Indebtedness | 9 Months Ended |
Sep. 30, 2014 |
Debt Disclosure [Abstract] | ' |
Indebtedness | ' |
6. Indebtedness |
The following is a summary of debt of the Company and its subsidiaries as of September 30, 2014 (dollars in thousands): |
|
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | Carrying Value, Net | | | | | | | | | |
of Fees |
| | Unpaid | | | Current | | | Long-Term | | | Unused | | | Interest Rate | | | Maturity Dates |
Principal | Borrowing |
Balance | Capacity |
Recourse debt: | | | | | | | | | | | | | | | | | | | | | | |
Revolving credit facility | | $ | 143,459 | | | $ | — | | | $ | 140,214 | | | $ | 56,541 | | | | 3.40% | | | December 2016 |
Vehicle loans | | | 10,498 | | | | 2,788 | | | | 7,710 | | | | — | | | | 1.9%–7.5% | | | March 2015– |
December 2018 |
2.75% Convertible senior notes due in 2018 | | | 230,000 | | | | — | | | | 230,000 | | | | — | | | | 2.80% | | | November 2018 |
1.625% Convertible senior notes due in 2019 | | | 500,000 | | | | — | | | | 500,000 | | | | — | | | | 1.60% | | | November 2019 |
| | | | | | | | | | | | | | | | | | | | | | |
Total recourse debt | | | 883,957 | | | | 2,788 | | | | 877,924 | | | | 56,541 | | | | | | | |
Non-recourse debt: | | | | | | | | | | | | | | | | | | | | | | |
Credit facility for SolarStrong | | | 5,600 | | | | 208 | | | | 5,163 | | | | 344,000 | | | | 6.8%–7.3% | | | June 2032– |
December 2032 |
Term loan assumed from Silevo acquisition | | | 9,103 | | | | 9,103 | | | | — | | | | — | | | | 7.80% | | | June 2015 |
Term loan due in May 2016 | | | 30,106 | | | | — | | | | 29,379 | | | | 94,894 | | | | 3.20% | | | May 2016 |
Term loan due in December 2016 | | | 82,555 | | | | — | | | | 80,733 | | | | 167,445 | | | | 3.4%–3.5% | | | December 2016 |
Solar Asset-backed Notes, Series 2013-1 | | | 50,607 | | | | 3,285 | | | | 47,322 | | | | — | | | | 4.80% | | | November 2038 |
Solar Asset-backed Notes, Series 2014-1 | | | 68,557 | | | | 2,740 | | | | 65,817 | | | | — | | | | 4.60% | | | April 2044 |
Solar Asset-backed Notes, Series 2014-2 | | | 201,494 | | | | 7,437 | | | | 193,341 | | | | — | | | | 4.0%–Class A | | | July 2044 |
5.4%–Class B | |
| | | | | | | | | | | | | | | | | | | | | | |
Total non-recourse debt | | | 448,022 | | | | 22,773 | | | | 421,755 | | | | 606,339 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Total debt | | $ | 1,331,979 | | | $ | 25,561 | | | $ | 1,299,679 | | | $ | 662,880 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
The following is a summary of debt as of December 31, 2013 (dollars in thousands): |
|
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | Carrying Value, Net | | | | | | | | | |
of Fees |
| | Unpaid | | | Current | | | Long-Term | | | Unused | | | Interest Rate | | | Maturity Date |
Principal | Borrowing |
Balance | Capacity |
Recourse debt: | | | | | | | | | | | | | | | | | | | | | | |
Revolving credit facility | | $ | 142,531 | | | $ | — | | | $ | 138,535 | | | $ | 57,469 | | | | 3.4%–5.5% | | | December 2016 |
Vehicle loans | | | 6,517 | | | | 1,789 | | | | 4,728 | | | | — | | | | 0.0%–7.5% | | | March 2015– |
December 2018 |
2.75% Convertible senior notes due in 2018 | | | 230,000 | | | | — | | | | 230,000 | | | | — | | | | 2.80% | | | November 2018 |
| | | | | | | | | | | | | | | | | | | | | | |
Total recourse debt | | | 379,048 | | | | 1,789 | | | | 373,263 | | | | 57,469 | | | | | | | |
Non-recourse debt: | | | | | | | | | | | | | | | | | | | | | | |
Working capital financing | | | 9,990 | | | | 1,197 | | | | 8,793 | | | | — | | | | 5.5%–5.6% | | | December 2024 |
Credit facility for SolarStrong | | | 5,733 | | | | 149 | | | | 5,297 | | | | 344,000 | | | | 6.8%–7.3% | | | June 2032– |
December 2032 |
Term loan due in June 2015 | | | 87,891 | | | | 4,192 | | | | 81,260 | | | | 12,109 | | | | 3.4%–3.7% | | | June 2015 |
Solar Asset-backed Notes, Series 2013-1 | | | 52,934 | | | | 3,155 | | | | 49,779 | | | | — | | | | 4.80% | | | November 2038 |
| | | | | | | | | | | | | | | | | | | | | | |
Total non-recourse debt | | | 156,548 | | | | 8,693 | | | | 145,129 | | | | 356,109 | | | | | | | |
Other debt | | | 95 | | | | 95 | | | | — | | | | — | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Total debt | | $ | 535,691 | | | $ | 10,577 | | | $ | 518,392 | | | $ | 413,578 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Recourse debt refers to debt that is recourse to the Company’s general assets. Non-recourse debt refers to debt that is recourse to only specified assets or subsidiaries of the Company. Below is a description of the Company’s debt. |
|
Revolving Credit Facility |
