By Abigail W. Adams
Portland, Me., Aug. 8 – HAT Holdings I LLC and HAT Holdings II LLC priced $350 million of five-year green notes exchangeable for Hannon Armstrong Sustainable Infrastructure Capital Inc. stock after the market close on Monday at par with a coupon of 3.75% and an initial conversion premium of 25%, according to a company news release.
Pricing came at the cheap end of talk for a coupon of 3.25% to 3.75% and at the midpoint of talk for an initial conversion premium of 22.5% to 27.5%, according to a market source.
Morgan Stanley & Co. LLC was bookrunner for the Rule 144A offering, which carries a greenshoe of $52.5 million.
The notes are non-callable until Aug. 20, 2026 and then subject to a 130% hurdle or are freely callable if necessary to maintain Hannon’s status as a REIT.
The notes will be settled in cash, shares or a combination of both at the company’s option.
In connection with the offering, the company will use $32.9 million of cash on hand to enter into capped call transactions with a strike price of $43.42, which represents a 100% premium over the last reported price of stock.
The company entered into privately negotiated transactions with holders of its 0% convertible notes due 2023 to repurchase for cash $76.3 million in principal of the outstanding amount.
Net proceeds are expected to be $342 million or $393.4 million if the greenshoe is exercised in full.
Approximately $76.3 million of net proceeds will be used fund the repurchase of the 2023 notes with remaining proceeds to be used to invest in or refinance eligible green projects.
Hannon Armstrong is an Annapolis, Md.-based climate solutions real estate investment trust.
| Issuer: | HAT Holdings I LLC and HAT Holdings II LLC
|
| Securities: | Green exchangeable notes for Hannon Armstrong Sustainable Infrastructure Capital Inc. stock
|
| Amount: | $350 million
|
| Greenshoe: | $52.5 million
|
| Maturity: | Aug. 15, 2028
|
| Bookrunners: | Morgan Stanley & Co. LLC
|
| Coupon: | 3.75%
|
| Price: | Par
|
| Yield: | 3.75%
|
| Conversion premium: | 25%
|
| Conversion price: | $27.14
|
| Conversion rate: | 36.8494
|
| Call options: | Non-callable until Aug. 20, 2026 and then subject to a 130% hurdle or freely callable if necessary to maintain Hannon’s status as a REIT
|
| Put options: | Upon a fundamental change
|
| Pricing date: | Aug. 7
|
| Settlement date: | Aug. 11
|
| Distribution: | Rule 144A
|
| Talk: | Coupon of 3.25% to 3.75% and an initial conversion premium of 22.5% to 27.5%
|
| Stock symbol: | NYSE: HASI
|
| Stock price: | $21.71 at market close Aug. 7
|
| Market capitalization: | $2.37 billion
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