Sunnova names new CEO amid financial woes
Sunnova, a regular issuer of solar ABS deals, picked a new chief executive on Monday in hopes he can guide the solar panel company to manage its huge debt load.
The residential solar industry has been under a cloud as borrowing costs have remained high coupled with the uncertain environment for tax credits related to solar energy. On March 3, Sunnova warned about its ability to meet debt obligations and its financial viability.
Still, despite the challenges, Sunnova and other solar issuers have been able to tap the securitization market for funding. Last year, Sunnova sold five asset-backed deals backed by loans and leases it originated, which raised nearly US$1.2bn combined, IFR data showed.
On March 4, the company filed with the SEC for an asset-backed deal called Sunnova Helios XV Issuer LLC. It is not clear when the offering will come to market.
Barclays analysts said Sunnova ABS holders should be protected for now given the recent developments at Sunnova.
"Based on the language in ABS deal documents, we believe that a bankruptcy filing from Sunnova wouldn't trigger a default event for the ABS structures and as a result there shouldn't be a rapid amortization event," the bank wrote in a research note on Monday.
KBRA, which rated 33 Sunnova securitized deals, said last week that it "will continue to monitor the developments and implications of Sunnova’s financial health, as well as possible manager transitions and performance of the Sunnova transactions."
Sunnova declined to comment.
In addition to tapping the structured financed market to shore up its finances, Sunnova entered into a US$185m term loan deal on March 2. It also announced last week a program to reduce US$70m in costs after posting a US$127.7m net loss in the fourth quarter last year.
Despite its access to the ABS market, the Texas-based firm raised a red flag about its future.
It said it currently does not have enough resources to repay or settle bonds and convertible securities that will mature in 2026 and 2028. There are US$1.98bn of these securities outstanding, LSEG data show. The company had US$8.1bn in total debt at the end of 2024.
"If sufficient capital is not available to us on acceptable terms when needed, our ability to continue to fund our operations, grow our business and satisfy our obligations would be materially adversely impacted," it said in a filing with Securities and Exchange Commission on March 3.
The Texas-based company today named Paul Mathews, who had been its chief operating officer, as president and CEO. He succeeds William Berger, who is stepping down as chairman, president and CEO. Berger, who founded Sunnova more than 12 years ago, will stay on as an adviser for the transition.
“At a time when the Company is executing a strategic repositioning for positive cash generation, we’ve asked Paul to be a change agent and deliver on the core needs of the business while creating value for our stakeholders," Sunnova director Anne Slaughter Andrew said in a statement today.
Before joining Sunnova in 2023, Mathews was an executive at UPS for nearly two decades, holding various roles in engineering and operations.