Annual report pursuant to Section 13 and 15(d)

Debt and Financing Lease Liabilities

v3.22.0.1
Debt and Financing Lease Liabilities
 12 Months Ended
Dec. 31, 2021
Debt Disclosure [Abstract]  
Debt and Financing Lease Liabilities DEBT AND FINANCING LEASE LIABILITIES
Long-term debt was comprised of the following:  
As of December 31,
2021 2020
Senior secured credit facility, 2.66%, due June 2024 (1)
$ 97,813  $ 110,761 
Construction revolver, 1.74%, due March 2022 (2)
$ 23,935  $ 15,177 
Construction revolver, 1.99%, due July 2022 (2)
7,763  11,581 
Subtotal non-recourse construction revolvers $ 31,698  $ 26,758 
Term loans, due 2021
 $ —  $ 12,142 
Variable rate term loan, 2.49%, due June 2024 (2) (3)
4,264  6,081 
Term loan, 6.11% due June 2028 (5)
2,933  3,339 
Variable rate term loan, 2.49%, due May 2025 (4)
38,844  40,750 
Variable rate term loan, 2.99%, due March 2023 (4)
14,442  14,867 
Term loan, 4.95%, due July 2031 (4)
3,157  3,527 
Term loan, 5.00%, due March 2028 (4)
2,688  3,118 
Term loan, 4.50%, due April 2027 (5)
10,302  18,403 
Term loan, 5.61%, due February 2034 (4)
2,423  2,589 
Variable rate term loan, 2.69%, due December 2027 (4)
9,238  10,541 
Variable rate term loan, 6.24%, due March 2026 (2) (4)
38,753  34,451 
Term loan, 5.15%, due December 2038 (2) (4)
25,465  27,695 
Variable rate term loan, 2.29%, due June 2033 (2) (3)
7,657  8,348 
Variable rate term loan, 2.61%, due October 2029 (2) (5)
7,762  8,503 
Fixed rate note, 5.00%, due April 2040
 224  222 
Fixed rate note, 3.58%, due December 2027 (4)
3,072  3,548 
Fixed rate note, 4.92%, due June 2045 (4)
3,776  — 
Fixed rate note, 3.25%, due March 2046 (4)
39,474  — 
Variable rate term loan, 3.63%, due July 2030 (4)
3,662  — 
Subtotal non-recourse term loans $ 218,136  $ 198,124 
Long-term financing facility, 0.28%, due July 2039 (3) (6)
$ 3,462  $ 3,625 
Long-term financing facility, —%, due November 2039 (3) (6)
6,361  6,675 
Long-term financing facility, —%, due July 2040 (3) (6)
1,050  1,107 
Long-term financing facility, —%, due December 2040 (3) (6)
14,130  18,287 
Long-term financing facility, —%, due December 2040 (4) (6)
2,810  2,924 
Long-term financing facility, 1.17%, due March 2041 (3) (6)
850  — 
Long-term financing facility, —%, due March 2041 (3) (6)
18,378  — 
Long-term financing facility, —%, due July 2041 (4) (6)
2,151  — 
Long-term financing facility, 0.03%, due September 2041 (3) (6)
3,382  — 
Long-term financing facility, 0.41%, due October 2041 (3) (6)
2,822  — 
Long-term financing facility, 0.23%, due November 2041 (3) (6)
1,880  — 
Long-term financing facility, —%, due December 2041 (3) (6)
43,712  — 
Long-term financing facility, 0.13%, due December 2041 (3) (6)
3,627  — 
Subtotal non-recourse long-term financing facilities $ 104,615  $ 32,618 
Continued on next page
As of December 31,
2021 2020
Financing leases (7)
$ 19,226  $ 23,500 
Total debt and financing leases $ 471,488  $ 391,761 
Less: current maturities 78,934  69,362 
Less: unamortized discount and debt issuance costs 15,370  10,725 
Long-term debt and financing lease liabilities, net of current portion, unamortized discount and debt issuance costs $ 377,184  $ 311,674 
(1) Facility has interest at varying rates monthly in arrears.
(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) Facility is payable in semi-annual installments.
(4) Facility is payable in quarterly installments.
(5) Facility is payable in monthly installments.
(6) These agreements are sale-leaseback arrangements and are accounted for as failed sales under the guidance and are classified as financing liabilities. See Note 8.
(7) Financing leases are sale-leaseback arrangements under previous guidance and do not include approximately $16,272 in future interest payments as of December 31, 2021 and $18,791 as of December 31, 2020. See Note 8.
The following table presents the aggregate maturities of long-term debt and financing leases as of December 31, 2021:
2022 $ 78,934 
2023 49,931 
2024 116,071 
2025 51,961 
2026 34,213 
Thereafter 140,378 
Total maturities $ 471,488 
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 term loan increased amounts outstanding to $65,000 and contains quarterly repayment provisions discussed further below. The amended revolving credit and term loan facility mature on June 28, 2024, when all amounts will be due and payable in full. The June 28, 2019 amendment increased the total commitment under the amended credit facility (revolving credit, term loan and swing line) from $125,000 to $185,000.
