Annual report pursuant to Section 13 and 15(d)

Debt and Financing Lease Liabilities

v3.20.4
Debt and Financing Lease Liabilities
 12 Months Ended
Dec. 31, 2020
Debt Disclosure [Abstract]  
Debt and Financing Lease Liabilities DEBT AND FINANCING LEASE LIABILITIES
Long-term debt was comprised of the following:  
Commencement Date Maturity Date
Acceleration Clause (2)
Rate as of December 31, 2020
 As of December 31,
2020 2019
Senior secured credit facility, interest at varying rates monthly in arrears June 2015 June 2024 NA 3.359  % $ 110,761  $ 112,636 
Variable rate term loan payable in semi-annual installments (4)
January 2006 February 2021 Yes 2.488  % 350  625 
Variable rate term loan payable in semi-annual installments (4)
January 2006 June 2024 Yes 2.238  % 6,081  6,609 
Term loan payable in quarterly installments March 2011 March 2021 Yes 7.250  % 171  831 
Term loan payable in monthly installments October 2011 June 2028 NA 6.110  % 3,339  3,649 
Variable rate term loan payable in quarterly installments October 2012 May 2025 NA 2.488  % 40,750  28,217 
Variable rate term loan payable in quarterly installments September 2015 March 2023 NA 2.988  % 14,867  16,200 
Term loan payable in quarterly installments August 2016 July 2031 NA 4.950  % 3,527  3,813 
Term loan payable in quarterly installments March 2017 March 2028 NA 5.000  % 3,118  3,548 
Term loan payable in monthly installments April 2017 April 2027 NA 4.500  % 18,403  22,553 
Term loan payable in quarterly installments April 2017 February 2034 NA 5.610  % 2,589  2,739 
Variable rate term loan payable in quarterly installments June 2017 December 2027 NA 2.688  % 10,541  11,783 
Variable rate term loan payable in quarterly installments February 2018 March 2026 Yes 6.238  % 34,451  15,766 
Term loan payable in quarterly installments June 2018 December 2038 Yes 5.150  % 27,695  29,947 
Variable rate term loan payable in semi-annual installments June 2018 June 2033 Yes 2.288  % 8,348  9,027 
Variable rate term loan payable in monthly/quarterly installments October 2018 October 2029 Yes 2.644  % 8,503  9,200 
Term loan payable in quarterly installments December 2019 December 2021 Yes 6.500  % 11,621  27,473 
Fixed rate note April 2020 April 2040 NA 5.000  % 222  — 
Fixed rate note payable in quarterly installments November 2020 December 2027 NA 3.575  % 3,548  — 
Construction revolver June 2020 May 2021 Yes 4.750  % 15,177  — 
Construction revolver July 2020 July 2022 Yes 1.988  % 11,581  — 
Long-term financing facility in semi-annual installments (3)
July 2019 July 2039 NA 0.280  % 3,625  3,841 
Long-term financing facilities in semi-annual installments (3)
November 2019 December 2040 NA —  % 26,069  8,794 
Long-term financing facilities in quarterly installments (3)
December 2020 December 2030 NA —  % 2,924  — 
Financing leases (1)
23,500  28,497 
Total debt and financing leases 391,761  345,748 
Less: current maturities 69,362  69,969 
Less: unamortized discount and debt issuance costs 10,725  9,598 
Long-term debt and financing lease liabilities, net of current portion, unamortized discount and debt issuance costs $ 311,674  $ 266,181 
(1) Financing leases are sale-leaseback arrangements under previous guidance and do not include approximately $18,791 in future interest payments as of December 31, 2020 and $22,015 as of December 31, 2019. See Note 8.
(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 the remaining principal and the required interest balance due according to the agreement.
(3) These agreements are sale-leaseback arrangements and are accounted for as failed sales under the new guidance and are classified as financing liabilities. See Note 8.
(4) As of December 31, 2020, we were in default on these loans for failure to maintain a projected consolidated debt service coverage ratio equal to or exceeding 1.20 to 1.00, however, a limited waiver was received in January 2021.
