if any, upon certain events as described in the Indenture. The Notes will mature on May 1, 2025 (the “Maturity Date”), unless earlier repurchased, redeemed or exchanged.
If the Issuers undergo a “fundamental change” (as defined in the Indenture) involving the Company, subject to certain conditions, holders of the Notes may require the Company to repurchase for cash all or parts of such holders’ Notes. The fundamental change repurchase price for the Notes generally will be equal to 100% of the accreted principal amount of the Notes to be repurchased, plus accrued and unpaid special interest, if any, to, but excluding, the fundamental change repurchase date.
Holders of the Notes may exchange any of their Notes for shares of Common Stock, at the applicable exchange rate at any time prior to the close of business on the second scheduled trading day immediately preceding the Maturity Date, unless the Notes have been previously redeemed or repurchased by the Issuers. Following the occurrence of a make-whole fundamental change, the Issuers will, in certain circumstances, increase the exchange rate for a holder that exchanges its Notes in connection with such make-whole fundamental change.
Any exchange of Notes into shares of Common Stock will be subject to certain ownership limitations (as more fully described in the Indenture). The initial exchange rate for each $1,000 aggregate initial principal amount of the Notes is 17.6873 shares of Common Stock, equivalent to an exchange price of approximately $56.54 per share of Common Stock, which is approximately a 32.5% premium to the closing price of the Common Stock on April 7, 2022. The exchange rate for the Notes will not increase on account of the accretion of the principal amount of the Notes. The exchange rate is subject to adjustment in certain circumstances (as more fully described in the Indenture).
The following is a brief description of the terms of the Notes and the Indenture.
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