Sunnova units enter restated revolver, guaranteed term loan; unit sells solar loan-backed notes

By Marisa Wong

Los Angeles, Nov. 8 – Sunnova TEP Holdings, LLC, a wholly owned subsidiary of Sunnova Energy International Inc., entered into a second amended and restated credit agreement on Nov. 3 to amend its amended and restated credit agreement dated March 29, 2021 with Sunnova TE Management, LLC as facility administrator and Atlas Securitized Products Holdings, LP as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

The amended credit agreement provides for a revolving credit facility with an aggregate commitment amount of $1.309 billion and an uncommitted maximum facility amount of $1.575 billion.

The maturity date for the revolver is Nov. 20, 2025.

Loan proceeds are available to purchase or otherwise acquire solar assets that are originated by Sunnova Energy Corp. or related solar asset owner member interests directly from Sunnova TEP Resources, LLC under a sale and contribution agreement, to fund certain reserve accounts that are required to be maintained by Sunnova TEP Holdings, to make distributions to Sunnova Energy Corp. and to pay fees and expenses incurred in connection with the restated revolver.

The amount available for borrowings at any one time under the revolver is limited to a borrowing base amount calculated based on the aggregate discounted solar asset balance of eligible solar assets multiplied by the applicable advance rate for each type of solar asset.

Borrowings under the revolver are made in class A loans and class B loans. The borrower is able to borrow new advances under the revolver during an availability period that is scheduled to end on May 20, 2025.

Interest is based on term SOFR plus a margin specific to each lender.

The company must also pay an unused line fee.

Payments from the solar assets and distributions from the solar asset owner member interests are deposited into accounts established under the revolver and applied in accordance with a cash waterfall.

The company is also required to maintain certain reserve accounts for the benefit of the lenders, each of which must remain funded at all times to the levels specified in the credit agreement.

Sunnova Energy Corp. is subject to some financial covenants regarding tangible net worth and working capital and subject to a prohibition on using the proceeds to fund distributions on equity.

The credit agreement also contains various restrictive covenants that Sunnova TEP Holdings must maintain.

Obligations under the amended credit agreement are secured by first priority liens on substantially all of the assets of Sunnova TEP Holdings and its wholly owned subsidiaries.

Computershare Trust Co., NA is paying agent, and U.S. Bank NA is verification agent.

Guaranteed term loan

Also on Nov. 8, a wholly owned, indirect subsidiary of Sunnova Energy International (Sunnova Hestia I Borrower, LLC) entered into a loan and security agreement with a wholly owned, direct subsidiary of Sunnova Energy International (Sunnova Hestia I Lender, LLC), Wilmington Trust, NA as agent and the U.S. Department of Energy, acting by and through the Secretary of Energy, as guarantor.

The lender issued a term loan to the borrower that is secured by the guaranteed loan collateral, which consists primarily of all right, title and interest of the borrower in a portfolio of solar loans made to consumers for the purpose of installing residential photovoltaic or energy storage systems.

Sunnova ABS Management, LLC, a wholly owned, direct subsidiary of the Sunnova Energy International, will act as manager and servicer. The manager will provide all operations, maintenance, administrative, collection and other management and servicing services for the borrower and in respect of the solar loans.

Proceeds from the guaranteed loan will be used to acquire and finance the guaranteed loan collateral and, after that, for a portion of certain costs of financing the installation of energy systems outfitted with the Sunnova Energy International’s purpose-built technology.

Solar-loan backed notes

At the same time, on Nov. 8, a wholly owned, indirect subsidiary of Sunnova Energy International (Sunnova Hestia I Issuer, LLC) entered into an indenture with Wilmington Trust, NA as the indenture trustee and completed an issuance of solar loan-backed notes.

The issuer issued $219.6 million aggregate principal amount of 5.75% solar loan-backed notes, series 2023-GRID1 class 1-A and $24.4 million aggregate principal amount of 8.25% solar loan-backed notes, series 2023-GRID1 class 2-A.

The Rule 144A notes have an anticipated repayment date of Nov. 20, 2030.

The class 1-A notes and the class 2-A notes have been rated AAA(sf) and BB(sf), respectively, by Kroll Bond Rating Agency, LLC. The class 1-A notes have been rated AA(sf) by Fitch Ratings, Inc. Fitch did not rate the class 2-A notes.

The notes are secured by, and payable from the cash flow generated by, the issuer’s membership interests in the lender and the lender’s rights as payee of the guaranteed loan.

The company used the proceeds from the sale of the class 1-A notes and the class 2-A notes to fund the guaranteed loan.

Sunnova is a Houston-based residential solar energy company.

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