Outstanding Loans and Security Agreements

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Outstanding Loans and Security Agreements

Outstanding Loans and Security Agreements

The following is a summary of our debt as of September 30, 2021 (in thousands, except percentage data):

	Unpaid Principal Balance		Net Carrying Value						Unused Borrowing Capacity		Interest Rate	Maturity Dates	Entity	Recourse
			Current		Long- Term		Total
10.25% Senior Secured Notes due March 2027	$	70,000	$	6,034	$	62,845	$	68,879	$	—	10.25%	March 2027	Company	Yes
2.5% Green Convertible Senior Notes due August 2025	230,000		—		222,371		222,371		—		2.5%	August 2025	Company	Yes
Total recourse debt	300,000		6,034		285,216		291,250		—
7.5% Term Loan due September 2028	31,912		3,315		26,384		29,699		—		7.5%	September  2028	PPA IIIa	No
6.07% Senior Secured Notes due March 2030	75,016		4,467		69,822		74,289		—		6.07%	March 2030	PPA IV	No
LIBOR + 2.5% Term Loan due December 2021	109,109		—		108,958		108,958		—		LIBOR plus margin	December 2021	PPA V	No
Letters of Credit due December 2021	—		—		—		—		759		2.25%	December 2021	PPA V	No
Total non-recourse debt	216,037		7,782		205,164		212,946		759
Total debt	$	516,037	$	13,816	$	490,380	$	504,196	$	759

The following is a summary of our debt as of December 31, 2020 (in thousands, except percentage data):

	Unpaid Principal Balance		Net Carrying Value						Unused Borrowing Capacity		Interest Rate	Maturity Dates	Entity	Recourse
			Current		Long- Term		Total
10.25% Senior Secured Notes due March 2027	$	70,000	$	—	$	68,614	$	68,614	$	—	10.25%	March 2027	Company	Yes
2.5% Green Convertible Senior Notes due August 2025	230,000		—		99,394		99,394		—		2.5%	August 2025	Company	Yes
Total recourse debt	300,000		—		168,008		168,008		—
7.5% Term Loan due September 2028	34,456		2,826		28,920		31,746		—		7.5%	September  2028	PPA IIIa	No
6.07% Senior Secured Notes due March 2030	77,837		3,882		73,125		77,007		—		6.07%	March 2030	PPA IV	No
LIBOR + 2.5% Term Loan due December 2021	114,761		114,138		—		114,138		—		LIBOR plus margin	December 2021	PPA V	No
Letters of Credit due December 2021	—		—		—		—		968		2.25%	December 2021	PPA V	No
Total non-recourse debt	227,054		120,846		102,045		222,891		968
Total debt	$	527,054	$	120,846	$	270,053	$	390,899	$	968

Recourse debt refers to debt that we have an obligation to pay. Non-recourse debt refers to debt that is recourse to only our subsidiaries. The differences between the unpaid principal balances and the net carrying values apply to deferred financing costs. We and all of our subsidiaries were in compliance with all financial covenants as of September 30, 2021 and December 31, 2020.

Recourse Debt Facilities

10.25% Senior Secured Notes due March 2027 - On May 1, 2020, we issued $70.0 million of 10.25% Senior Secured Notes in a private placement ("10.25% Senior Secured Notes"). The 10.25% Senior Secured Notes are governed by an indenture (the “Senior Secured Notes Indenture”) entered into among us, the guarantor party thereto and U.S. Bank National Association, in its capacity as trustee and collateral agent. The 10.25% Senior Secured Notes are secured by certain of our operations and maintenance agreements that previously were part of the security for the 6% Convertible Notes. The 10.25% Senior Secured Notes are supported by a $150.0 million indenture between us and U.S. Bank National Association, which contained an accordion feature for an additional $80.0 million of notes that could be issued on or prior to September 27, 2021. We chose not to exercise this accordion feature, which has now expired.

Interest on the 10.25% Senior Secured Notes is payable quarterly, commencing June 30, 2020. The 10.25% Senior Secured Notes Indenture contains customary events of default and covenants relating to, among other things, the incurrence of new debt, affiliate transactions, liens and restricted payments. On or after March 27, 2022, we may redeem all of the 10.25% Senior Secured Notes at a price equal to 108% of the principal amount of the 10.25% Senior Secured Notes plus accrued and unpaid interest, with such optional redemption prices decreasing to 104% on and after March 27, 2023, 102% on and after March 27, 2024 and 100% on and after March 27, 2026. Before March 27, 2022, we may redeem the 10.25% Senior Secured Notes upon repayment of a make-whole premium. If we experience a change of control, we must offer to purchase for cash all or any part of each holder’s 10.25% Senior Secured Notes at a purchase price equal to 101% of the principal amount of the 10.25% Senior Secured Notes, plus accrued and unpaid interest. The non-current balance of the outstanding unpaid principal of the 10.25% Senior Secured Notes was $64.0 million as of September 30, 2021. The current balance of the outstanding unpaid principal of the 10.25% Senior Secured Notes was $6.0 million as of September 30, 2021.

2.5% Green Convertible Senior Notes due August 2025 - In August 2020, we issued $230.0 million aggregate principal amount of our 2.5% Green Convertible Senior Notes due August 2025 (the "Green Notes"), unless earlier repurchased, redeemed or converted . The principal amount of the Green Notes are $230.0 million, less initial purchaser's discount of $6.9 million and other issuance costs of $3.0 million resulting in net proceeds of $220.1 million.

The Green Notes are senior, unsecured obligations accruing interest at a rate of 2.5% per annum, payable semi-annually in arrears on February 15 and August 15 of each year, beginning on February 15, 2021.

