Debt and Financing Lease Liabilities |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DEBT AND FINANCING LEASE LIABILITIES | DEBT AND FINANCING LEASE LIABILITIES
Our debt and financing lease liabilities are comprised of the following:
Senior Secured Credit Facility - Revolver and Term Loans
On March 17, 2023, we entered into amendment number two to the fifth amended and restated senior secured credit facility with five banks to increase the total funded debt to EBITDA covenant ratio from a maximum of 3.50 to 4.00 for the quarters ending March 31, 2023 and June 30, 2023, and 3.5 thereafter.
On August 24, 2023, we entered into amendment number three to the fifth amended and restated senior secured credit facility to extend the maturity date of the $220,000 delayed draw term loan A, such that after paying $55,000 in connection with the amendment, $45,000 is due November 15, 2023, and the remaining principal amount is due December 15, 2023. The amendment also increased the total funded debt to EBITDA covenant ratio from a maximum of 3.50 to 4.25 for the quarter ending September 30, 2023, and 3.50 thereafter.
Non-recourse Term Shelf Notes, 5.99%, due December 31, 2047
On March 28, 2023, three senior secured notes (“Shelf Notes”) due December 31, 2047 were issued under our shelf facility, with gross proceeds of $22,625. The Shelf Notes bear interest at a fixed rate of 5.99% per annum and are payable quarterly commencing June 30, 2023. At closing, we incurred $282 in lender fees and debt issuance costs. In connection with the Shelf Notes, we recorded a derivative instrument for make-whole provisions with an initial value of $3,123, which was recorded as a debt discount.
Non-recourse Variable Rate Term Loan, 7.17%, due March 28, 2028
On March 30, 2023, we entered into an amended and restated financing agreement (“Amended Agreement”) with the existing bank that extended the maturity date of the loan from March 30, 2023 to March 28, 2028. The Amended Agreement consists of a term loan of $14,084, an incremental term loan of $359 and a letter of credit of $899. The term loan bears interest at a variable rate, with interest payments due in quarterly installments. The rate at September 30, 2023 was 7.17% per annum. The remaining principal balance and unpaid interest is due March 28, 2028. As a result of this refinancing, we entered into a new interest rate swap contract with an initial notional amount of $14,084 and termination date of December 31, 2040. See Note 12 Derivative Instruments and Hedging Activities for additional information on this new swap contract.
Non-recourse Fixed Rate Note, 6.70%, due August 31, 2039 (formerly 6.38%, due May 31, 2038)
On March 31, 2023, we drew down $30,000 under this facility and on May 31, 2023, we entered into the first amendment to the loan agreement that increased the original commitment of $125,000 by an additional $90,000 to $215,000 and at closing we drew down the $90,000.
The first amendment also contained the following amended terms:
•The loan bears interest on the unpaid principal amount thereof from the date made through repayment at an interest rate of 6.38% per annum compared to the original rate of 6.50%.
•The loan maturity date was changed from October 26, 2037 to May 31, 2038
On September 28, 2023, we entered into a second amendment to the loan agreement that increased the maximum commitment from $215,000 to $500,000, continued existing loans to project companies, added certain renewable natural gas project companies to the loan portfolio, and provided that additional wholly- and majority-owned project companies may be added to the loan portfolio subject to certain conditions.
At the closing of the second amendment, we drew down an additional $135,544 under the loan, which was used to pay transaction costs, reimburse project costs incurred by us, make other permitted distributions to Ameresco, and to fund the required reserve accounts. Subject to certain conditions, the facility allows for additional draws to be made up to the remaining principal amount to fund the construction and operation of renewable natural gas projects owned and operated by the project companies. As of September 30, 2023, $334,717 was outstanding under this facility, net of unamortized debt discount and issuance costs.
The second amendment also contained the following amended terms:
•The loan bears interest at a rate of 6.70% with a residual percentage of distributable cash flows payable after the maturity date of the loan, until the earlier of the lender achieving an 8.51% internal rate of return (“IRR”) on funds borrowed under the facility, or the facility discharge date which was extended to August 31, 2049.
•The loan maturity date was changed from May 31, 2038 to August 31, 2039
•All borrowings may be paid before maturity in whole or in part at RNG Holdings’ option after August 30, 2027 provided that the lender’s IRR is achieved, and against a prepayment of 102% of par for prepayments between August 31, 2027 and August 31, 2029 and 101% of par for prepayments between September 1, 2029 and August 30, 2031. No call premium applies for payments after August 30, 2031.
Non-recourse Construction Credit Facility, 2.00%
On March 31, 2023, we entered into a credit agreement for a construction facility with a total commitment of CAD$100,000 which has an availability period of five years. As of September 30, 2023, no funds were drawn under this facility. During the availability period the loans will bear interest at a fixed rate of 2.00% and during the operating period the rate will range from 1.00% to 3.00% as set forth in the agreement. The maturity date is the earlier of twenty years from project commencement date or one year prior to the termination date of the last remaining energy services agreements.
Non-recourse Construction Credit Facility, 6.54%, due July 31, 2024
On April 18, 2023, one of our consolidated joint venture subsidiaries (“JV”) entered into a construction loan agreement with two lenders for a principal amount of up to $140,844 under a non-recourse credit facility. At the closing, the JV drew down $90,921 for construction of an energy asset and subsequently drew down an additional $32,206.
Monthly payments of interest only on the loan will be due and payable in accordance with the provisions as set forth in the agreement. Any outstanding principal of the loan shall be paid in full no later than the maturity date (or in any event upon acceleration of the loan), together with all accrued and unpaid interest on such amount. The loan will be repaid after the energy asset project achieves provisional acceptance, through a sale-leaseback financing under lease agreements to be entered into between the same parties, the form of which were included in the closing documents.
Non-recourse Construction Credit Facility, 9.32%, due August 31, 2026
On August 18, 2023, we entered into a construction and development loan agreement which provides a loan in a principal amount of up to $300,000. At the closing, we drew down $200,000 under this facility, of which approximately $187,000 was used to reimburse Ameresco for development and construction costs. Subsequent to closing, we drew down an additional $15,240.
The loan bears interest at a rate of 4.00% plus the greater of (i) Term SOFR for a one-month tenor and (ii) the 10-year United States treasury rate and a fee equal to 0.25% of any unused committed principal amount. The loan matures on August 31, 2026, with a one-year extension option that can be exercised if certain circumstances are met, including payment of a $3,000 extension fee. We plan to accrue the extension fee if the extension becomes probable.
Non-recourse Debt Instruments - Energy Project Asset Acquisition
As discussed in Note 6, on August 4, 2023, we acquired an energy asset project. The adjusted purchase price for phase 1 was $76,758, of which $5,000 was paid in cash, $46,694 was financed by the seller, and we assumed a construction loan on the energy asset project for $36,270.
The construction loan bears interest at a monthly variable SOFR term rate, which was 6.84% per annum at September 30, 2023. Subject to the terms and conditions contained in the assumed credit agreement, the construction loan shall convert into a term loan upon the project’s commercial operation date, which is expected to occur this fiscal year. The term loan shall have a maturity date of April 2030 and, therefore, the construction loan is classified as non-current. In September 2023, we paid $12,500 in principal on the seller’s promissory note and paid interest at a rate of 5.00%. As of September 30, 2023, the balance of the seller’s note was $34,194, of which $5,900 is expected to be paid on the earlier of the phase 2 close date or December 2023, and the remaining balance of $28,294 is expected to be paid in January 2024, without bearing interest.
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