Ameresco, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Long-Term Debt

Long-Term Debt

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Long-Term Debt

LONG-TERM DEBT

Long-term debt comprised the following:



	Commencement Date	Maturity Date	Acceleration Clause⁽²⁾	Rate as of December 31,		Balance as of December 31,
	Commencement Date	Maturity Date	Acceleration Clause⁽²⁾	2018		2018		2017
Senior secured credit facility, interest at varying rates monthly in arrears	June 2015	June 2020	NA	4.710	%	$	43,074	$	49,986
Variable rate term loan payable in semi-annual installments	January 2006	February 2021	Yes	5.047	%	936		1,220
Variable rate term loan payable in semi-annual installments	January 2006	June 2024	Yes	4.797	%	7,426		8,295
Variable rate term loan payable in quarterly installments	February 2009	December 2024	NA	NA		—		8,757
Term loan payable in quarterly installments	March 2011	March 2021	Yes	7.250	%	1,464		2,218
Term loan payable in monthly installments	October 2011	June 2028	NA	6.110	%	3,843		4,551
Variable rate term loan payable in quarterly installments	October 2012	June 2020	NA	6.297	%	30,674		32,711
Variable rate term loan payable in quarterly installments	September 2015	March 2023	NA	5.297	%	17,208		18,346
Term loan payable in quarterly installments	August 2016	July 2031	NA	4.950	%	3,925		4,605
Term loan payable in quarterly installments	March 2017	March 2028	NA	5.000	%	3,945		4,258
Term loan payable in monthly installments⁽³⁾	April 2017	April 2027	NA	4.500	%	22,081		13,325
Term loan payable in quarterly installments	April 2017	February 2034	NA	5.610	%	2,735		3,128
Variable rate term loan payable in quarterly installments	June 2017	December 2027	NA	5.247	%	12,915		14,034
Variable rate term loan payable in quarterly installments	February 2018	August 2022	Yes	10.297	%	21,475		—
Term loan payable in quarterly installments	June 2018	December 2038	Yes	5.150	%	30,069		—
Variable rate term loan payable in semi-annual installments	June 2018	June 2033	Yes	4.847	%	9,668		—
Variable rate construction loan payable	November 2016	June 2018	NA	NA		—		1,721
Variable rate term loan payable in monthly/quarterly installments	October 2018	October 2029	Yes	5.020	%	9,072		—
Capital leases⁽¹⁾						33,363		35,013
						253,873		202,168
Less - current maturities						26,890		22,375
Less - deferred financing fees						7,821		6,556
Long-term debt						$	219,162	$	173,237

⁽¹⁾Capital leases do not include approximately $25,305 in future interest payments

⁽²⁾These agreements have acceleration causes that, in the event of default, as defined, the payee has the option to accelerate payment terms and make due the remaining principal and the required interest balance according to the agreement

⁽³⁾As of December 31, 2018, this construction loan has an additional $2,742 commitment that could be drawn upon

Aggregate maturities of long-term debt for the years ended December 31, are as follows:



2019	$	26,890
2020	85,685
2021	18,573
2022	27,810
2023	27,518
Thereafter	69,955
Debt Discount	(2,558		)
	$	253,873