In September 2012, the Company entered into a revolving credit agreement with a syndicate of banks to obtain funding for working capital, letters of credit and funding for general corporate needs. The committed amount under the revolving credit facility was increased from $75.0 million to $200.0 million in 2013. Borrowed funds bear interest at an annual rate of 3.25% plus LIBOR or, at the Company’s option, 2.25% plus the highest of (i) the federal funds rate plus 0.50%, (ii) Bank of America’s published “prime rate” or (iii) LIBOR plus 1.00%. The fee for letters of credit is 3.875% per annum, and the fee for undrawn commitments is 0.375% per annum. The revolving credit facility is secured by certain of the Company’s machinery and equipment, accounts receivable, inventory and other assets. In each of June, July, September and October 2014, the revolving credit facility was amended to increase certain debt covenant thresholds, including those related to permitted investment amounts by the Company, and to make certain changes in connection with the Company’s acquisition of Silevo and issuance of certain loans and debt, among other things. The Company was in compliance with all debt covenants as of September 30, 2014. |
Vehicle Loans |
The Company has entered into various vehicle loan agreements with various financial institutions. The vehicle loans are secured by the vehicles financed. The Company was in compliance with all debt covenants as of September 30, 2014. |
2.75% Convertible Senior Notes Due in 2018 |
In October 2013, the Company issued $230.0 million in aggregate principal of 2.75% convertible senior notes due on November 1, 2018 through a public offering. The net proceeds from the offering, after deducting transaction costs, were $222.5 million. The Company debt issuance costs were recorded in other assets and are being amortized to interest expense over the contractual term of the convertible senior notes. |
Each $1,000 of principal of the convertible senior notes is initially convertible into 16.2165 shares of the Company’s common stock, which is equivalent to an initial conversion price of $61.67 per share, subject to adjustment upon the occurrence of specified events. Holders of the convertible senior notes may convert their convertible senior notes at their option at any time prior to maturity. If certain corporate events occur prior to the maturity date, the Company would increase the conversion rate for a holder who elects to convert its convertible senior notes in connection with such a corporate event in certain circumstances. The maximum conversion rate is capped at 21.4868 shares for each $1,000 of principal of the convertible senior notes, which is equivalent to a minimum conversion price of $46.54 per share. The convertible senior notes do not have a cash conversion option. The convertible senior note holders may require the Company to repurchase their convertible senior notes for cash only under certain defined events of default. The Company was in compliance with all debt covenants as of September 30, 2014. |
1.625% Convertible Senior Notes Due in 2019 |
In September 2014, the Company issued $500.0 million in aggregate principal of 1.625% convertible senior notes due on November 1, 2019 through a private placement. The net amount from the issuance, after deducting transaction costs, was $488.3 million. The debt issuance costs were recorded in other assets and are being amortized to interest expense over the contractual term of the convertible senior notes. |
Each $1,000 of principal of the convertible senior notes is initially convertible into 11.9720 shares of the Company’s common stock, which is equivalent to an initial conversion price of $83.53 per share, subject to adjustment upon the occurrence of specified events. Holders of the convertible senior notes may convert their convertible senior notes at their option at any time prior to maturity. If certain corporate events occur prior to the maturity date, the Company would increase the conversion rate for a holder who elects to convert its convertible senior notes in connection with such a corporate event in certain circumstances. The maximum conversion rate is capped at 15.8629 shares for each $1,000 of principal of the convertible senior notes, which is equivalent to a minimum conversion price of $63.04 per share. The convertible senior notes do not have a cash conversion option. The convertible senior note holders may require the Company to repurchase their convertible senior notes for cash only under certain defined events. The Company was in compliance with all debt covenants as of September 30, 2014. |
