Note 6—Debt

The table below provides information about the carrying values and weighted-average effective interest rates of the Company’s debt obligations that were outstanding at September 30, 2019 and December 31, 2018:


	At				At
	September 30, 2019				December 31, 2018
			Wtd. Avg.				Wtd. Avg.
			Effective				Effective
	Carrying		Interest		Carrying		Interest
(dollars in thousands)	Value (4)		Rate (4)		Value (4)		Rate (4)
Other Debt
Subordinated debt (1)
Due within one year		2,213	3.5			2,232	3.7
Due after one year		93,832	3.5			95,490	3.7
Revolving credit facility obligations
Due within one year		─	─			─	─
Due after one year		45,000	6.9			─	─
Notes payable and other debt (2)
Due within one year		6,295	14.7			─	─
Due after one year		─	─			7,210	14.7

Total other debt		147,340	5.0			104,932	4.5

Asset Related Debt
Notes Payable and Other Debt
Bond related debt (3)
Due within one year	$	─	─	%	$	317	4.0	%
Due after one year		─	─			38,938	3.7
Non-bond related debt
Due within one year		1,100	5.0			1,500	5.0
Due after one year		2,900	5.0			3,500	5.0

Total asset related debt		4,000	5.0			44,255	3.9

Total debt	$	151,340	5.0		$	149,187	4.3

⁽¹⁾

The subordinated debt balances include net cost basis adjustments of $7.6 million and $7.9 million at September 30, 2019 and December 31, 2018, respectively, that pertain to premiums and debt issuance costs.

⁽²⁾

Included in notes payable and other debt – other debt were unamortized debt issue costs of $0.1 million and $0.2 million at September 30, 2019 and December 31, 2018, respectively.

⁽³⁾

Included in notes payable and other debt – bond related debt were unamortized debt issuance costs. The balance at December 31, 2018 was de minimis.

⁽⁴⁾

Carrying value amounts and weighted-average interest rates reported in this table include the effects of any discounts, premiums and other cost basis adjustments. An effective interest rate represents an internal rate of return of a debt instrument that makes the net present value of all cash flows, inclusive of cash flows, that give rise to cost basis adjustments, equal zero and in the case of (i) fixed rate instruments, is measured as of an instrument’s issuance date and (ii) variable rate instruments, is measured as of each date that a reference interest rate resets.

Covenant Compliance and Debt Maturities

The following table provides information about scheduled principal payments associated with the Company’s debt agreements that were outstanding at September 30, 2019:


	Asset Related Debt
(in thousands)	and Other Debt
2019	$	942
2020		8,824
2021		1,913
2022		46,879
2023		1,846
Thereafter		83,510
Net premium and debt issue costs		7,426
Total debt	$	151,340

At September 30, 2019, the Company was in compliance with all covenants under its debt obligations.

Other Debt

Other debt of the Company finances non-interest-bearing assets and other business activities of the Company. The interest expense associated with this debt is classified as “Interest expense” under “Other expenses” on the Consolidated Statements of Operations.

Subordinated Debt

The table below provides information about the key terms of the subordinated debt that was issued by MMA Financial Holdings, Inc. (“MFH”), the Company’s wholly owned subsidiary, and that was outstanding at September 30, 2019:


(dollars in thousands)			Net Premium				Interim
			and Debt				Principal
Issuer	Principal		Issuance Costs		Carrying Value		Payments	Maturity Date	Coupon
MFH	$	26,130	$	2,299	$	28,429	Amortizing	March 30, 2035	3-month LIBOR plus 2.0%
MFH		23,760		2,102		25,862	Amortizing	April 30, 2035	3-month LIBOR plus 2.0%
MFH		13,696		1,120		14,816	Amortizing	July 30, 2035	3-month LIBOR plus 2.0%
MFH		24,902		2,036		26,938	Amortizing	July 30, 2035	3-month LIBOR plus 2.0%
Total	$	88,488	$	7,557	$	96,045

Revolving Credit Facility Obligations

On September 19, 2019, MEH entered into a credit agreement with various lenders that initially provided for a $70.0 million revolving credit facility, which may be increased up to $125.0 million (the “Facility Amount”) after the initial closing date upon the joinder of additional lenders. The Facility Amount may be expanded by up to an additional $50.0 million, subject to the agreement of the participating lenders and satisfaction of certain other customary conditions. On October 11, 2019, the committed amount of the revolving credit facility increased to $100.0 million upon the joinder of two additional lenders.