Senior Secured Credit Facility - Revolver and Term Loan

On June 30, 2015, the Company entered into a third amended and restated bank credit facility with two banks. The new credit facility replaces and extended the Company’s existing credit facility, which was scheduled to expire in accordance with its terms on June 30, 2016. The revolving credit facility and term loan mature on June 30, 2020, when all amounts will be due and payable in full. The Company expects to use the new credit facility for general corporate purposes of the Company and its subsidiaries, including permitted acquisitions, refinancing of existing indebtedness and working capital. In July 2016, the Company entered into an amendment to the third amended and restated bank credit facility that amended the requirement of the total funded debt to EBITDA ratio, as defined. In November 2016, the Company entered into an additional amendment to the third amended and restated bank credit facility that increased the amount of the term loan under the credit facility by approximately $20,000 to an aggregate of $30,000 and extends the maturity date of the term loan from June 30, 2018 to June 30, 2020. In June 2017, the Company entered into an additional amendment to the third amended and restated bank credit facility that increased the amount available to be drawn on the revolving credit facility from $60,000 to $75,000. This amendment also amended the requirement of the total funded debt to EBITDA ratio, as defined, described below. In June 2018, the Company entered into an additional amendment to the Third Amended and Restated bank credit facility. The amendment added an additional lender, increased the aggregate amount of the revolving commitments from $75,000 to $85,000 through the existing June 30, 2020 end date, increased the term loan from $25,000 to $46,000 to reduce the outstanding revolving loan balances by the same amount and, for the period of June 30, 2018 through June 30, 2020, increased the Total Funded Debt to EBITDA covenant ratio, as defined, from a maximum of 2.75 to 3.00. The total commitment under the amended credit facility (revolving credit, term loan and swing line) is $136,000.

The credit facility consists of a $85,000 revolving credit facility and a $46,000 term loan. The revolving credit facility may be increased by up to an additional $25,000 at the Company’s option if lenders are willing to provide such increased commitments, subject to certain conditions. Up to $20,000 of the revolving credit facility may be borrowed in Canadian dollars, Euros or pounds sterling. The Company is the sole borrower under the credit facility. The obligations under the credit facility are guaranteed by certain of the Company’s direct and indirect wholly owned domestic subsidiaries and are secured by a pledge of all of the Company’s and such subsidiary guarantors’ assets, other than the equity interests of certain subsidiaries and assets held in non-core subsidiaries (as defined in the agreement). At December 31, 2018 and 2017, $41,500 and $22,500, excluding debt discounts, was outstanding under the term loan, respectively. At December 31, 2018 and 2017, $1,696 and $27,580, excluding debt discounts, was outstanding under the revolving credit facility, respectively. At December 31, 2018 funds of $72,234 is available for borrowing under the revolving credit facility. At December 31, 2018, the Company had $11,070 in letters of credit outstanding.

The interest rate for borrowings under the credit facility is based on, at the Company’s option, either (1) a base rate equal to a margin of 0.5% or 0.25%, depending on the Company’s ratio of Total Funded Debt to EBITDA (as defined in the agreement), over the highest of (a) the federal funds effective rate, plus 0.50% , (b) Bank of America’s prime rate and (c) a rate based on the London interbank deposit rate (“LIBOR”) plus 1.50%, or (2) the one-, two- three- or six-month LIBOR plus a margin of 2.00% or 1.75%, depending on the Company’s ratio of Total Funded Debt to EBITDA, as defined. A commitment fee of 0.375% is payable quarterly on the undrawn portion of the revolving credit facility. At December 31, 2018, the interest rate for borrowings under the revolving credit facility was 4.52% and the weighted average interest rate for borrowings under the term loan was 4.72%.

The revolving credit facility does not require amortization of principal. The term loan requires quarterly principal payments of $1,500, with the balance due at maturity. All borrowings may be paid before maturity in whole or in part at the Company’s option without penalty or premium, other than reimbursement of any breakage and deployment costs in the case of LIBOR borrowings.

The credit facility limits the Company’s and its subsidiaries’ ability to, among other things: incur additional indebtedness; incur liens or guarantee obligations; merge, liquidate or dispose of assets; make acquisitions or other investments; enter into hedging agreements; pay dividends and make other distributions and engage in transactions with affiliates, except in the ordinary course of business on an arms’ length basis.

Under the credit facility, the Company and its subsidiaries may not invest cash or property in, or loan to, the Company’s non-core subsidiaries in aggregate amounts exceeding 49% of the Company’s consolidated stockholders’ equity. In addition, under the credit facility, the Company and its core subsidiaries must maintain the following financial covenants:



	•		a ratio of total funded debt to EBITDA, as defined, of less than 3.0 to 1.0 as of the end of each fiscal quarter ending June 30, 2018 and thereafter; and
	•		a debt service coverage ratio (as defined in the agreement) of at least 1.5 to 1.0.