In connection with the issuance of the convertible senior notes in September 2014, the Company paid $57.6 million to enter into a capped call option agreement to reduce the potential dilution to holders of the Company’s common stock upon conversion of the convertible senior notes. The capped call option agreement has a cap price of $126.08 and an initial strike price of $83.53, which is equal to the initial conversion price of the convertible senior notes. The capped call options expire on various dates ranging from September 4, 2019 to October 29, 2019. The capped call option agreement is a separate transaction, is not a part of the terms of the convertible senior notes and does not affect the rights of the convertible senior note holders. The capped call option agreement met the criteria for equity classification and was recorded as a reduction to additional paid-in capital. The capped call option agreement is excluded from the calculation of diluted net income (loss) per share attributable to common stockholders as its effect is antidilutive. |
|
Working Capital Financing |
On May 26, 2010, a subsidiary of the Company entered into a financing agreement with a bank to obtain funding for working capital. The amount available to be borrowed under the financing agreement was determined based on the present value of expected future lease receipts from solar energy systems owned by the subsidiary and leased to customers, up to a maximum of $16.3 million. The working capital financing was funded in four tranches and was available for draw-down through March 31, 2011. Each tranche bore interest at an annual rate of 2.00% plus the swap rate applicable to the average life of the scheduled lease receipts for the tranche. The working capital financing was secured by substantially all of the subsidiary’s assets and was nonrecourse to the Company’s other assets. On July 2, 2014, the Company fully repaid the outstanding balance of and terminated the working capital financing. |
Credit Facility for SolarStrong |
On November 21, 2011, a subsidiary of the Company entered into an agreement with a bank for a credit facility of up to $350.0 million. The credit facility is used to partially fund the Company’s SolarStrong initiative, which is a five-year plan to build solar energy systems for privatized U.S. military housing communities across the country. The credit facility is drawn-down in tranches, with the interest rates determined when amounts are drawn-down. The credit facility is secured by the assets of the SolarStrong initiative and is non-recourse to the Company’s other assets. The Company was in compliance with all debt covenants as of September 30, 2014 and is currently re-evaluating the terms of this facility. |
Term Loan Due in June 2015 |
On June 7, 2013, a subsidiary of the Company entered into an agreement with a syndicate of banks for a term loan of $100.0 million. On January 6, 2014, the agreement was amended to increase the maximum term loan availability to $158.0 million. Each tranche of the term loan bore interest at an annual rate of LIBOR plus 3.25%. The term loan was secured by the assets and cash flows of the subsidiary and was non-recourse to the Company’s other assets. On July 31, 2014, the Company fully repaid the outstanding balance of and terminated the term loan in connection with the issuance of Solar Asset-backed Notes, Series 2014-2, as described below. |
Term Loan Assumed From Silevo Acquisition |
Through the Silevo acquisition, the Company assumed a pre-existing term loan with an outstanding principal balance of $9.1 million. The term loan bears interest at a fixed rate of 7.8% per annum. The term loan is a liability of the JV only and is non-recourse to Company and its other subsidiaries. The Company was in compliance with all debt covenants as of September 30, 2014. |
Term Loan Due in May 2016 |
On February 4, 2014, a subsidiary of the Company entered into an agreement with a syndicate of banks for a term loan of $100.0 million. On February 20, 2014, the agreement was amended to increase the maximum term loan availability to $220.0 million. On March 20, 2014, the agreement was further amended to increase the maximum term loan availability to $250.0 million. The term loan bears interest at an annual rate of LIBOR plus 3.25% or, at the Company’s option, 3.25% plus the highest of (i) the Federal Funds Rate plus 0.50%, (ii) Bank of America’s published “prime rate” or (iii) LIBOR plus 1.00%. The term loan is secured by the assets and cash flows of the subsidiary and is non-recourse to the Company’s other assets. The Company was in compliance with all debt covenants as of September 30, 2014. |
Term Loan Due in December 2016 |