Obligations associated with the revolving credit facility are guaranteed by the Company and are secured by specified assets of the Borrower and a pledge of all of the Company’s equity interest in the Borrower through pledge and security documentation. Availability and amounts advanced under the revolving credit facility are subject to compliance with a borrowing base comprised of assets that comply with certain eligibility criteria, and includes late-stage development, construction and permanent loans to finance renewable energy projects and cash.

The revolving credit facility contains affirmative and negative covenants binding on the Borrower that are customary for credit facilities of this type. Additionally, the credit agreement includes the following financial covenants of the Company and its consolidated subsidiaries: minimum debt service coverage ratio, maximum debt to net worth, minimum consolidated net worth and minimum consolidated net income.

Borrowing under the revolving credit facility bears interest at the one-month London Interbank Offered Rate (“LIBOR”), adjusted for statutory reserve requirements (subject to a 1.5% floor), plus a fixed spread of 2.75% per annum. At September 30, 2019, the LIBOR base rate plus the fixed spread was 4.8%, while the weighted-average effective interest rate of the Company’s obligation was 6.9%. The Borrower has also agreed to pay certain fees and expenses and to provide certain indemnities, all of which are customary for such financings. In certain circumstances where the interest rate is unable to be determined, including in the event LIBOR ceases to be published, the administrative agent to the credit agreement will select a new rate in its reasonable judgment. The maturity date of the credit agreement is September 19, 2022, subject to a 12-month extension solely to allow refinancing or orderly repayment of the facility.

At September 30, 2019, the UPB and carrying value of amounts borrowed from the revolving credit facility was $45.0 million while the Company recognized $0.1 million of related interest expense in the Consolidated Statements of Operations during the three months ended September 30, 2019. As of November 1, 2019, the UPB and carrying value of the revolving credit facility was $53.5 million.

Notes Payable and Other Debt

At September 30, 2019, the UPB and carrying value of notes payable and other debt that was used to finance the Company’s 11.85% ownership interest in SAWHF was $6.4 million and $6.3 million, respectively. Such debt, which is denominated in South African rand, has a contractual maturity date of September 8, 2020, and requires the Company to pay its counterparty a rate equal to the Johannesburg Interbank Agreed Rate (“JIBAR”) plus a fixed spread of 5.15%. At September 30, 2019, the JIBAR base rate was 6.81%, while the weighted-average effective interest rate of the Company’s debt obligation that was used to finance its ownership in SAWHF was 14.71%.

Asset Related Debt

Asset related debt is debt that finances interest-bearing assets. The interest expense associated with this debt is included within “Net interest income” on the Consolidated Statements of Operations.

Bond Related Debt

These debt obligations pertained to investments in bonds that were classified as available-for-sale and were recognized by the Company in connection with transfers of bond investments that did not qualify as sales for reporting purposes. In most of these cases, debt obligations were recognized when the Company sold bond investments for cash consideration and concurrently executed total return swap (“TRS”) agreements with the buyer, which enabled the Company to retain the economic risks and returns of such investments.

In cases where a TRS agreement was involved in a conveyance that was not accounted for as a sale, the Company’s counterparty was required to pay the Company an amount equal to the interest payments received on the underlying bonds and the Company was required to pay the counterparty a rate that was based upon the Securities Industry and Financial Markets Association seven-day municipal swap rate (“SIFMA”) plus a spread. The Company used the pay rate on executed TRS agreements to accrue interest on its secured borrowing obligations to its counterparty.

During the second quarter of 2019, the Company terminated the three remaining TRS agreements that financed the Company’s bond investments and derecognized $31.6 million of asset-related debt. Consequently, as of September 30, 2019, the Company had no asset-related debt outstanding that financed bond investments.

Non-bond Related Debt

This debt obligation bears interest at 5.0%, is payable quarterly in arrears and has a varying amortization schedule that fully amortizes the note by its maturity date of January 1, 2026. The UPB and carrying value of this debt obligation was $4.0 million at September 30, 2019.

Letters of Credit

The Company had no letters of credit outstanding at September 30, 2019 and December 31, 2018.