Quarterly report pursuant to Section 13 or 15(d)

Credit Facility

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Credit Facility
3 Months Ended
Mar. 31, 2015
Text Block [Abstract]  
Credit Facility
7. Credit Facility

In July 2013, we entered into a $350 million senior secured revolving credit facility through newly-created, wholly-owned special purpose subsidiaries (the “Borrowers”). The terms of the credit facility are set forth in the Loan Agreement (G&I) (the “G&I Loan Agreement”) and the Loan Agreement (PF) and related amendments as described below (the “PF Loan Agreement”, and together with the G&I Loan Agreement, the “Loan Agreements”).

Since that time, we have entered into a number of amendments intended to increase the flexibility and borrowing capability of the credit facility as described below:

 

    November 2013 - the PF Loan Agreement was amended to provide us with the flexibility to negotiate an alternative interest rate margin on certain loans with the approval of the administrative agent.

 

    May 2014 - the PF Loan Agreement was amended to increase its overall borrowing capacity by $200 million to $500 million, increase the maximum borrowings allowed at any point in time under the PF Loan Agreement by $100 million to $250 million and expand the collateral eligibility criteria to reflect current market opportunities in distributed energy assets.

 

    August 2014 - we entered into an amended and restated Loan Agreement which a) incorporated the terms of the first two amendments, b) added additional subsidiaries as Borrowers, c) provided for a fixed rate loan option and d) modified the timing of borrowings on certain projects.

 

    September 2014 - the Loan Agreements were amended to reduce the required notice period for advances.

 

    December 2014 - the Loan Agreements were amended to extend the maturity date of the facility to July 19, 2019 and to increase the PF Loan Agreement overall borrowing capacity by $475 million to $975 million and increase the maximum borrowings allowed at any point in time under the PF Loan Agreement by $75 million to $325 million. The G&I Loan Agreement was amended to decrease the G&I Loan Agreement overall borrowing capacity by $25 million to $375 million and decrease the maximum borrowings allowed at any point in time under the G&I Loan Agreement by $75 million to $125 million.

 

    April 2015 – the PF Loan Agreement was amended to increase its overall borrowing capacity by $75 million to $1.05 billion and to increase the maximum borrowings allowed at any point in time under the PF Loan Agreement by $75 million to $400 million; provided, however, that upon the repayment of borrowings related to certain projects and the release of the related collateral, the maximum loan amount shall be reduced on a dollar for dollar basis until it is reduced to $350 million. The G&I Loan Agreement was amended to decrease the G&I Loan Agreement overall borrowing capacity by $75 million to $300 million and decrease the maximum borrowings allowed at any point in time under the G&I Loan Agreement by $25 million to $100 million. Additionally, we may, with the consent of the administrative agent, borrow against new projects before such projects become approved financings but after they have been pledged as collateral.

We have guaranteed the obligations of the Borrowers under each of the Loan Agreements pursuant to (x) a Continuing Guaranty, dated July 19, 2013, and (y) a Limited Guaranty, dated July 19, 2013. As part of our August and December 2014 amendments, we entered into amended and restated versions of these guaranties.

 

The Loan Agreements, as amended, provide for senior secured revolving credit facilities with total maximum advances of $1.35 billion (i) in the case of the G&I Loan Agreement, in the principal amount of $100 million to be used to leverage certain qualifying government and institutional financings entered into by us, with maximum total advances (without giving effect to prepayments or repayments) of $300 million, and (ii) in the case of the PF Loan Agreement, in the principal amount of $400 million to be used to leverage certain qualifying project financings entered into by us, with maximum total advances (without giving effect to prepayments or repayments) of $1.05 billion. The $400 million is subject to being reduced to $350 million as described above in the April 2015 amendment. The scheduled termination date of each of the Loan Agreements is July 19, 2019. Loans under the G&I Loan Agreement bear interest at a rate equal to the London Interbank Offered Rate (“LIBOR”) plus 1.50% or, under certain circumstances, the Federal Funds Rate plus 1.50%. Loans under the PF Loan Agreement bear interest at a rate equal to LIBOR plus 2.50% or, under certain circumstances, the Federal Funds Rate plus 2.50%, or a specifically negotiated rate on certain loans as approved by the administrative agent. Under the PF Loan Agreement, we also have the option to borrow at a fixed rate of interest until the expiration of the credit facility in July 2019. The fixed rate is determined by agreement with the Administrative Agent and is based on the prevailing US SWAP rate of an equivalent term to the average-life of the fixed rate portion of the borrowing plus an agreed upon margin.