On May 23, 2014, a subsidiary of the Company entered into an agreement with a syndicate of banks for a term loan of $125.0 million. The term loan bears interest at an annual rate of 3.00% to 4.00%, depending on the cumulative period the term loan has been outstanding, plus LIBOR or, at the Company’s option, plus the highest of (i) the Federal Funds Rate plus 0.50%, (ii) Bank of America’s published “prime rate” or (iii) LIBOR plus 1.00%. The term loan is secured by certain assets and cash flows of the subsidiary and is non-recourse to the Company’s other assets or cash flows. The Company was in compliance with all debt covenants as of September 30, 2014. |
Solar Asset-backed Notes, Series 2013-1 |
The Company has structured and entered into various solar asset-backed note securitization transactions pursuant to its financial strategy of monetizing solar assets at the lowest cost of capital. |
|
In November 2013, the Company pooled and transferred qualifying solar energy systems and the associated customer contracts into a special purpose entity, or SPE, and issued $54.4 million in aggregate principal of Solar Asset-backed Notes, Series 2013-1, backed by these solar assets to certain investors. The SPE is wholly owned by the Company and is consolidated in the Company’s financial statements. Accordingly, the Company did not recognize a gain or loss on the transfer of these solar assets. As of September 30, 2014, these solar assets had a carrying value of $145.3 million and are included under solar energy systems, leased and to be leased — net, in the condensed consolidated balance sheets. The Solar Asset-backed Notes were issued at a discount of 0.05%. The cash flows generated by these solar assets are used to service the monthly principal and interest payments on the Solar Asset-backed Notes and satisfy the SPE’s expenses, and any remaining cash is distributed to a wholly owned subsidiary of the Company. The Company recognizes revenue earned from the associated customer contracts in accordance with the Company’s revenue recognition policy. The assets and cash flows generated by the qualifying solar energy systems are not available to the other creditors of the Company, and the creditors of the SPE, including the Solar Asset-backed Note holders, have no recourse to the Company’s other assets. The Company contracted with the SPE to provide operations and maintenance and administrative services for the qualifying solar energy systems. The Company was in compliance with all debt covenants as of September 30, 2014. |
In connection with the pooling of the assets that were transferred to the SPE in November 2013, the Company terminated a lease pass-through arrangement with an investor. The lease pass-through arrangement had been accounted for as a borrowing and any amounts outstanding from the lease pass-through arrangement were recorded as a lease pass-through financing obligation. The balance that was then outstanding from the lease pass-through arrangement was $56.4 million. The Company paid the investor an aggregate of $40.2 million, and the remaining balance is to be paid over time. The remaining balance is paid using the net cash flows generated by the same assets previously leased under the lease pass-through arrangement, after payment of the principal and interest on the Solar Asset-backed Notes and expenses related to the assets and the Notes, including asset management fees, custodial fees and trustee fees, and was contractually documented as a right to participate in future cash flows of the SPE. This right to participate in future residual cash flows generated by the assets of the SPE has been disclosed as a component of other liabilities and deferred credits for the noncurrent portion and as a component of accrued and other current liabilities for the current portion under the caption “participation interest.” The Company accounted for the participation interest as a liability because the investor has no voting or management rights in the SPE, the participation interest would terminate upon the investor achieving a specified return and the investor has the option to put the participation interest to the Company on a specified date for the amount necessary for the investor to achieve the specified return, which would require the Company to settle the participation interest on a net basis in cash. In addition, under the terms of the participation interest, the Company has the option to purchase the participation interest from the investor for the amount necessary for the investor to achieve the specified return. |
Solar Asset-backed Notes, 2014-1 |
