Item 7.01. Regulation FD Disclosure.
On September 20, 2023, Sunnova Energy Corporation (the “Company”), a wholly owned subsidiary of Sunnova Energy International Inc. (“Sunnova”), announced the commencement of a proposed private offering of senior notes (the “Notes Offering”) as described in Item 8.01.
In connection with the Notes Offering, the Company expects to make available the following information to prospective investors.
We define Cash Flow Available for Debt Service or “CFADS” as (1) (a) net cash from (used in) operating activities of Sunnova and its subsidiaries calculated in accordance with GAAP and, (b) to the extent not duplicative, cash provided from activities from solar energy systems and/or an ancillary technology (“Projects”) when received by the Project company, excluding, in the case of each of clause (a) and (b) above, the effect of the following items: derivative origination and breakage fees from financing structure changes, payments to dealers for exclusivity and other bonus arrangements, net inventory and prepaid inventory (sales) purchases, payments of non-capitalized costs related to acquisitions and capital markets activities of the Company or Sunnova, payments of direct sales costs, excluding inventory, to the extent the related solar energy system is financed through a loan, payments to installers and builders for homebuilder asset-development activities, payments of customer rewards and including the effect of the following items: principal proceeds from customer notes receivable, financed insurance payments, distributions to redeemable noncontrolling interests and noncontrolling interests and (2) adjusted general and administration expenses plus interest payments made on non-recourse financings (other than securitizations), in each case for all or any portion of any such period that ends on or prior to December 31, 2023 and interest payments made on indebtedness other than non-recourse financing, minus principal payments on non-recourse financings constituting securitizations, other than principal repayments funded in exchange for, or out of or with the net cash proceeds of (i) any non-recourse financing, (ii) any indebtedness constituting refinancing indebtedness under the indenture or (iii) the sale or issuance of any equity interests of Sunnova. The foregoing is a summary of the definition of CFADS that will be included in the indenture governing the notes for purposes of calculating compliance with certain of the restrictive covenants described in “Description of the Notes.” This measurement is not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of liquidity. The GAAP measure most directly comparable to CFADS is net cash from (used in) operating activities. Our calculations of CFADS, as will be defined in our indenture, are not comparable to liquidity measures presented by other companies. Investors should not rely on CFADS as a substitute for any GAAP measure, including net cash used in operating activities. In addition, under the indenture governing the notes, our ability to engage in activities such as incurring additional indebtedness, making investments and paying dividends is expected to be tied to a ratio based on CFADS.
