Item 2.03. Creation of a direct financial obligation or an obligation under an off-balance sheet arrangement.
On October 26, 2022one of Ameresco, Inc. (“Ameresco”) subsidiaries (“RNG Holdings“), a holding company for three renewable natural gas project companies (the “Project Companies”), has entered into a loan agreement (the “RNG Credit Facility”) with HA RNG Lender LLCa subsidiary of Hannon Armstrong Sustainable Infrastructure Capital, Inc. The RNG Credit Facility refinanced and increased borrowings available under a non-recourse credit facility which RNG Holdings
and the Project Companies concluded on October 23, 2020for a principal amount of up to $50 million which was to expire March 31, 2026 (the “Prior Facility”).
The loan must mature on October 26, 2037provides a principal amount of up to $125 million and bears interest at a rate of 6.5% with a residual percentage of distributable cash flow payable after the loan maturity date, until the lender obtains an “IRR” of 8.25% on the funds borrowed under the facility, or discharge from the facility Date of October 26, 2047. Principal and interest payments are due in quarterly installments on a five (5) year amortization schedule, with principal payments adjusted based on the distributable cash flows of the three renewable natural gas projects (“Projects”). ) owned and operated by the Project Companies. No initial, commitment or structuring fees were payable on the credit facility.
At closing, RNG Holdings pulled down $80 million under the RNG credit facility, approximately $26.5 million of which was used to repay all amounts outstanding under the prior facility and the remainder was used to terminate swap obligations, pay transaction costs, make permitted distributions to
Ameresco and for the working capital needs of Project Companies. The facility allows the use of two additional drawdowns, subject to certain conditions, up to the amount of remaining principal, to make distributions to Ameresco.
RNG Holdings is the borrower under the RNG Credit Facility. The obligations under the facility are guaranteed by all RNG Holdings subsidiaries and are guaranteed by RNG Holdings’ and the assets of its subsidiaries as well as from Ameresco
stake in RNG Holdings. Borrowings under the Credit Facility are otherwise non-recourse Ameresco.
All borrowings may be repaid prior to maturity in whole or in part at RNG Holdings
option after three years provided the lender’s IRR is met and against a prepayment of 102% of par for prepayments between October 26, 2025 and October 25, 2027 and 101% of par for early redemptions between October 26, 2027 and October 25, 2029. No call bonus applies for payments on or after October 26, 2029. The facility is subject to mandatory prepayment provisions customary for non-recourse project financings of this type.
The RNG Credit Facility contains positive and negative covenants customary in non-recourse project financings of this type, including covenants restricting the ability to RNG Holdings and the ability of its subsidiaries, subject to negotiated exceptions, to: create liens or warranty obligations; incur additional debt; transfer or lease assets; change business activity; pay dividends and make other distributions; make investments; merge or liquidate; issue additional shares; engage in transactions with affiliates; and edit important project documents. Any breach of the credit facility covenants could prevent RNG Holdings to be able to borrow additional funds and would constitute a default. The RNG credit facility also includes several other customary events of default, including a change of control of RNG Holdings and breach of material project agreements, such as off-take agreements, gas supply agreements, leases and easements. If an event of default occurs and is not cured within the applicable grace period or waived, the lender would be entitled to take various actions, including accelerating amounts due under the RNG Credit Facility, the termination of the Credit Facility and the enforcement of liens against the Collateral.
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