In April 2014, the Company pooled and transferred qualifying solar energy systems and the associated customer contracts into a SPE and issued $70.2 million in aggregate principal of Solar Asset-backed Notes, Series 2014-1, backed by these solar assets to certain investors. The SPE is wholly owned by the Company and is consolidated in the Company’s financial statements. Accordingly, the Company did not recognize a gain or loss on the transfer of these solar assets. As of September 30, 2014, these solar assets had a carrying value of $136.1 million and are included under solar energy systems, leased and to be leased — net, in the condensed consolidated balance sheets. The Solar Asset-backed Notes were issued at a discount of 0.01%. The cash flows generated by these solar assets are used to service the monthly principal and interest payments on the Solar Asset-backed Notes and satisfy the SPE’s expenses, and any remaining cash is distributed to a wholly owned subsidiary of the Company. The Company recognizes revenue earned from the associated customer contracts in accordance with the Company’s revenue recognition policy. The assets and cash flows generated by the qualifying solar energy systems are not available to the other creditors of the Company, and the creditors of the SPE, including the Solar Asset-backed Note holders, have no recourse to the Company’s other assets. The Company contracted with the SPE to provide operations and maintenance and administrative services for the qualifying solar energy systems. The Company was in compliance with all debt covenants as of September 30, 2014. |
In connection with the transfer of the assets into the SPE in April 2014, the Company terminated a lease pass-through arrangement with an entity that is a partnership between the Company and an investor. The partnership is a VIE that is consolidated by the Company as the primary beneficiary. To settle the associated lease pass-through financing obligation, the partnership distributed $74.5 million to the investor, including amounts previously accrued for distribution, and amended the expected future distributions to the investor. Additionally, the contractual documents of the partnership were amended to grant the investor the right to put its interest in the partnership back to the partnership. Accordingly, the carrying value of the investor’s interest in the partnership was reclassified from noncontrolling interests in subsidiaries to redeemable noncontrolling interests in subsidiaries in the condensed consolidated balance sheet. |
Solar Asset-backed Notes, Series 2014-2 |
In July 2014, the Company pooled and transferred qualifying solar energy systems and the associated customer contracts into a SPE and issued $160.0 million in aggregate principal of Solar Asset-backed Notes, Series 2014-2, Class A, and $41.5 million in aggregate principal of Solar Asset-backed Notes, Series 2014-2, Class B, to certain investors. The SPE is wholly owned by the Company and is consolidated in the Company’s financial statements. Accordingly, the Company did not recognize a gain or loss on the transfer of these solar assets. As of September 30, 2014, these solar assets had a carrying value of $288.0 million and are included under solar energy systems, leased and to be leased — net, in the condensed consolidated balance sheets. The Solar Asset-backed Notes were issued at a discount of 0.01%. These solar assets and the associated customer contracts are leased to an investor under a lease pass-through arrangement that the Company has accounted for as a borrowing. The rent paid by the investor under the lease pass-through arrangement is used (and, following the expiration of the lease pass-through arrangement, the cash generated by these solar assets will be used) to service the monthly principal and interest payments on the Solar Asset-backed Notes and satisfy the SPE’s expenses, and any remaining cash is distributed to a wholly owned subsidiary of the Company. The Company recognizes revenue earned from the associated customer contracts in accordance with the Company’s revenue recognition policy. The assets and cash flows generated by these solar assets are not available to the other creditors of the Company, and the creditors of the SPE, including the Solar Asset-backed Note holders, have no recourse to the Company’s other assets. The Company contracted with the SPE to provide operations and maintenance and administrative services for the qualifying solar energy systems. The Company was in compliance with all debt covenants as of September 30, 2014. |
|
In connection with the transfer of the assets into the SPE in July 2014, the Company paid $129.3 million to fully settle the term loan obtained on June 7, 2013, as noted above. As a result, the Company recognized a loss on debt extinguishment of $1.5 million is included in other expense, net, in the condensed consolidated statements of operations. |