Any failure to comply with the financial or other covenants of the credit facility would not only prevent the Company from being able to borrow additional funds, but would constitute a default, permitting the lenders to, among other things, accelerate the amounts outstanding, including all accrued interest and unpaid fees, under the credit facility, to terminate the credit facility, and enforce liens against the collateral.

The credit facility also includes several other customary events of default, including a change in control of the Company, permitting the lenders to accelerate the indebtedness, terminate the credit facility, and enforce liens against the collateral.

For purposes of the Company’s senior secured facility: EBITDA, as defined, excludes the results of certain renewable energy projects that the Company owns and for which financing from others remains outstanding; total funded debt, as defined, includes amounts outstanding under both the term loan and revolver portions of the senior secured credit facility plus other indebtedness, but excludes non-recourse indebtedness of project company subsidiaries; and debt service, as defined, includes principal and interest payments on the indebtedness included in total funded debt other than principal payments on the revolver portion of the facility.

February 2018 Term Loan

In February 2018, the Company entered into a credit agreement for gross proceeds of $28,500, with a bank for use in providing non-recourse financing for a new renewable natural gas energy asset at a rate of 7.5% above LIBOR. Principal and interest amounts are due in quarterly installments. The term loan matures on August 31, 2022 with all remaining unpaid amounts outstanding under the agreement due at that time. At December 31, 2018, $21,475, net of debt discount, was outstanding under the term loan. The interest rate at December 31, 2018 was 10.297%.

June 2018 Term Loan

In June 2018, the Company entered into a non-recourse term loan with a bank, with an original principal amount of $12,407. In August 2018, the Company entered into a joinder agreement which increased the principal amount by an additional $19,252, for a total principal amount of $31,659. The loan bears interest at a fixed rate of 5.15%. The principal and interest payments are due in quarterly installments and the loan matures on December 31, 2038, with all remaining unpaid amounts outstanding under the agreement due at that time. These agreements contain interest make-whole provisions that the Company determined qualified as embedded derivatives that are required to be bifurcated and valued separately from the host contract. See Notes 8 and 9 for additional discussions. At December 31, 2018, $30,069 was outstanding under the term loan, including debt discounts and the make-whole interest provision derivatives.

June 2018 Variable Note

In June 2018, the Company entered into a loan agreement for use in providing non-recourse financing for a solar PV project in operation. The loan agreement provides for a $10,000 term loan credit facility and bears interest at a variable rate, with interest payments due in semi-annual installments. The term loan matures on June 15, 2033, with all remaining unpaid amounts outstanding under the facility due at that time. At December 31, 2018, $9,668, net of debt discounts, was outstanding under the term loan. The variable interest rate for this loan at December 31, 2018 was 4.847%.

October 2018 Term Loan

In October 2018, the Company entered into a non-recourse term loan with a bank, with an original principal amount of $9,200. The loan bears interest at a rate of 2.5% above LIBOR. Interest is due monthly in the first year of the loan and then principal and interest payments are due in quarterly installments. the loan matures on October 18, 2029, with all remaining unpaid amounts outstanding under the agreement due at that time. At December 31, 2018, $9,072 was outstanding under the term loan, including debt discounts.

The Company’s project financing facilities contain various financial and other covenant requirements which include debt service coverage ratios and total funded debt to EBITDA, as defined. Any failure to comply with the financial or other covenants of the Company’s projects financings would result in inability to distribute funds to from the wholly-owned subsidiary to the Company or constitute an event of default in which the lenders may have the ability to accelerate the amounts outstanding, including all accrued interest and unpaid fees.

As of December 31, 2018, the Company was not in compliance with certain financial covenant requirements on two of the Company’s project financing debt facilities. The Company has received a waiver from one of the financial institutions to waive the failure as of December 31, 2018. The Company has not received a waiver from one financial institution in relation to the covenant failure on a project financing facility for which $3,978 was outstanding as of December 31, 2018.