Sunnova Energy reaches forbearance agreement with note holders

Sunnova Energy International Inc (NYSE:NOVA)., currently trading at $0.18 and carrying a concerning WEAK Financial Health Score according to InvestingPro, has entered into a forbearance agreement with holders of its senior notes, the company disclosed in a regulatory filing on Friday. The deal, which includes Sunnova’s 11.750% Senior Notes due 2028 and 5.875% Senior Notes due 2026, provides the company with temporary relief from certain debt obligations. With a substantial total debt of $8.49 billion and a current ratio of 0.78, indicating short-term obligations exceed liquid assets, this agreement comes at a critical time for the company.

The Houston-based renewable energy company had previously opted to use a 30-day grace period for an interest payment due on April 1, 2025, which was about $23.5 million. The grace period ended on May 1, 2025, without the payment being made, which under the terms of the indenture, constituted an event of default. This default could have led to the acceleration of the maturity of the notes, meaning the entire debt could become immediately due and payable. InvestingPro analysis reveals multiple warning signs, including the company’s rapid cash burn rate and potential difficulties making interest payments - just two of 20 key insights available to Pro subscribers.

Under the terms of the forbearance agreement, which took effect on May 2, 2025, and lasts until May 8, 2025, the supporting note holders have agreed not to exercise their rights related to the default during this period. This includes refraining from declaring the notes due and payable. If an acceleration does occur during the forbearance period, these holders have committed to rescinding it. The agreement also restricts the supporting holders from transferring their notes to anyone not already a party to the agreement or who does not agree to be bound by its terms.

Sunnova also mentioned in the filing that it is engaged in discussions aimed at reducing its debt and improving its financial flexibility. However, there are no guarantees regarding the outcome or timing of these discussions.

The information provided in the filing is based on a press release statement and is intended to inform stakeholders of the company’s current financial situation and the steps being taken to address it. The full text of the forbearance agreement is included as an exhibit to Sunnova’s Current Report on Form 8-K and is incorporated by reference.

Investors and interested parties should note that forward-looking statements in the document involve risks and uncertainties that could cause actual results to differ materially from those anticipated. The company’s stock has declined by 95.56% over the past year, with its market capitalization now at just $22.51 million. Sunnova’s Annual Report and subsequent Quarterly Reports provide more details on these risks. For comprehensive analysis of Sunnova’s financial situation, including detailed metrics and expert insights, investors can access the full Pro Research Report available on InvestingPro. The company has emphasized that it does not undertake any obligation to update forward-looking statements as circumstances change.

In other recent news, Sunnova Energy International Inc. has been active in various strategic and financial maneuvers. The company recently announced the appointment of Ryan Omohundro as its Chief Restructuring Officer, reflecting its focus on restructuring and financial optimization. Meanwhile, Sunnova disclosed it received a notice from the New York Stock Exchange regarding non-compliance with listing standards due to its stock price, prompting the company to consider options like a reverse stock split to address this issue. Additionally, Fitch Ratings downgraded Sunnova’s credit rating to ’C’ following the company’s decision to enter a 30-day grace period for a missed interest payment on its senior notes.

Sunnova has also appointed Robyn Liska as interim Chief Financial Officer as part of its efforts to strengthen its financial structure. In a related move, the company amended the credit terms for its subsidiary, Sunnova EZ-Own Portfolio, LLC, to enhance its financial flexibility. These developments are part of Sunnova’s broader strategy to stabilize its finances and address refinancing risks. The company is actively engaging with advisors such as Kirkland & Ellis LLP and Alvarez & Marsal to navigate its financial challenges.

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