v3.22.2.2
Debt
 9 Months Ended
Sep. 30, 2022
Debt Disclosure [Abstract]  
Debt Debt
 
As of
September 30, 2022
As of
December 31, 2021
Interest
Type		Weighted
average
interest rate
Long-term debt
Amended rated term loan$490,322 $499,750 Fixed3.51 %
Construction loans— 5,593 Floating— %
Term loans28,819 12,818 Fixed and floating4.01 %
Financing lease obligations37,094 37,601 Imputed3.65 %
Total principal due for long-term debt556,235 555,762 
Unamortized discounts and premiums(2,271)(176)
Unamortized deferred financing costs(8,934)(9,606)
Less: Current portion of long-term debt17,321 21,143 
Long-term debt, less current portion$527,709 $524,837 
Amended Rated Term Loan
As part of the Blackstone Capital Facility, APA Finance, LLC (“APAF”), a wholly owned subsidiary of the Company, entered into a $251.0 million term loan facility with Blackstone Insurance Solutions ("BIS") through a consortium of lenders, which consists of investment grade-rated Class A and Class B notes (the "Rated Term Loan").
On August 25, 2021, APAF entered into an Amended and Restated Credit Agreement with BIS to refinance the Rated Term Loan (the “Amended Rated Term Loan”). The Amended Rated Term Loan added $135.6 million to the facility, bringing the aggregate facility to $503.0 million. The Amended Rated Term Loan has a weighted average 3.51% annual fixed rate, reduced from the previous weighted average rate of 3.70%, and matures on February 29, 2056 (“Final Maturity Date”).
The Amended Rated Term Loan amortizes at an initial rate of 2.5% of outstanding principal per annum for a period of 8 years at which point the amortization steps up to 4% per annum until September 30, 2031 (“Anticipated Repayment Date”). After the Anticipated Repayment Date, the loan becomes fully-amortizing, and all available cash is used to pay down principal until the Final Maturity Date.
As of September 30, 2022, the outstanding principal balance of the Rated Term Loan was $490.3 million less unamortized debt discount and loan issuance costs totaling $7.8 million. As of December 31, 2021, the outstanding principal balance of the Rated Term Loan was $500.0 million less unamortized debt discount and loan issuance costs totaling $8.4 million.
As of September 30, 2022, the Company was in compliance with all covenants. As of December 31, 2021, the Company was in compliance with all covenants, except the delivery of the APAF audited consolidated financial statements, for which the Company obtained a waiver to extend the financial statement reporting deliverable due date. The Company delivered the audited financial statements on May 25, 2022, before the extended reporting deliverable due date.
Construction to Term Loan Facility
On January 10, 2020, APA Construction Finance, LLC (“APACF”) a wholly-owned subsidiary of the Company, entered into a credit agreement with Fifth Third Bank, National Association and Deutsche Bank AG New York Branch to fund the development and construction of future solar facilities (“Construction Loan to Term Loan Facility”). The Construction Loan to Term Loan Facility includes a construction loan commitment of $187.5 million and a letter of credit commitment of $12.5 million, which can be drawn until January 10, 2023.
The construction loan commitment can convert to a term loan upon commercial operation of a particular solar energy facility. In addition, the Construction Loan to Term Loan Facility accrued a commitment fee at a rate equal to 0.50% per year of the daily unused amount of the commitment. As of September 30, 2022, the outstanding principal balances of the construction loan and term loan were zero and $16.0 million, respectively. As of December 31, 2021, the outstanding principal balances of the construction loan and term loan were $5.6 million and $12.3 million, respectively. As of September 30, 2022, and December 31, 2021, the Company had an unused borrowing capacity of $171.5 million and $169.7 million, respectively. For the three months ended September 30, 2022, and 2021, the Company incurred interest costs associated with outstanding construction loans totaling zero and $0.1 million, respectively. For the nine months ended September 30, 2022, and 2021 the Company incurred interest costs associated with outstanding construction loans totaling zero and $0.4 million, respectively. These interest costs were capitalized as part of property, plant and equipment. The Construction Loan to Term Loan Facility includes various financial and other covenants for APACF and the Company, as guarantor. As of September 30, 2022, and December 31, 2021, the Company was in compliance with all covenants.
