Item 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On September 30, 2020 (the "Closing Date"), Vivint Solar, Inc.'s ("Vivint
Solar") wholly-owned subsidiary, Vivint Solar Financing VII, LLC ("Vivint Solar
Financing VII") completed an issuance of Solar Asset Backed Notes (the
"Transaction").
Vivint Solar Financing VII issued an aggregate principal amount of $217,000,000
of Solar Asset Backed Notes, Series 2020-1, Class A (the "2020-1 Class A Notes")
and an aggregate principal amount of $29,500,000 of Solar Asset Backed Notes,
Series 2020-1, Class B (the "2020-1 Class B Notes" and together with the 2020-1
Class A Notes, the "2020-1 Notes"). The 2020-1 Class A Notes bear interest at a
rate of 2.21% and have an anticipated repayment date of January 30, 2029. The
2020-1 Class B Notes bear interest at a rate of 3.22% and have an anticipated
repayment date of January 30, 2029.
The 2020-1 Notes may only be acquired by persons who are either (i) qualified
institutional buyers as defined in Rule 144A under the Securities Act of 1933,
as amended (the "Securities Act"), or (ii) not U.S. Persons (as defined in
Regulation S under the Securities Act ("Regulation S")) in offshore transactions
in reliance on Regulation S. The 2020-1 Class A Notes have been rated A- (sf)
and the 2020-1 Class B Notes have been rated BBB (sf), in each case by Kroll
Bond Rating Agency, Inc.
The Collateral
The 2020-1 Notes were issued by Vivint Solar Financing VII pursuant to an
Indenture (the "2020-1 Indenture"), dated as of the Closing Date, between Vivint
Solar Financing VII and Wells Fargo Bank, National Association ("Wells Fargo"),
as indenture trustee.
The 2020-1 Notes are secured by, and payable solely from the cash flow generated
by, the membership interests that will be owned by Vivint Solar Financing VII in
certain indirectly owned subsidiaries of Vivint Solar, each of which
subsidiaries is the managing member of a project company that is jointly owned
with a third-party investor and each of which project companies owns a pool of
photovoltaic systems and related leases and power purchase agreements and
ancillary rights and agreements that were originated by a wholly owned
subsidiary of Vivint Solar.
Vivint Solar Provider, LLC ("Vivint Solar Provider") will act as transaction
manager pursuant to the terms of a Transaction Management Agreement with Vivint
Solar Financing VII. Vivint Solar Provider will be required to provide all
administrative, collection and other management services for Vivint Solar
Financing VII in respect of the managing membership interests that each owns in
an applicable project company, and the interests, rights and obligations
thereof.
Events of Default and Amortization Events
The 2020-1 Indenture contains events of default that generally are customary in
nature for solar securitizations of this type, including (a) the non-payment of
interest or principal, (b) material violations of covenants, (c) material
breaches of representations and warranties and (d) certain bankruptcy events.
The 2020-1 Notes are also subject to amortization events that generally are
customary in nature for solar securitizations of this type, including (i) a debt
service coverage ratio falling below certain levels, (ii) the failure to
maintain insurance, and (iii) the failure to repay the notes in full prior to
the anticipated repayment date for such class of notes. The occurrence of an
amortization event or an event of default could result in the more rapid
amortization of the 2020-1 Notes and the occurrence of an event of default
could, in certain instances, result in the liquidation of the collateral
securing the 2020-1 Notes.
Use of Proceeds
Vivint Solar intends to use the proceeds from the sale of the notes for general
corporate purposes, including repayment, in part, of the borrowings under the
Credit Agreement, dated as of August 6, 2019, by and among Vivint Solar
Financing VI, LLC, Bank of America, N.A., Credit Suisse AG, Cayman Islands
Branch, Keybank National Association, Silicon Valley Bank and Citibank, N.A.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information related to the Transactions described under Item 1.01 above is
hereby incorporated by reference under this Item 2.03
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