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 reverted back to 3.25 on March 31, 2021. The amendment also increased the Eurocurrency rate floor from 0% to 1%.
On June 22, 2021, we entered into the second amendment to the fourth amended and restated bank credit facility we have syndicated with three banks, which increased the amount of the revolving commitment by the lenders under the credit facility by $65,000 and included the following amendments:
•increased the aggregate amount of the revolving commitments from $115,000 to $180,000 through the existing June 28, 2024 maturity date,
•increased the total funded debt to EBITDA covenant ratio from a maximum of 3.25 to 3.50, and
•decreased the Eurocurrency rate floor from 1% to 0%.
We accounted for this amendment as a modification and at closing we incurred $78 in lender fees which were reflected as debt discount. The unamortized debt discount and issuance costs are being amortized over the remaining term of the amended
agreement.
The revolving credit facility may be increased up to an additional $100,000 in increments of at least $25,000 at the approval of lenders, 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, 2021
 As of December 31,
2021 2020
Term loan 1.95  % $ 52,720  $ 57,574 
Revolving credit facility 3.50  % $ 44,681  $ 52,696 
Total senior secured credit facility outstanding (1)
$ 97,401  $ 110,270 
(1) Net of unamortized debt discount and debt issuance costs of $412 in 2021 and $491 in 2020.
As of December 31, 2021, funds of $121,176 were available for borrowing under the revolving credit facility and we had $13,824 in letters of credit outstanding. 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 interest rate for borrowings under the credit facility is based on, at our option, either (1) a base rate equal to a margin of 0.50% 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 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.
Variable Rate Term Loan, 6.24%, due March 2026
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 increased the commitment from $28,500 to $35,000 and included an option for the lender to increase the commitment by up to an additional $15,000 for a total not to exceed $50,000.
In February 2021, the lender increased its commitment by $15,000 and we received net proceeds of $14,848. The quarterly payments consist of $1,250 in principal plus an additional principal prepayment based on project cash flows in addition to interest to be paid through the earlier of maturity, March 2026, or when the principal balance is paid in full. We accounted for this amendment as a modification and at closing we incurred $150 in lender fees which were reflected as debt discount and $2 in third-party fees which were expensed in selling, general and administrative expenses during the twelve months ended December 31, 2021. The unamortized debt discount and issuance costs from the October 2020 loan modification are being amortized over the remaining term of the amended agreement. The balance of the loan outstanding as of December 31, 2021 was $38,016, net of unamortized debt discount and issuance costs.
Construction Revolvers
Construction Revolver, 1.74%, due March 2022
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. In March 2021, we entered into a third amendment to this agreement to extend this facility from May 2021 to March 2022. All remaining unpaid amounts outstanding under the facility are due at that time.
The balance of this construction revolver as of December 31, 2021 was $23,792, net of unamortized debt issuance costs and funds of $76,065 were available for borrowing under this facility.
Construction Revolver, 1.99%, due July 2022
The balance of our July 2020 construction revolver as of December 31, 2021 was $7,638, net of unamortized debt discount and issuance costs and we have funds of $22,237 available for borrowing under this construction revolver.
Fixed Rate Note, 3.25%, due March 2046 and Variable Rate Term Loan, 3.63%, due July 2030
On July 27, 2021, we entered into a $44,748 non-recourse debt agreement with a group of lenders. The financing facility consists of gross proceeds of $40,683 in senior secured first lien term notes due March 2046 (“Senior Notes”), gross proceeds of $4,065 in floating rate senior secured second lien term notes due July 2030 (“Second Lien Notes”), and a shelf facility of up to $60,000 available until July 2024. There were no notes issued under the shelf facility at December 31, 2021 and the lenders, in their sole discretion, have the right to approve or deny our funding requests.
The Senior Notes bear interest at a fixed rate of 3.25% per annum, are payable quarterly commencing September 30, 2021, and require that the project’s debt service coverage ratio for both the historical 12-month and projected 12-month periods at each payment date equal or exceed 1.2 to 1.0.
The Second Lien Notes bear a floating rate equal to the applicable LIBOR rate plus 3.50% from July 27, 2021 to July 26, 2025 and on July 27, 2025 the rate increases to the applicable LIBOR rate plus 3.75%. The Second Lien Notes are payable on each quarterly payment date commencing September 30, 2021, as specified in the debt agreement.
The agreement also requires us to maintain six months of scheduled payments of principal and interest as the minimum debt service reserve and to make additional principal prepayments based on project cash flows and certain other conditions through the earlier of maturity or when the principal balance is paid in full.
At closing, we incurred $957 in lender fees and debt issuance costs. In connection with the Senior Notes, we recorded a derivative instrument for make-whole provisions with an initial value of $5,164, which was recorded as a debt discount. See Note 19 for additional information. The aggregate balance of the Senior Notes and Second Lien Notes as of December 31, 2021 was $37,263, net of unamortized debt discount and issuance costs.