Hannon Armstrong Sustainable Infrastructure Capital, Inc.
(“HASI,” “we,” “our,” or the “Company”) (NYSE: HASI), a leading
investor in climate solutions, today announced that it has priced
its private offering of $350 million in aggregate principal amount
of 3.750% green exchangeable senior unsecured notes due 2028 (the
“Notes”) by its indirect subsidiaries, HAT Holdings I LLC (“HAT I”)
and HAT Holdings II LLC (“HAT II,” and together with HAT I, the
“Issuers”). At issuance, the Notes will be guaranteed by the
Company, Hannon Armstrong Sustainable Infrastructure, L.P. and
Hannon Armstrong Capital, LLC. The settlement of the Notes is
expected to occur on August 11, 2023, subject to customary closing
conditions. 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 $52.5 million additional aggregate principal amount of the
Notes.
The Company estimates that the net proceeds from the offering of
the Notes will be approximately $342.0 million (or approximately
$393.4 million if the option to purchase additional Notes described
below is exercised in full), after deducting the initial
purchasers’ discounts and commissions and estimated offering
expenses. Additionally, the Company expects to use $32.9 million of
cash on hand to enter into privately negotiated capped call
transactions as described below. If the initial purchasers exercise
their option to purchase additional Notes, the Issuers intend to
enter into additional capped call transactions with the option
counterparties (as defined below). In addition, the Company also
intends to use approximately $76.3 million of the net proceeds from
the offering of the Notes to repurchase for cash certain of its
0.00% Convertible Senior Notes due 2023 (the “2023 Convertible
Notes”) as described below. The Company intends to allocate an
amount equal to the net proceeds of the offering to acquire, invest
in or refinance, in whole or in part, new and/or existing eligible
green projects. Investment opportunities have already been
identified and are consistent with the Company’s normal course
investment profile. In addition, these eligible green 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 continue to qualify for taxation as a REIT.
The Notes will accrue interest at a rate of 3.750% per year,
payable semi-annually in arrears on February 15 and August 15 of
each year, beginning on February 15, 2024 until the maturity date,
unless the Notes are earlier repurchased, redeemed or exchanged in
accordance with their terms prior to such date. Upon any exchange
of the Notes, holders will receive cash, shares of common stock,
$0.01 par value per share (the “Common Stock”) or a combination of
cash and shares of Common Stock, at the Company’s election, based
on the exchange rate for the Notes, which will initially be 36.8494
shares of Common Stock per $1,000 principal amount of Notes,
equivalent to an initial exchange price of approximately $27.14 per
share. The exchange price represents a premium of approximately
25.0% above the last reported sale price of the Common Stock on the
New York Stock Exchange on August 7, 2023. The exchange rate will
be subject to adjustment upon the occurrence of certain events, but
will not be adjusted for any accrued and unpaid interest. The
Company may redeem the Notes if HASI’s board of directors
determines such redemption is reasonably necessary to preserve its
qualification as a REIT or, in whole or in part, at the Company’s
option, on or after August 20, 2026 and prior to the 62nd scheduled
trading day immediately preceding the maturity date, under certain
circumstances. Any shares of Common Stock issuable upon exchange of
the Notes will have certain registration rights.
Contemporaneously with the pricing of the Notes in the offering,
the Company entered into separate and individually negotiated
transactions with certain holders of the 2023 Convertible Notes to
repurchase for cash approximately $76.3 million aggregate principal
amount of the 2023 Convertible Notes (the “concurrent note
repurchases”). The Company has negotiated the concurrent note
repurchases through one of the initial purchasers and/or its
affiliate who expect to repurchase such 2023 Convertible Notes from
holders and resell them to the Company on or about the closing date
of the offering. The Issuers expect that certain holders of 2023
Convertible Notes that the Company has agreed to repurchase that
have hedged their equity price risk with respect to such 2023
Convertible Notes may, concurrently with the pricing of the Notes,
unwind all or part of their hedge positions by buying the Common
Stock and/or entering into or unwinding various derivative
transactions with respect to the Common Stock.
Any repurchase of the 2023 Convertible Notes, and the potential
related market activities by holders of the 2023 Convertible Notes
participating in the concurrent note repurchases, could increase
(or reduce the size of any decrease in) the market price of the
Common Stock, which may affect the trading price of the Notes at
that time and the initial exchange price of the Notes. The Company
cannot predict the magnitude of such market activity or the overall
effect it will have on the price of the Notes or the Common
Stock.