We may not redeem the Green Notes prior to August 21, 2023. We may elect to redeem, at face value, all or any portion of the Green Notes at any time on or after August 21, 2023 and on or before the twenty-sixth trading day immediately before the maturity date, provided certain conditions are met.

Before May 15, 2025, the noteholders have the right to convert their Green Notes only upon the occurrence of certain events, including a conversion upon satisfaction of a condition relating to the closing price of our common stock ("the Closing Price Condition"). If the Closing Price Condition is met on at least 20 of the last 30 consecutive trading days in any quarter, the noteholders may convert their Green Notes at any time during the immediately following quarter. The Closing Price Condition was not met during the three months ended September 30, 2021 and accordingly, the noteholders may not convert their Green Notes at any time during the quarter ending December 31, 2021. From and after May 15, 2025, the noteholders may convert their Green Notes at any time at their election until the close of business on the second trading day immediately before the maturity date. Should the noteholders elect to convert their Green Notes, we may elect to settle the conversion by paying or delivering, as applicable, cash, shares of our Class A common stock or a combination thereof.

The initial conversion rate is 61.6808 shares of Class A common stock per $1,000 principal amount of notes, which represents an initial conversion price of approximately $16.21 per share of Class A common stock. The conversion rate and conversion price are subject to customary adjustments upon the occurrence of certain events. In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” as defined occur, the conversion rate will, in certain circumstances, be increased for a specified period of time.

We adopted ASU 2020-06 as of January 1, 2021 using the modified retrospective transition method. Upon adoption, we combined the previously separated equity component of the Green Notes with the liability component, which is now together classified as debt, thereby eliminating the subsequent amortization of the debt discount as interest expense. Similarly, the portion of issuance costs previously allocated to equity was reclassified to debt and amortized as interest expense. Accordingly, we recorded a net decrease to accumulated deficit of $5.3 million, a decrease to additional paid-in capital of $126.8 million, and an increase to recourse debt, non-current, of approximately $121.5 million upon adoption as of January 1, 2021.

Interest expense for the three and nine months ended September 30, 2021 was $1.9 million and $5.8 million, including amortization of issuance costs of $0.5 million and $1.5 million, respectively.

Non-recourse Debt Facilities

7.5% Term Loan due September 2028 - In December 2012 and later amended in August 2013, PPA IIIa entered into a $46.8 million credit agreement to fund the purchase and installation of our Energy Servers. The loan bears a fixed interest rate of 7.5% payable quarterly. The loan requires quarterly principal payments, which began in March 2014. The credit agreement requires us to maintain a debt service reserve for all funded systems, the balance of which was $3.6 million and $3.8 million as of September 30, 2021 and December 31, 2020, respectively, which was included as part of long-term restricted cash in the condensed consolidated balance sheets. The loan is secured by all assets of PPA IIIa.

6.07% Senior Secured Notes due March 2030 - The notes bear a fixed interest rate of 6.07% per annum payable quarterly, which began in December 2015 and ends in March 2030. The note purchase agreement requires us to maintain a debt service reserve, the balance of which was $8.9 million and $8.5 million as of September 30, 2021 and December 31, 2020, respectively, which was included as part of long-term restricted cash in the condensed consolidated balance sheets. The notes are secured by all the assets of the PPA IV.

LIBOR + 2.5% Term Loan due December 2021 - In June 2015, PPA V entered into a $131.2 million term loan due December 2021. The current portion of the LIBOR + 2.5% Term Loan as of September 30, 2021 and December 31, 2020 was none and $114.1 million, respectively. In November 2021, PPA V entered into a $136 million term loan, which replaces the LIBOR + 2.5% Term Loan due December 2021. For additional information, please see Note 18 – Subsequent Events. As a result of the November 2021 refinance, we reclassified the short term obligation related to LIBOR + 2.5% Term Loan as non-current within the condensed consolidated balance sheet.

In accordance with the credit agreement, PPA V was issued floating rate debt based on LIBOR plus a margin, paid quarterly. The applicable margins used for calculating interest expense are 2.25% for years 1-3 following the Term Conversion Date and 2.5% thereafter. For the lenders’ commitments to the loan and the commitments to a letter of credit facility, the PPA V also pays commitment fees at 0.5% per annum over the outstanding commitments, paid quarterly. The loan is secured by all the assets of the PPA V and requires quarterly principal payments which began in March 2017. In connection with the floating-rate credit agreement, in July 2015, PPA V entered into pay-fixed, receive-float interest rate swap agreements to convert its floating-rate loan into a fixed-rate loan. The agreement also included commitments to a letter of credit facility with the aggregate principal amount of $6.4 million, later adjusted down to $6.2 million. The amount reserved under the Letter of Credit as of September 30, 2021 and December 31, 2020 was $5.4 million and $5.2 million, respectively, and the unused capacity was $0.8 million and $1.0 million, respectively.

Repayment Schedule and Interest Expense

The following table presents details of our outstanding loan principal repayment schedule as of September 30, 2021 (in thousands):

Remainder of 2021	$	3,253
2022	25,765
2023	32,430
2024	36,369
2025	270,613
Thereafter	147,607
	$	516,037

Interest expense of $14.5 million and $20.3 million for the three months ended September 30, 2021 and 2020, respectively, and $43.8 million and $57.5 million for the nine months ended September 30, 2021 and 2020, respectively, was recorded in interest expense on the condensed consolidated statements of operations. This interest expense includes interest expense - related parties of $0.4 million for the three months ended September 30, 2020, and $2.5 million for the nine months ended September 30, 2020, respectively. We did not incur any interest expense - related parties during the three or nine months ended September 30, 2021.