Sunnova to issue US$425m of convertible senior notes

By Tom Kenning
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Sunnova added more than 17,000 customers in Q2 2022. Image: Sunnova

US residential solar installer Sunnova plans to offer a US$425 million private placement of convertible senior notes due in 2028, to pay off debts and fund operating costs.

The placement comes with an option to purchase an additional US$75 million worth of notes, which will be convertible into cash, shares of Sunnova’s common stock or a combination of the two.

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Texas-based Sunnova intends to use a portion of the net proceeds from the offering for general corporate purposes, including funding of working capital, operating expenses, capital expenditures and paying off debts.

The remainder of the proceeds will be used to pay the cost of capped call transactions, which it will enter with one or more of the initial purchasers.

The capped call transactions are expected to “reduce the potential dilution to Sunnova’s common stock upon any conversion of notes and/or offset any cash payments Sunnova is required to make in excess of the principal amount of converted notes,” the company said in a media release.

The company had its best ever quarterly sales in Q2, with revenue driven upwards by a strong customer backlog and increased installations. It added 17,300 new customers in the quarter, bringing the total to 225,000 as of 30 June 2022.

However, the firm’s net losses increased compared to Q1 this year, during which it had managed to make a dent in its net loss despite a quarterly drop in customer additions.

In May, Sunnova also introduced a new energy plan offering new customers with a fixed percentage discount on prevailing utility tariffs and a 25-year market-based rate for their power in a bid to protect consumers from volatile energy prices.

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