In connection with the pricing of the Notes, the Issuers entered
into privately negotiated capped call transactions with one or more
of the initial purchasers or their respective affiliates and other
financial institutions (the “option counterparties”). The capped
call transactions are expected to cover, subject to customary
anti-dilution adjustments substantially similar to those applicable
to the Notes, the same number of shares of the Common Stock that
will initially underlie the Notes.
The capped call transactions are expected generally to reduce
the potential dilution to the Company’s common and/or offset
potential cash payments the Issuers are required to make in excess
of the principal amount, in each case, upon any exchange of the
Notes, with such reduction and/or offset subject to a cap. If the
market price per share of Common Stock, as measured under the terms
of the capped call transactions, exceeds the cap price of the
capped call transactions, there would nevertheless be dilution
and/or there would not be an offset of such potential cash
payments, in each case, to the extent that such market price
exceeds the cap price of the capped call transactions. The cap
price of the capped call transactions will initially be $43.42 per
share, which represents a premium of 100% over the last reported
sale price per share of the Common Stock on August 7, 2023, and is
subject to customary adjustments under the terms of the capped call
transactions.
In connection with establishing their initial hedges of the
capped call transactions, the option counterparties (and/or their
respective affiliates) have advised the Issuers that they expect to
enter into various derivative transactions with respect to the
Common Stock and/or purchase shares of Common Stock or other
securities of the Company or the Issuers in secondary market
transactions concurrently with or shortly after the pricing of the
Notes, including with certain investors in the Notes. This activity
could increase (or reduce the size of any decrease in) the market
price of the Common Stock or the Notes at that time.
In addition, the option counterparties (and/or their respective
affiliates) may modify their hedge positions by entering into or
unwinding various derivatives with respect to the Common Stock
and/or purchasing or selling shares of the Common Stock or other
securities of the Company or the Issuers in secondary market
transactions following the pricing of the Notes and prior to the
maturity of the Notes (and are likely to do so during any
observation period related to an exchange of Notes or following any
early exchange, redemption or repurchase of Notes). The effect, if
any, of these activities on the market price of the Common Stock or
the Notes will depend in part on market conditions and cannot be
ascertained at this time, but this activity could also cause or
avoid an increase or decrease in the market price of the Common
Stock or the Notes, which could affect the holders’ ability to
exchange the Notes, and it could affect the amount of cash and/or
the number and value of the shares of the Common Stock holders
receive upon exchange of the Notes.
The Notes and the related guarantees are being offered only to
persons reasonably believed to be qualified institutional buyers in
reliance on Rule 144A under the Securities Act of 1933, as amended
(the “Securities Act”). The Notes and the related guarantees will
not be registered under the Securities Act or any state securities
laws and may not be offered or sold in the United States absent an
effective registration statement or an applicable exemption from
the registration requirements of the Securities Act or any state
securities laws.
This press release shall not constitute an offer to sell, or the
solicitation of an offer to buy, these securities, nor shall there
be any sale of these securities in any state or jurisdiction in
which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
state or jurisdiction.
About HASI
HASI (NYSE: HASI) is a leading climate positive public company
that actively partners with clients to deploy real assets that
facilitate the energy transition. With more than $10 billion in
managed assets, our vision is that every investment improves our
climate future.
Forward-Looking Statements
Some of the information in this press release contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. When used in this
press release, words such as “believe,” “expect,” “anticipate,”
“estimate,” “plan,” “continue,” “intend,” “should,” “may,”
“target,” or similar expressions, are intended to identify such
forward-looking statements. Forward-looking statements are subject
to significant risks and uncertainties. Investors are cautioned
against placing undue reliance on such statements. Actual results
may differ materially from those set forth in the forward-looking
statements. Factors that could cause actual results to differ
materially from those described in the forward-looking statements
include those discussed under the caption “Risk Factors” included
in the Company’s Annual Report on Form 10-K (as supplemented by our
Form 10-K/A) for the Company’s fiscal year ended December 31, 2022,
which were filed with the U.S. Securities and Exchange Commission
(“SEC”), as well as in other reports that the Company files with
the SEC.
Forward-looking statements are based on beliefs, assumptions and
expectations as of the date of this press release. The Company
disclaims any obligation to publicly release the results of any
revisions to these forward-looking statements reflecting new
estimates, events or circumstances after the date of this press
release.
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INVESTOR RELATIONS INQUIRIES Neha Gaddam 410-571-6189
investors@hasi.com
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