The non-recourse facility is secured by the cash flows available to Vivint Solar from its high-quality portfolio of installed residential solar systems supported by long-term customer contracts. Utilizing a flexible structure that provides an attractive advance rate while allowing Vivint Solar to continue to access the senior term debt market as it has done in the past, this financing will allow Vivint Solar to fund additional customer installations and provides partial credit for SREC revenues, enabling a faster return of working capital to support the growth of Vivint Solar's portfolio. The facility has minimal near-term amortization requirements and allows Vivint Solar to utilize a portion of the cash flows generated by the operating portfolio, under certain conditions and at predetermined improved leverage levels, to fund additional business initiatives.
The financing is accessible in two tranches, an initial, shorter-term tranche of $75 million priced at LIBOR plus 5.5%, and a second tranche of $125 million that can be drawn over time to fund future growth. If Vivint Solar elects to draw on the second tranche, pricing will increase to LIBOR plus 8.0% and the term will extend to 4 years on the entire $200 million facility.
This financing structure was designed to provide immediate liquidity with the option to upsize and fund anticipated future growth beyond 2016 and we believe it provides significant flexibility as compared to several recently closed transactions in the residential solar market. This is the first step in a series of anticipated financing activities that were put on hold as a result of the now terminated SunEdison merger.
About Vivint Solar
Vivint Solar is a leading provider of distributed solar energy systems – electricity generated by a solar energy system installed at a customer's location – to residential customers in the United States. Vivint Solar's customers pay little to no money upfront, receive significant savings relative to utility generated electricity rates and continue to benefit from guaranteed energy prices over the 20-year term of their contracts. Vivint Solar finances, designs, installs, monitors and services the solar energy systems to make things easy for its customers. For more information, visit www.vivintsolar.com or follow @VivintSolar.
Note on Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding Vivint Solar's growth prospects and ability to access capital the financial markets in the future for financing.
Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Forward-looking statements should not be read as a guarantee of future performance or results, and they will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved, if at all. These statements are based on current expectations and assumptions regarding future events and business performance as of the date of this press release, and they are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements, including but not limited to: the availability of additional financing on acceptable terms; changes in the retail price of traditional utility generated electricity; changes in electric utility policies and regulations; the availability of rebates, tax credits and other incentives, including solar renewable energy credits, or SRECs and state incentives, that affect the pricing of our offering; regulations and policies related to net metering; changes in regulations, tariffs and other trade barriers and tax policy affecting us and our industry; our ability to manage our recent and future growth effectively, including attracting, training and retaining sales personnel and solar energy system installers; the availability and price of solar panels and other system components, the assumptions employed in calculating our operating metrics may be inaccurate; Vivint Solar's limited operating history; and such other risks identified in the registration statements and reports that Vivint Solar files with the U.S. Securities and Exchange Commission, or SEC, from time to time. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in those statements will be achieved or will occur, and actual results could differ materially from those anticipated or implied in the forward-looking statements. Except as required by law, Vivint Solar does not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. You should read the documents Vivint Solar has filed with the SEC for more complete information about the company. These documents are available on both the EDGAR section of the SEC's website at www.sec.gov and the Investor Relations section of the company's website at www.vivintsolar.com.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
Vice President of Investor Relations
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SOURCE Vivint Solar