The following table presents the aggregate maturities of long-term debt and financing leases as of December 31, 2020:
2021 $ 69,362 
2022 26,327 
2023 40,311 
2024 116,391 
2025 48,092 
Thereafter 91,278 
Less: unamortized debt discount and issuance costs (10,725)
Total maturities $ 381,036 
Senior Secured Credit Facility - Revolver and Term Loan
On June 28, 2019, we entered into a fourth amended and restated bank credit facility with three banks. The new credit facility replaced and extended our existing credit facility, which was scheduled to expire on June 30, 2020. The amended revolving credit and term loan facility mature on June 28, 2024, when all amounts will be due and payable in full. We expect to use the remaining funds available under the credit facility for general corporate purposes, including permitted acquisitions, refinancing of existing indebtedness and working capital.
The June 28, 2019 amendment increased the total commitment under the amended credit facility (revolving credit, term loan and swing line) to $185,000 and included the following changes:
•increased the aggregate amount of the revolving commitments from $85,000 to $115,000 through an extended June 28, 2024 maturity date,
•increased the term loan from $40,000 to $65,000 to reduce the outstanding revolving loan balance by the same amount and extended the maturity date from June 30, 2020 to June 28, 2024, and
•increased the total funded debt to EBITDA covenant ratio from a maximum of 3.00 to 3.25.
In March 2020, we amended this credit facility which increased the total funded debt to EBITDA covenant ratio to a maximum of 3.75 for the year ended December 31, 2020, which reverts back to 3.25 on March 31, 2021. The amendment also increased the Eurocurrency rate floor from 0% to 1%. The total commitment under the amended credit facility remains unchanged at $185,000.
The revolving credit facility may be increased up to an additional $100,000 in increments of at least $25,000 at our 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. We are the sole borrower under the credit facility. The obligations under the credit facility are guaranteed by certain of our direct and indirect wholly owned domestic subsidiaries and are secured by a pledge of all of Ameresco’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).
The table below sets forth amounts outstanding under the credit facility, net of unamortized debt discounts and debt issuance costs:
Rate as of December 31, 2020
 As of December 31,
2020 2019
Term loan 3.00  % $ 57,574  $ 62,409 
Revolving credit facility 3.75  % $ 52,696  $ 49,588 
Total senior secured credit facility outstanding (1)
$ 110,270  $ 111,997 
(1) Net of unamortized debt discount and debt issuance costs of $491 in 2020 and $639 in 2019.
As of December 31, 2020 funds of $50,011 were available for borrowing under the revolving credit facility and we had $11,916 in letters of credit outstanding.
The interest rate for borrowings under the credit facility is based on, at our option, either (1) a base rate equal to a margin of 0.5% or 0.25%, depending on our 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 our 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.
The revolving credit facility does not require amortization of principal. The term loan requires quarterly principal payments of $1,219, with the balance due at maturity. All borrowings may be paid before maturity in whole or in part at our option without penalty or premium, other than reimbursement of any breakage and deployment costs in the case of LIBOR borrowings.
The credit facility limits Ameresco’s and our 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, Ameresco and our subsidiaries may not invest cash or property in, or loan to, our non-core subsidiaries in aggregate amounts exceeding 49% of our consolidated stockholders’ equity. In addition, we and our core subsidiaries must maintain a ratio of total funded debt to EBITDA as noted above, 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 us 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 Ameresco, permitting the lenders to accelerate the indebtedness, terminate the credit facility, and enforce liens against the collateral.
For purposes of our senior secured facility EBITDA, as defined, excludes the results of certain renewable energy projects that we own 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.
April 2020 Fixed Rate Note
In April 2020, we issued a note to a developer in connection with the acquisition of one energy project, discussed in Note 7. The note provided a principal amount of $222 and bears interest at a fixed rate of 5%. The principal and interest payments can be redeemed at any time after the issue date and prior to maturity in April 2040.