Any financing we propose to be included in the borrowing base as collateral under the Loan Agreements is subject to the approval of the administrative agent in its sole discretion. As part of the December 2014 amendment, we agreed to pay a placement fee of $20,000 for each financing added to the borrowing base after the date of the amendment. The amount eligible to be drawn under the Loan Agreements for purposes of financing such investments will be based on a discount to the value of each investment or an applicable valuation percentage. Under the G&I Loan Agreement, the applicable valuation percentage for non-delinquent investments is 80% in the case of a U.S. federal government obligor, 75% in the case of an institutional obligor or a state and local obligor, and with respect to other obligors or in certain circumstances, such other percentage as the administrative agent may prescribe. Under the PF Loan Agreement, the applicable valuation percentage is 67% or such other percentage as the administrative agent may prescribe. The sum of approved financings after taking into account the valuation percentages and any changes in the valuation of the financings in accordance with the Loan Agreements determines the borrowing capacity, subject to the overall facility limits described above.

We had outstanding borrowings under our credit facilities of approximately $321 million and $316 million as of March 31, 2015 and December 31, 2014, respectively. We pledged approximately $463 million and $422 million of financing receivables as collateral for the credit facility as of March 31, 2015 and December 31, 2014, respectively. The weighted average short-term borrowing rate of our credit facilities was 2.4% as of March 31, 2015 and December 31, 2014. We incurred approximately $11 million of costs associated with the Loan Agreements that have been capitalized (included in other assets on the condensed consolidated balance sheets) and will be amortized on a straight-line basis over the term of the Loan Agreements. On each monthly payment date, the Borrowers shall also pay to the administrative agent, for the benefit of the lenders, certain availability fees for each Loan Agreement equal to 0.50%, divided by 360, multiplied by the excess of the available borrowing capacity under each Loan Agreement over the actual amount borrowed under such Loan Agreement.

Each Loan Agreement contains terms, conditions, covenants, and representations and warranties that are customary and typical for a transaction of this nature. The Loan Agreements contain various affirmative and negative covenants, and limitations on the incurrence of liens and indebtedness, investments, fundamental organizational changes, dispositions, changes in the nature of business, transactions with affiliates, use of proceeds and stock repurchases.

Each Loan Agreement also includes customary events of default, including the existence of a default in more than 50% of underlying financings. The occurrence of an event of default may result in termination of the Loan Agreements, acceleration of amounts due under both Loan Agreements, and accrual of default interest at a rate of LIBOR plus 2.50% in the case of the G&I Loan Agreement and at a rate of LIBOR plus 5.00% in the case of the PF Loan Agreement.

The Loan Agreements require that we maintain the following financial covenants:

 

Covenant

   Covenant
Threshold
 

Minimum Liquidity (defined as available borrowings under the Loan Agreements plus unrestricted cash divided by actual borrowings) of greater than:

     5

12 month rolling Net Interest Margin of greater than:

     zero   

Maximum Debt to Equity Ratio of less than: (1)

     4 to 1   

 

(1) Debt is defined as total indebtedness excluding accounts payable and accrued expenses and nonrecourse debt.

 

We were in compliance with the financial covenants of the Loan Agreements at each reporting date that such covenants were applicable.