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LONG-TERM DEBT

12 Months Ended

Dec. 31, 2021

NOTE 6 - LONG-TERM DEBT

We have a MLA with CoBank. Nuvera and its respective subsidiaries also have security agreements under which substantially all the assets of Nuvera and its respective subsidiaries have been pledged to CoBank as collateral. In addition, Nuvera and its respective subsidiaries have guaranteed all the obligations under the credit facility. These mortgage notes are required to be paid in quarterly installments covering principal and interest, beginning in September 2018 and maturing on July 31, 2025.

Secured Credit Facility:

MLA RX0583

▪		RX0583(A)-T4 - $64,550,000 term note with interest payable quarterly. Final maturity date of this note is July 31, 2025. Twenty-eight quarterly principal payments of $1,152,600 are due commencing September 30, 2018 through June 30, 2025. A final balloon payment of $32,265,785 is due at maturity of this note on July 31, 2025.

▪		RX0583(A)-T5 - $10,000,000 revolving note with interest payable quarterly. Final maturity date of this note is July 31, 2025. We currently have drawn $1,077,589 on this revolving note as of December 31, 2020.

RX0583(A)-T4 and RX0583(A)-T5 initially bear interest at a “LIBOR Margin” rate equal to 3.25 percent over the applicable LIBOR rate. The LIBOR Margin decreases as our “Leverage Ratio” decreases.

We generally use variable-rate debt to finance our operations, capital expenditures and acquisitions. These variable-rate debt obligations expose us to variability in interest payments due to changes in interest rates. The terms of our credit facility with CoBank require that we enter into interest rate agreements designed to protect us against fluctuations in interest rates, in an aggregate principal amount and for a duration determined under the credit facility.

As described in Note 7 – “Interest Rate Swaps,” on August 1, 2018 we entered into an IRSA with CoBank covering 25 percent of our existing debt balance or $16,137,500 of our aggregate indebtedness to CoBank on August 1, 2018. As of December 31, 2021, our IRSA covered $12,103,400, with a weighted average rate of 5.27%.

As described in Note 7 – “Interest Rate Swaps,” on August 29, 2019 we entered into a second IRSA with CoBank covering an additional $42,000,000 of our aggregate indebtedness to CoBank at August 29, 2019. As of December 31, 2021, our IRSA covered $33,923,670, with a weighted average rate of 3.50%.

Our remaining debt of $10.9 million ($8.9 million available under the revolving credit facilities and $2.0 million currently outstanding) remains subject to variable interest rates at an effective weighted average interest rate of 2.36%, as of December 31, 2021.

Our loan agreements include restrictions on our ability to pay cash dividends to our stockholders. However, we are allowed to pay dividends (a) (i) in an amount up to $2,700,000 in any year if our “Total Leverage Ratio,” that is, the ratio of our “Indebtedness” to “EBITDA” (earnings before interest, taxes, depreciation and amortization – as defined in the loan documents), is greater than 2.00 to 1.00, and (ii) in any amount if our Total Leverage Ratio is less than 2.00 to 1.00, and (b) in either case, if we are not in default or potential default under the loan agreements. On December 31, 2020, our Total Leverage Ratio fell below 2.00, thus eliminating any restrictions on our ability to pay cash dividends to our stockholders. Our current Total Leverage Ratio as of December 31, 2021, is 1.83.

Our credit facility requires us to comply with specified financial ratios and tests. These financial ratios include total leverage ratio, debt service coverage ratio, equity to total assets ratio and annual maximum aggregate capital expenditures. As of December 31, 2021, we were in compliance with all the stipulated financial ratios in our loan agreements.

There are security and loan agreements underlying our current CoBank credit facility that contain restrictions on our distributions to stockholders and investment in, or loans, to others. Also, our credit facility contains restrictions that, among other things, limits or restricts our ability to enter into guarantees and contingent liabilities, incur additional debt, issue stock, transact asset sales, transfers or dispositions, and engage in mergers and acquisitions, without CoBank approval.

On April 16, 2020, Nuvera received a $2,889,000 loan under the SBA’s PPP, which was established as part of the COVID-19 CARES Act. The PPP Loan was unsecured and was evidenced by a note in the favor of Citizens as the lender.

The interest rate on the Note was 1.0% per annum. Payments of principal and interest were deferred for 180 days from the date of the Note (the deferral period). The PPP provided a mechanism for forgiveness of up to the full amount borrowed as long as Nuvera used the loan proceeds during the 24-week period after the loan origination for eligible purposes, including U.S. payroll costs, certain benefit costs, rent and utilities costs, and maintained its employment and compensation levels, subject to certain other requirements and limitations. The amount of the loan forgiveness was subject to reduction, among other things, if Nuvera terminated employees or reduced salaries or wages during the 24-week period. Any unforgiven portion of the PPP Loan was payable over a two-year term, with payments deferred during the deferral period. Nuvera was permitted to prepay the Note at any time without payment of any premium. The Note contained customary events of material defaults, including, among others, those relating to failure to make a payment, bankruptcy, other indebtedness, breaches of representations, and material adverse changes. The Company adhered to all guidelines under the terms of the Note and applied for debt forgiveness in August, 2020.

On February 3, 2021, the Company was notified by Citizens, the lender on the Company’s PPP Loan that Citizens had received payment in full from the United States federal government for the amount of the Company’s PPP Loan and the Company’s PPP Loan had been fully forgiven. We recognized a gain on the forgiveness of $2,912,433, which included the original amount of the loan plus accrued interest in the quarter ended March 31, 2021.

Long-term debt is as follows:	2021		2020
Secured seven-year credit facility to CoBank, ACB, amortizing in quarterly installments of $1,152,600 (beginning on September 30, 2018), plus a notional variable rate of interest through July 31, 2025.	$	46,902,185	$	51,512,585
Secured seven-year revolving credit facility of up to $10,000,000 to CoBank, ACB, plus a notional variable rate of interest through July 31, 2025.		1,077,589		-
Unsecured two-year SBA PPP Loan of $2,889,000 at 1% per annum from Citizens Bank Minnesota received April 16, 2020. Loan was forgiven in February, 2021.		-		2,889,000
Less: Unamortized Loan Fees		(353,158)		(451,714)
		47,626,616		53,949,871
Less: Amount due within one year		(4,610,400)		(6,886,986)
Net of Current Portion of Unamortized Loan Fees		98,556		98,556
Total Long Term Debt	$	43,114,772	$	47,161,441

Required principal payments for the next five years are as follows:

2022	$	4,610,400
2023	$	4,610,400
2024	$	4,610,400
2025	$	34,148,574
2026	$	0