Item 1.01 Entry into a Material Definitive Agreement.
First Amendment to the Credit Agreement
On August 12, 2021, the Company entered into an Amended and Restated Credit Agreement (the “Credit Agreement”) with PNC Bank, National Association, as administrative agent, swing loan lender, issuing lender and green loan coordinator (“PNC”), and several other financial institutions (together with PNC, collectively, the “Lenders”), pursuant to which the Lenders committed to provide the Company an unsecured $400 million revolving credit facility, including a $200 million five year facility (the “Five Year Facility”) and a $200 million 364 days facility (the “364 Days Facility” and, together with the Five Year Facility, the “Revolver”), subject to the terms and conditions in the Credit Agreement. Participating Lenders included PNC, Bank of America, N.A., Citizens Bank N.A., Truist Bank, Wells Fargo Bank, National Association, Royal Bank of Canada, and City National Bank.
On August 11, 2022, the Company entered into a First Amendment to the Amended and Restated Agreement (“Amendment”) with the Lenders. The Amendment provides for, among other things, the following: (i) borrowings under both the Five Year Facility and the 364 Days Facility shall now bear interest based upon the Secured Overnight Financing Rate (“SOFR”), plus a 10-basis point credit spread adjustment, in lieu of LIBOR as LIBOR will no longer be available after June 2023; (ii) the negative covenant which capped the total aggregate investments where the Company has less than a 50% ownership to $150 million was eliminated from both facilities; and (iii) the 364 Days Facility now offers a reduced interest rate margin, like the Five Year Facility, with respect to borrowed amounts allocated to certain sustainable investments.
Simultaneous with the execution of the Amendment, an updated 364 Days Facility was made available to the Company for the upcoming year expiring on August 10, 2023. Additionally, Bank of America, N.A. assigned all of its rights and interests under the 364 Days Facility to M&T Bank, including its commitment to extend $40 million to the Company on a short-term basis for the upcoming 364-day period. As part of this assignment, M&T Bank assumed all of Bank of America, N.A.’s rights and obligations in its capacity as a Lender under the Credit Agreement and Amendment for the 364 Days Facility, but retains all such interests and obligations under the Five Year Facility.
All other terms and conditions of the Credit Agreement were unchanged and remain in full force and effect.
The following summarizes certain of the key provisions for the Revolver, including the changes discussed above:
Borrowings under the Five Year Facility shall bear interest at (i) the SOFR Rate plus a 10-basis point credit spread adjustment and an applicable margin of 1.25% or less, with such margin based on Total Indebtedness as a percentage of Total Capitalization as defined in the Credit Agreement or (ii) the Base Rate plus 0.25% or less. The Five Year Facility has a reduced interest rate margin with respect to borrowed amounts allocated to certain sustainable investments (the “Five Year Green Loan”). The maximum principal amount that can be borrowed under the Five Year Green Loan is $50,000,000. Borrowings under the Green Loan shall bear interest at (i) the SOFR Rate plus a 10-basis point credit spread adjustment and an applicable margin of 1.20% or less, with such margin based on Total Indebtedness as a percentage of Total Capitalization or (ii) the Base Rate plus 0.20% or less.
Borrowings under the 364 Days Facility shall bear interest at the SOFR Rate plus a 10-basis point credit spread adjustment and an applicable margin of 1.00% or less, with such margin based on Total Indebtedness as a percentage of Total Capitalization or (ii) the Base Rate. The 364 Days Facility has a reduced interest rate margin with respect to borrowed amounts allocated to certain sustainable investments (the “364 Days Green Loan”). The maximum principal amount that can be borrowed under the 364 Days Green Loan is $50,000,000. Borrowings under the 364 Days Green Loan shall bear interest at (i) the SOFR Rate plus a 10-basis point credit spread adjustment and an applicable margin of 0.95% or less, with such margin based on Total Indebtedness as a percentage of Total Capitalization or (ii) the Base Rate.
The Company utilizes proceeds from the Revolver for general corporate purposes including repayments of short-term borrowings, working capital requirements and capital expenditures. Borrowings under the Five Year Green Loan and the 364 Days Green Loan may be used to support sustainable investments. Interest on SOFR Rate loans shall be paid on the last day of the Interest Period selected by the Company and if such Interest Period is longer than three months, also on the 90th day of such period. Interest on Base Rate loans shall be paid on the first day of each calendar quarter. All accrued but unpaid interest due under the Revolver is payable on the earlier of any applicable specified maturity date or the expiration date of the Credit Agreement. The Revolver has a commitment fee of 0.175% or less per annum on the unused commitment associated with the Five Year Facility, with such fee based on Total Indebtedness as a percentage of Total Capitalization as defined in the Credit Agreement. In the case of the 364 Days Facility, as long as the daily outstanding principal balance on the 364 Days Facility exceeds $100,000,000, there is no commitment fee; otherwise, the commitment fee for the 364 Days Facility mirrors the commitment fee of the Five Year Facility. The Company may request to extend the expiration date for up to three one-year extensions for both the Five Year Facility and the 364 Days Facility on any anniversary date of the Revolver, with such extension subject to each Lender’s approval. The Company may also request Lenders to increase the Revolver by up to $100,000,000 for both the Five Year Facility and the 364 Days Facility, provided that no Lender shall be obligated to increase its credit commitment and any increase in its credit commitment shall be in such Lender’s sole discretion.