Project-Level Term Loan
In conjunction with the Stellar NJ 2 Acquisition, the Company assumed a project-level term loan with an outstanding principal balance of $14.1 million and a fair value discount of $2.2 million. The term loan is subject to scheduled semi-annual amortization and interest payments, and matures on September 1, 2029.
As of September 30, 2022, the outstanding principal balance of the term loan is $12.6 million, less unamortized debt discount of $2.2 million, which was recognized as part of the acquisition. During the nine months ended September 30, 2022, the Company incurred interest costs associated with the term loan of $0.2 million.
The term loan is secured by an interest in the underlying solar project assets and the revenues generated by those assets. As of September 30, 2022, the Company was in compliance with all covenants.
Letter of Credit Facilities
On October 23, 2020, the Company entered into a letter of credit facility with Fifth Third Bank for the total capacity of $10.0 million. Additionally, in conjunction with the Stellar NJ 2 Acquisition, the Company entered into a cash collateralized letter of credit with Fifth Third Bank with a total capacity of $2.1 million.
As of September 30, 2022, and December 31, 2021, the total letters of credit outstanding with Fifth Third Bank were $12.1 million with an unused capacity of zero. As of September 30, 2022, and December 31, 2021, the total letters of credit outstanding with Deutsche Bank were $0.7 million and $0.6 million, respectively, with an unused capacity of $11.8 million and $11.9 million, respectively. To the extent liabilities are incurred as a result of the activities covered by the letters of credit, such liabilities are included on the accompanying condensed consolidated balance sheets. From time to time, the Company is required to post financial assurances to satisfy contractual and other requirements generated in the normal course of business. Some of these assurances are posted to comply with federal, state or other government agencies’ statutes and regulations. The Company sometimes uses letters of credit to satisfy these requirements and these letters of credit reduce the Company’s borrowing facility capacity.
Financing Lease Obligations
From time to time, the Company sells equipment to third parties and enters into master lease agreements to lease the equipment back for an agreed-upon term. Due to certain forms of continuous involvement provided by the master lease agreements, sale leaseback accounting is prohibited under ASC 840. Therefore, the Company accounts for these transactions using the financing method by recognizing the sale proceeds as a financing obligation and the assets subject to the sale-leaseback remain on the balance sheet of the Company and are being depreciated. The aggregate proceeds have been recorded as long-term debt within the condensed consolidated balance sheets.
As of September 30, 2022 and December 31, 2021, the Company's recorded financing obligations were $36.0 million, net of $1.1 million of deferred transaction costs, and $36.5 million, net of $1.1 million of deferred transaction costs, respectively. Payments of $0.9 million and $0.1 million were made under financing lease obligations for the three months ended September 30, 2022, and 2021, respectively. Payments of $1.5 million and $0.1 million were made under financing obligations for the nine months ended September 30, 2022 and 2021, respectively. Interest expense, inclusive of the amortization of deferred transaction costs, for the three months ended September 30, 2022, and 2021, was $0.4 million and $0.2 million, respectively. Interest expense, inclusive of the amortization of deferred transaction costs, for the nine months ended September 30, 2022 and 2021, was $1.1 million and $0.2 million, respectively.
The table below shows the minimum lease payments under the financing lease obligations for the years ended:
2022$709 
20232,336 
20242,340 
20252,353 
20262,336 
Thereafter14,993 
Total$25,067 
The difference between the outstanding financing lease obligation of $37.1 million and $25.1 million of minimum lease payments, including the residual value guarantee, is due to $13.2 million of investment tax credits claimed by the Lessor, less $2.6 million of the implied interest on financing lease obligation included in minimum lease payments. The remaining difference is due to $1.3 million of interest accrued and a $0.1 million difference between the minimum lease payments and the fair value of financing lease obligations acquired.