XML 23 R13.htm IDEA: XBRL DOCUMENT

Fair Value

9 Months Ended

Sep. 30, 2022

Our accounting policy for the fair value measurement of cash equivalents and embedded Escalation Protection Plan (“EPP”) derivatives is described in Part II, Item 8 Note 2 - Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The tables below set forth, by level, our financial assets that are accounted for at fair value for the respective periods. The table does not include assets and liabilities that are measured at historical cost or any basis other than fair value (in thousands):


	Fair Value Measured at Reporting Date Using
September 30, 2022	Level 1		Level 2		Level 3		Total

Assets
Cash equivalents:
Money market funds	$	453,396	$	—	$	—	$	453,396


	$	453,396	$	—	$	—	$	453,396
Liabilities


Derivatives:



Embedded EPP derivatives	—		—		5,838		5,838

	$	—	$	—	$	5,838	$	5,838


	Fair Value Measured at Reporting Date Using
December 31, 2021	Level 1		Level 2		Level 3		Total

Assets
Cash equivalents:
Money market funds	$	297,034	$	—	$	—	$	297,034


	$	297,034	$	—	$	—	$	297,034
Liabilities

Derivatives:
Option to acquire a variable number of shares of Class A Common Stock	$	—	$	13,200	$	—	$	13,200

Embedded EPP derivatives	—		—		6,461		6,461




	$	—	$	13,200	$	6,461	$	19,661

SK ecoplant Notice to Exercise the Option to Acquire a Variable Number of Shares of Class A Common Stock

On August 10, 2022, pursuant to the SPA, SK ecoplant notified us of its intent to exercise its option to purchase additional shares of our Class A common stock, pursuant to a Second Tranche Exercise Notice (as defined in the SPA) electing to purchase 13,491,701 shares at a purchase price of $23.05 per share. Upon receipt of SK’s notice the purchase price and the number of shares of Class A Common Stock that SK will purchase under the Option are fixed. The payment for the Second Tranche Shares will be due the later of (i) December 6, 2022 and (ii) upon clearance under the HSR Act of the sale of the Second Tranche Shares as contemplated by the Second Tranche Exercise Notice.

The Option was fair valued as of the notice date at $4.2 million. Upon the receipt of the notice from SK ecoplant the Option met the criteria of equity award and was classified as a forward contract as part of additional paid-in capital. The fair value of the Option was reflected in accrued expenses and other current liabilities in our condensed consolidated balance sheet as of December 31, 2021.

Embedded EPP Derivative Liability

For the three months ended September 30, 2022 and 2021, we recorded the fair value of the embedded EPP derivatives and recognized an unrealized gain of $0.1 million and an unrealized loss of $0.2 million, respectively, in gain (loss) on revaluation of embedded derivatives on our condensed consolidated statements of operations.

For the nine months ended September 30, 2022 and 2021, we recorded the fair value of the embedded EPP derivatives and recognized an unrealized gain of $0.6 million and an unrealized loss of $1.6 million, respectively, in gain (loss) on revaluation of embedded derivatives on our condensed consolidated statements of operations.

The changes in the Level 3 financial liabilities during the nine months ended September 30, 2022, were as follows (in thousands):


	Embedded EPP Derivative Liability







Liabilities at December 31, 2021	$	6,461
Changes in fair value	(623)
Liabilities at September 30, 2022	$	5,838

Financial Assets and Liabilities and Other Items Not Measured at Fair Value on a Recurring Basis

Customer Receivables and Debt Instruments - The fair value for customer financing receivables is based on a discounted cash flow model, whereby the fair value approximates the present value of the receivables (Level 3). The senior secured notes, term loans and convertible notes are based on rates currently offered for instruments with similar maturities and terms (Level 3). The following table presents the estimated fair values and carrying values of customer receivables and debt instruments (in thousands):


	September 30, 2022				December 31, 2021
	Net Carrying Value		Fair Value		Net Carrying Value		Fair Value

Customer receivables
Customer financing receivable	$	—	$	—	$	45,269	$	38,334
Debt instruments
Recourse:





10.25% Senior Secured Notes due March 2027	63,194		59,939		68,968		72,573
2.5% Green Convertible Senior Notes due August 2025	224,340		319,822		222,863		356,822
Non-recourse:

7.5% Term Loan due September 2028 (Note 7)	—		—		29,006		35,669

6.07% Senior Secured Notes due March 2030	68,899		70,085		73,262		83,251
3.04% Senior Secured Notes due June 2031	125,999		115,294		132,631		137,983

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details