Spruce Power Announces $130 Million Debt Financing
Spruce Power has closed a $130 million non-recourse debt facility with Barings This new financing replaces the company's previous $125 million term loan, adding net incremental capital. The facility, rated A+ by Kroll, is priced at a fixed rate of 6.889%. It is backed by contracted cash flows from over 22,000 solar contracts in Spruce's portfolio, with a 69% advance rate. The refinancing provides a net capital injection of over $6 million after fees and the termination of interest rate swaps. The company expects continued strong performance from its variable rate PPAs, particularly in California, where rising retail electric prices have boosted cash flows.
- Closed a $130 million non-recourse debt facility with Barings
- Refinanced a $125 million term loan, adding net incremental capital.
- Facility rated A+ by Kroll, priced at a fixed loan rate of 6.889%.
- The refinancing injects over $6 million of net capital into the company.
- Strong expected performance from variable rate PPAs due to rising retail electric prices.
- None.
Insights
The refinancing of Spruce Power's term loan with a
The loan's A+ rating by Kroll and the fixed interest rate of
The
This refinancing deal positions Spruce Power well in terms of market dynamics. The partnership with Barings, a notable entity with deep industry expertise, aligns with Spruce's mission to support clean energy usage. Strategic relationships like this often open avenues for collaborative growth and shared expertise, which can be advantageous in navigating the evolving energy market.
Considering the portfolio's composition of variable rate PPAs indexed to retail electric rates, the rising electricity prices in California and other regions are key external factors. These trends are likely to enhance the company's revenues and cash flow stability. Investors should watch these regional pricing trends closely, as they directly affect Spruce’s performance.
Moreover, the injection of incremental capital, although modest at
The refinancing indicates strong confidence in Spruce Power's technology and asset portfolio. With a collateral pool consisting of over 22,000 solar contracts, Spruce is positioned as a significant player in the distributed solar energy sector. The variable rate PPAs indexed to retail electric rates reflect a sophisticated approach to maximizing asset yield, particularly given the upward trend in retail electricity prices.
This focus on tech-driven financial structuring illustrates the dual importance of asset performance and financial engineering in the renewable energy space. Effective leveraging of both aspects can lead to higher returns and improved asset utilization. For investors, it's critical to note how tech advancements and market-tailored financial solutions converge to create robust investment opportunities in the renewable sector.
“Spruce is proud to announce the execution and closing of the refinance of its SP4 Facility. This transaction achieves a favorable balance of capitalizing on the Company’s strong asset performance and retention of asset level cash flows for our shareholders,” said Joe Pettit, Spruce’s VP of Corporate Development. “Additionally, I’m pleased to announce a new relationship with Barings, who brings deep industry expertise that is supportive of Spruce’s mission to power our customers’ clean and efficient energy use.”
“We are pleased to start a great partnership with Spruce to support the Company’s innovative business model and growth trajectory, as we seek to deliver attractive risk-adjusted returns to our clients,” said Burak Cetin, Barings’ Managing Director and Head of Private Residential and Consumer Asset Finance.
The
The New Debt Facility’s collateral pool consists of cash flows from over 22,000 solar contracts (the “Spruce Power 4 Portfolio”), the majority of which are variable rate PPAs indexed to retail electric rates of
The refinancing transaction provides for an injection of incremental capital into the Company of over
Santander US Capital Markets LLC served as the sole structuring agent.
About Spruce Power
Spruce Power Holding Corporation (NYSE: SPRU) is a leading owner and operator of distributed solar energy assets across
About Barings LLC
Barings is a
*Assets under management as of March 31, 2024
Forward Looking Statements
Certain statements in this press release may constitute “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements can be identified by the use of forward-looking words or phrases such as “anticipate,” “believe,” “could,” “expect,” “intends,” “may,” “opportunity,” “plans,” “goals,” “target” “predict,” “potential,” “estimate,” “should,” “will,” “would,” “continue,” “likely” or the negative of these terms or other words of similar meaning. These statements are based upon our current plans and strategies and reflect our current assessment of the risks and uncertainties. Forward-looking statements in this release include statements regarding the future direction of the Company and growth opportunities. These statements are based on various assumptions, whether or not identified in this press release and on the current expectations of management, and are not predictions of actual performance. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements, including but not limited to: expectations regarding the growth of the solar industry, home electrification, electric vehicles and distributed energy resources; the ability to successfully integrate XL Fleet and Spruce; the ability to identify and complete future acquisitions; the ability to develop and market new products and services; the effects of pending and future legislation; the highly competitive nature of the Company’s business and markets; the ability to execute on and consummate business plans in anticipated time frames; litigation, complaints, product liability claims, government investigations and/or adverse publicity; cost increases or shortages in the components or chassis necessary to support the Company’s products and services; the introduction of new technologies; the impact of natural disasters and other events beyond our control, such as hurricanes, wildfires or pandemics, on the Company’s business, results of operations, financial condition, regulatory compliance and customer experience; privacy and data protection laws, privacy or data breaches, or the loss of data; general economic, financial, legal, political and business conditions and changes in domestic and foreign markets; risks related to the rollout of the Company’s business and the timing of expected business milestones; the effects of competition on the Company’s future business; the availability of capital; and the other risks discussed under the heading “Risk Factors” in the Company’s Annual Report on Form 10 K for the year ended December 31, 2023 filed with the SEC on April 9, 2024, subsequent Quarterly and Annual Reports on Form 10-Q and Form 10-K, respectively, and other documents that the Company files with the SEC in the future. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. These forward-looking statements speak only as of the date hereof and the Company specifically disclaims any obligation to update these forward-looking statements.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240701266202/en/
For More Information
Investor Contact: investors@sprucepower.com
Head of Investor Relations: Bronson Fleig
Media Contact: publicrelations@sprucepower.com
Source: Spruce Power Holding Corporation
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