UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
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| Item 1.01. | Entry into a Material Definitive Agreement. |
Indenture and 3.375% Senior Notes due 2026
On June 28, 2021 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 $1,000,000,000 million aggregate principal amount of 3.375% senior notes due 2026 (the “Notes”) under an indenture, dated as of June 28, 2021 (the “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 National Association, as trustee. 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 and to non-U.S. persons in offshore transactions in accordance with Regulation S 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 Company intends to utilize approximately $514 million of the net proceeds of the offering to redeem the Issuers’ 5.25% Senior Notes due 2024 (the “2024 Notes”), which are green bonds, and to pay the related premium. The Company intends to utilize the net proceeds of the offering after redeeming the 2024 Notes 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 those with disbursements to be made following the issue date. Prior to the full investment of such net proceeds, the Company intends 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.
The Notes bear interest at a rate of 3.375% per year, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2021. The Notes will mature on June 15, 2026 (the “Maturity Date”), unless earlier repurchased or redeemed.
The following is a brief description of the terms of the Notes and the Indenture.
Change of Control
If a Change of Control Triggering Event (as defined in the Indenture) occurs, the Issuers will be required (unless the Issuers have exercised their right to redeem all of the Notes by sending a notice of redemption) to offer to repurchase all of the outstanding Notes at a purchase price equal to 101% of the principal amount thereof plus accrued but unpaid interest to, but excluding, the applicable Change of Control Payment Date (as defined in the Indenture).
Optional Redemption
Prior to March 15, 2026, the Issuers may redeem some or all of the Notes, at the Issuers’ option, at any time and from time to time at a price equal to 100% of the principal amount thereof, plus the applicable “make-whole” premium as of, together with accrued but unpaid interest, if any, to, but excluding, the applicable date of redemption.
On and after March 15, 2026, the Issuers may redeem some or all of the Notes, at the Issuers’ option, at any time from time to time at a price equal to 100% of the principal amount thereof together with accrued and unpaid interest, if any, to the applicable date of redemption.
In addition, prior to March 15, 2026, the Issuers may redeem up to 40% of the Notes using the proceeds of certain equity offerings at a price equal to 103.375% of the principal amount thereof, plus accrued but unpaid interest, if any, to, but excluding, the applicable date of redemption.
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Guarantees
When the Notes are first issued they will be guaranteed solely by the Guarantors. None of the Company’s other subsidiaries will be required to guarantee the Notes in the future, except that, under certain circumstances and subject to certain exceptions set forth in the Indenture, one or more of the Company’s Domestic Subsidiaries (as defined in the Indenture) (except for Excluded Subsidiaries or Securitization Entities (each as defined in the Indenture)) may be required to guarantee the payment of the Notes (the “Springing Guarantee Covenant”).
Ranking
The Notes will be:
| • | senior unsecured obligations of the Issuers; |
| • | pari passu in right of payment with all of the Issuers’ existing and future senior unsecured indebtedness and senior unsecured guarantees; |
| • | effectively subordinated in right of payment to all of the Issuers’ existing and future secured indebtedness and secured guarantees to the extent of the value of the assets securing such indebtedness and guarantees; |
| • | senior in right of payment to any of the Issuers’ future subordinated indebtedness and subordinated guarantees; and |
| • | effectively subordinated in right of payment to all existing and future indebtedness, guarantees and other liabilities (including trade payables) and any preferred equity of the Issuers’ subsidiaries (other than any Domestic Subsidiaries that may become guarantors of the Notes). |
The guarantee from each Guarantor will be:
| • | a senior unsecured obligation of such guarantor; |
| • | pari passu in right of payment with all existing and future senior unsecured indebtedness and senior unsecured guarantees of such guarantor; |
| • | effectively subordinated in right of payment to all existing and future secured indebtedness and secured guarantees of such guarantor to the extent of the value of the assets securing such indebtedness and guarantees; |
| • | senior in right of payment to any future subordinated indebtedness and subordinated guarantees of such guarantor, and |
| • | effectively subordinated in right of payment to all existing and future indebtedness, guarantees and other liabilities (including trade payables) and any preferred equity of the Guarantors’ subsidiaries (other than any subsidiaries that may become guarantors of the Notes). |
The Guarantors’ guarantees of the Notes (other than the Company’s guarantee) and any guaranty of the Notes made by a Domestic Subsidiary pursuant to the Springing Guarantee Covenant and all other obligations of such guarantor under the Indenture will automatically terminate and such guarantor will automatically be released from all of its obligations under such guarantee and the Indenture under certain circumstances set forth in the Indenture, which may include the permanent termination and release of such guarantee and obligations on and after any date (the “Covenant Termination Date”) that (a) the Notes have investment grade credit ratings from each of two specified rating agencies and (b) no Default or Event of Default (each as defined in the Indenture) has occurred and is continuing. The Springing Guarantee Covenant will also automatically and permanently terminate and be of no further force and effect on and after the Covenant Termination Date.
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Covenants
The Indenture contains covenants that, subject to a number of exceptions and adjustments, among other things:
| • | limit the ability of the Company and its subsidiaries to incur additional indebtedness; |
| • | require that the Company and its subsidiaries maintain Total Unencumbered Assets (as defined in the Indenture) of not less than 120% of the aggregate principal amount of the outstanding Unsecured Indebtedness (as defined in the Indenture) of the Company and its subsidiaries; and |
| • | impose certain requirements in order for the Company to merge or consolidate with or transfer all or substantially all of our assets to another person. |
Certain of these covenants will automatically and permanently terminate and will be of no force or effect on and after the Covenant Termination Date (as defined above).
Events of Default
The Indenture also provides for Events of Default which, if any of them occurs, would permit or require the principal of and accrued and unpaid interest on all the outstanding Notes to become or to be declared due and payable.
The preceding description is qualified in its entirety by reference to the Indenture, a copy of which is attached as Exhibit 4.1 to this Current Report on Form 8-K and is incorporated herein by reference.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant. |
The information required by this Item 2.03 relating to the Notes and the Indenture is contained in Item 1.01 above and is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit No. |
Description | |
| 4.1 | Indenture dated as of June 28, 2021, by and among HAT Holdings I LLC and HAT Holdings II LLC, as issuers, and Hannon Armstrong Sustainable Infrastructure Capital, Inc., Hannon Armstrong Sustainable Infrastructure, L.P., and Hannon Armstrong Capital, LLC, as guarantors, and U.S. Bank National Association, as trustee (including the form of HAT Holdings I LLC and HAT Holdings II LLC’s 3.375% Senior Notes due 2026). | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| HANNON ARMSTRONG SUSTAINABLE INFRASTRUCTURE CAPITAL, INC. | ||||||
| Dated: June 28, 2021 | By: | /s/ Steven L. Chuslo | ||||
| Steven L. Chuslo | ||||||
| Executive Vice President and Chief Legal Officer | ||||||
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