May 2020 Amendment to Term Loan
In May 2020, we amended our October 2012 non-recourse term loan with two banks. The amended and restated term loan replaces and extended our existing term loan from May 31, 2020 to May 27, 2025. The amended term loan provides an amended principal amount of $41,850 and bears an interest rate of 2.25% above LIBOR. The interest rate increases by 0.125% above the base rate every three years following the date of execution. The principal and interest payments are due in quarterly installments. As of December 31, 2020, $39,066 was outstanding under the amended term loan, net of unamortized discount and debt issuance costs.
June 2020 Construction Revolver
In June 2020, we entered into a revolving credit agreement with a bank, with an aggregate borrowing capacity of $100,000 for use in financing the construction cost of our owned projects. The facility bears interest at (i) 2.0% above LIBOR or (ii) 0.5% above a base rate defined in the credit agreement, dependent on the type of borrowing requested by us. In December 2020, we entered into an amendment to this agreement which extended this revolving facility from November 2020 to February 2021, and in February
2021, we entered into a second amendment to extend this facility to May 2021. All remaining unpaid amounts outstanding under the facility due at that time. As of December 31, 2020, $14,976 was outstanding under the construction revolving facility, net of debt issuance costs, and funds of $84,823 were available for future borrowings.
July 2020 Construction Revolver
In July 2020, we entered into a revolving credit agreement with a bank, with an aggregate borrowing capacity of $30,000 for use in financing our construction cost of energy projects. The facility may, at our request, be increased by up to an additional $20,000 after certain conditions have been met. The facility bears interest at a rate of 1.75% over LIBOR.
The project loan drawn under the revolving facility matures at the earlier of (i) 12 months from the funding of project loan or (ii) July 17, 2022, with all remaining unpaid amounts outstanding under the facility due at that time. As of December 31, 2020, $11,107 was outstanding under the revolving facility, net of unamortized discount and debt issuance costs, and funds of $18,419 were available for future borrowings.
October 2020 Term Loan Modification
In October 2020, we entered into an amended and restated credit agreement with a bank primarily to increase the commitments under the existing credit agreement and add projects eligible for financing. The new credit agreement replaced and extended our existing credit agreement and included the following amendments:
•increased the commitment from $28,500 to $35,000; the commitment may be increased by lender in its sole discretion by up to an additional $15,000 for a total not to exceed $50,000,
•extended the maturity date from August 31, 2022 to March 31, 2026, and
•the interest rate for borrowings was modified with a decrease in the margin over LIBOR from 7.50% to 6.00%.
We accounted for this amendment as a modification and at closing we incurred $788 in lender’s fees which were reflected as debt discount and $300 in third-party fees which were expensed in selling, general and administrative expenses during the year ended December 31, 2020. The unamortized discount and debt issuance costs from the original loan are being amortized over the term of the amended agreement. The balance of the loan outstanding as of December 31, 2020 was $33,642, net of unamortized discount and debt issuance costs.
November 2020 Fixed Rate Term Loan
In November 2020, we entered into a non-revolving term loan in the amount of $3,484 at a fixed rate of 3.575% with a financial services company to fund the construction of an energy storage facility in Canada, which has been in commercial operation for more than one year. The principal and interest are due in quarterly installments beginning in December 2020 and the loan matures on December 31, 2027. The balance of the loan outstanding as of December 31, 2020 was $3,356, net of unamortized discount and debt issuance costs. The agreement contains a make-whole provision which we deemed to be an embedded derivative. See Notes 18 and 19 for additional information.
December 2020 Long-term Financing Facility
In December 2020, we closed on two solar PV energy assets under a new master lease agreement, as discussed in Note 8, with an initial term of ten years. In accordance with Topic 842, Leases, this transaction was accounted for as a failed sale as we retain control of the underlying assets. The proceeds received from the transaction were recorded by us as a long-term financing facility with an interest rate of 0%, as a result of tax credits which were transferred to the counterparty. The principal and interest payments are due in quarterly installments and the long-term financing facility matures on December 30, 2030, with an option to extend the agreement to December 30, 2040. As of December 31, 2020, $2,544 was outstanding under the facility, net of unamortized discount and debt issuance costs.