Sunrun (Nasdaq: RUN), the nation’s leading provider of residential
solar, storage and energy services, today announced it has closed
the securitization of leases and power purchase agreements, known
as Sunrun’s solar-as-a-service offering, and raised additional
subordinated non-recourse financing.
"We are pleased with Sunrun's record-setting transaction,
placing the largest ever residential solar securitization for the
industry and subsequently raising additional non-recourse
financings, ” said Danny Abajian, Sunrun’s Chief Financial
Officer. "Sunrun’s execution demonstrates our
non-recourse, asset level financing strategy provides attractive
capital to fuel growth, with strong advance rates, allowing
unit-level cash generation over time without increasing leverage at
the parent level."
The securitization transaction was structured with two pari
passu tranches of A- rated notes (the “Class A-1” and “Class A-2”,
respectively and together the “Class A”) and a single class of BB+
(“Class B”) rated notes. The $440mm Class A-1 notes were marketed
in a public asset backed securitization whereas the $275mm Class
A-2 notes were privately placed. The Class A-1 and A-2 notes were
both priced with a coupon of 6.60%. Strong investor demand for the
Class A-1 notes resulted in a spread of 240bps and a yield of
6.78%, while also enabling the Class A-1 notes to be upsized by
$100mm to $440mm. The spread of 240bps represents an improvement of
25bps from Sunrun’s 2023-1 asset backed securitization in May 2023.
The Class A-1 and A-2 notes represent an advance rate of
approximately 67.4% of the securitization share of the aggregate
discounted solar asset balance (i.e., contracted cash flows
available for debt servicing) using a 6% discount rate. The Class
A-1 and A-2 notes have an expected weighted average life of 6.53
years, an Anticipated Repayment Date of July 30, 2030 and a final
maturity date of January 30, 2059.
Similar to prior transactions, Sunrun raised an additional
subordinated subsidiary-level non-recourse financing totaling
$253mm (secured, in part, by the distributions from the Class B
notes), after the securitization transaction closed, which
increased the cumulative advance rate obtained by Sunrun.
The terms associated with the securitization and subsequent
subordinated non-recourse financing, taken together with related
tax equity proceeds, upfront incentives, and customer prepayments,
net of transaction fees and required cash reserves, are equivalent
to a cumulative advance rate that is consistent with the company’s
prior commentary of approximately 79% to 84% of the company’s
contracted Subscriber Value metric using a 6% discount rate. Sunrun
obtained actual net proceeds that slightly exceeded this range in
the most recent series of transactions, with the debt sizing
benefiting from approximately a quarter of the assets in these
financings being seasoned as they have been placed in service over
6 years ago. In connection with including these seasoned assets in
the financing, Sunrun also repaid $255 million in total debt,
including senior and subordinated term loans maturing in 2024 and
2029, respectively.
Deutsche Bank Securities was the sole structuring agent and
served as joint bookrunner along with Atlas SP Securities, BofA
Securities, and MUFG Securities Americas. Citigroup Global Markets,
Credit Agricole Securities, ING Financial Markets, J.P. Morgan
Securities, SG Americas Securities, TD Securities, and Truist
Securities served as co-managers for the securitization.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of
these securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of such jurisdiction.
Investor & Analyst Contact:Patrick
JobinSenior Vice President, Finance &
IRinvestors@sunrun.com
Media Contact:Wyatt SemanekDirector, Corporate
Communicationspress@sunrun.com
About Sunrun
Sunrun Inc. (Nasdaq: RUN) is the nation’s leading home solar,
storage, and energy services company. Founded in 2007, Sunrun
pioneered home solar service plans to make local clean energy more
accessible to everyone for little to no upfront cost. Sunrun’s
innovative home storage solution brings families affordable,
resilient, and reliable energy. The company can also manage and
share stored solar energy to provide benefits to households,
utilities, and the electric grid while reducing our reliance on
polluting energy sources. For more information, please visit
www.sunrun.com.
Forward Looking Statements
This communication contains forward-looking statements related
to Sunrun (the “Company”) within the meaning of Section 27A of the
Securities Act of 1933, and Section 21E of the Securities Exchange
Act of 1934 and the Private Securities Litigation Reform Act of
1995. Such forward-looking statements include, but are not limited
to, statements related to: the Company’s financial and operating
guidance and expectations; the Company’s business plan, trajectory,
expectations, market leadership, competitive advantages,
operational and financial results and metrics (and the assumptions
related to the calculation of such metrics); the Company’s momentum
in its business strategies including its ESG efforts, expectations
regarding market share, total addressable market, customer value
proposition, market penetration, financing activities, financing
capacity, product mix, and ability to manage cash flow and
liquidity; the growth of the solar industry; trends or potential
trends within the solar industry, our business, customer base, and
market; the Company’s ability to derive value from the anticipated
benefits of partnerships, new technologies, and pilot programs;
anticipated demand, market acceptance, and market adoption of the
Company’s offerings, including new products, services, and
technologies; expectations regarding the growth of home
electrification, electric vehicles, virtual power plants, and
distributed energy resources; the Company’s ability to manage
suppliers, inventory, and workforce; supply chains and regulatory
impacts affecting supply chains; the Company’s leadership team and
talent development; the legislative and regulatory environment of
the solar industry and the potential impacts of proposed, amended,
and newly adopted legislation and regulation on the solar industry
and our business; the ongoing expectations regarding the Company’s
storage and energy services businesses and anticipated emissions
reductions due to utilization of the Company’s solar systems; and
factors outside of the Company’s control such as macroeconomic
trends, bank failures, public health emergencies, natural
disasters, acts of war, terrorism, geopolitical conflict, or armed
conflict / invasion, and the impacts of climate change. These
statements are not guarantees of future performance; they reflect
the Company’s current views with respect to future events and are
based on assumptions and estimates and are subject to known and
unknown risks, uncertainties and other factors that may cause
actual results, performance or achievements to be materially
different from expectations or results projected or implied by
forward-looking statements. The risks and uncertainties that could
cause the Company’s results to differ materially from those
expressed or implied by such forward-looking statements include:
the Company’s continued ability to manage costs and compete
effectively; the availability of additional financing on acceptable
terms; worldwide economic conditions, including slow or negative
growth rates and inflation; volatile or rising interest rates;
changes in policies and regulations, including net metering,
interconnection limits, and fixed fees, or caps and licensing
restrictions and the impact of these changes on the solar industry
and our business; the Company’s ability to attract and retain the
Company’s business partners; supply chain risks and associated
costs; realizing the anticipated benefits of past or future
investments, partnerships, strategic transactions, or acquisitions,
and integrating those acquisitions; the Company’s leadership team
and ability to attract and retain key employees; changes in the
retail prices of traditional utility generated electricity; the
availability of rebates, tax credits and other incentives; the
availability of solar panels, batteries, and other components and
raw materials; the Company’s business plan and the Company’s
ability to effectively manage the Company’s growth and labor
constraints; the Company’s ability to meet the covenants in the
Company’s investment funds and debt facilities; factors impacting
the home electrification and solar industry generally, and such
other risks and uncertainties identified in the reports that we
file with the U.S. Securities and Exchange Commission from time to
time. All forward-looking statements used herein are based on
information available to us as of the date hereof, and we assume no
obligation to update publicly these forward-looking statements for
any reason, except as required by law.
Citations to industry and market statistics used herein may be
found in our Investor Presentation, available via the “Investor
Relations” section of Sunrun’s website at
https://investors.sunrun.com.
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