Note 6. Indebtedness

As of March 31, 2017, debt consisted of the following (in thousands, except percentages):

							Unused		Annual
	Carrying Values, net of						Borrowing		Contractual	Interest			Maturity
	debt discount						Capacity		Interest Rate	Rate			Date
	Current		Long Term		Total
Recourse debt:
Bank line of credit	$	—	$	247,400	$	247,400	$	6	Varies ⁽¹⁾	4.19% - 6.25%			April 2018
Total recourse debt	$	—	$	247,400	$	247,400	$	6

Non-recourse debt:
Line of credit (Aggregation Facility)		—		278,900		278,900		5,200	Varies ⁽²⁾	3.35% - 3.54%			December 2020
Term Loan A		575		145,854		146,429		5,000	LIBOR + 2.75%		3.79	%	December 2021
Bank term loans due in September 2022		1,504		33,015		34,519		—	LIBOR + 2.25%		3.03	%	September 2022
									LIBOR + 3.00%		4.03	%	September 2022
Bank term loan due in April 2022		1,372		25,886		27,258		—	4.50%		4.50	%	April 2022
Solar asset-backed notes		3,789		96,402		100,191		—	4.40% - Class A		4.40	%	July 2024
									5.38% - Class B		5.38	%	July 2024
Term Loan and Term Loan B		116		42,618		42,734		—	LIBOR + 5.00%		6.04	%	December 2020 and 2021
Bank term loan due in July 2021		8,441		26,040		34,481		—	Varies ⁽³⁾	6.55% - 10.05%			July 2021
Note payable		—		37,363		37,363		—	12.00%		12.00	%	December 2018
Total non-recourse debt		15,797		686,078		701,875		10,200
Total debt	$	15,797	$	933,478	$	949,275	$	10,206

As of December 31, 2016, debt consisted of the following (in thousands, except percentages):

							Unused		Annual
	Carrying Values, net of						Borrowing		Contractual	Interest			Maturity
	debt discount						Capacity		Interest Rate	Rate			Date
	Current		Long Term		Total
Recourse debt:
Bank line of credit	$	—	$	244,000	$	244,000	$	3,406	Varies ⁽¹⁾	3.96% - 5.75%			April 2018
Total recourse debt	$	—	$	244,000	$	244,000	$	3,406

Non-recourse debt:
Line of credit (Aggregation Facility)		—		245,200		245,200		9,300	Varies ⁽²⁾	2.93% - 3.39%			December 2020
Term Loan A		616		146,387		147,003		5,000	LIBOR + 2.75%		3.64	%	December 2021
Bank term loan due in September 2022		1,074		21,249		22,323		—	LIBOR + 2.25%		2.86	%	September 2022
Bank term loan due in April 2022		1,331		26,565		27,896		—	4.50%		4.50	%	April 2022
Solar asset-backed notes		3,730		97,565		101,295		—	4.40% - Class A		4.40	%	July 2024
									5.38% - Class B		5.38	%	July 2024
Term Loan and Term Loan B		116		42,870		42,986		—	LIBOR + 5.00%		6.00	%	December 2020 December 2021
Bank term loan due in July 2021		7,286		23,802		31,088		1,032	Varies ⁽³⁾	6.25% - 9.94%			July 2021
Note payable		—		36,232		36,232		—	12.00%		12.00	%	December 2018
Total non-recourse debt		14,153		639,870		654,023		15,332
Total debt	$	14,153	$	883,870	$	898,023	$	18,738

⁽¹⁾	Loans under the facility bear interest at LIBOR + 3.25% or the Base Rate + 2.25%. The Base Rate is the highest of the Federal Funds Rate + 0.50%, the Prime Rate, or LIBOR + 1.00%.

⁽²⁾	Loans under the facility bear interest at LIBOR + 2.50% for the initial three-year revolving availability period, stepping up to LIBOR + 2.75% in the following two-year period.

⁽³⁾	Loans under the facility bear interest at LIBOR + 5.50% for contracted SRECs and LIBOR + 9.00% for uncontracted SRECs.

Bank Line of Credit

The Company has outstanding borrowings under a syndicated working capital facility with banks for a total commitment of up to $250.0 million. The working capital facility is secured by substantially all of the unencumbered assets of the Company, as well as ownership interests in certain subsidiaries of the Company.

Under the terms of the working capital facility, the Company is required to meet various restrictive covenants, including meeting certain reporting requirements, such as the completion and presentation of audited consolidated financial statements. The Company is also required to maintain minimum unencumbered liquidity of at least $25.0 million in the aggregate as of the last day of each calendar month. The Company is further required to maintain a modified interest coverage ratio of 2.00 or greater, measured quarterly as of the last day of each quarter. The Company was in compliance with all debt covenants as of March 31, 2017.

As of March 31, 2017, the balance under this facility was $247.4 million with a maturity date in April 2018. As of March 31, 2017, the Company’s cash balance was $203.8 million and as such, does not currently have the funds required to fully repay the debt. As this facility has a three year term, the Company has only recently started to negotiate refinancing options and plans to extend the maturity date of the facility. Although there is no assurance that the Company will be able to do so, the Company believes that it is probable that it will be able to extend or otherwise refinance the facility prior to maturity.

Syndicated Credit Facilities

During 2016, certain subsidiaries of the Company entered into secured credit facilities agreements, as amended, with a syndicate of banks for up to $340.0 million in committed facilities. The facilities include a $310.0 million aggregation facility (“Aggregation Facility”), a $23.0 million term loan (“Term Loan”) and a $7.0 million letter of credit facility.

The facilities are non-recourse to the Company and are secured by net cash flows of certain subsidiaries from Customer Agreements, less certain operating, maintenance and other expenses which are available to the borrowers after distributions to tax equity investors. The facilities contain customary covenants including the requirement to maintain certain financial measurements and provide lender reporting. The credit facilities also contain certain provisions in the event of default which entitle lenders to take certain actions including acceleration of amounts due under the facilities. The Company was in compliance with all debt covenants as of March 31, 2017.

In December 2014, subsidiaries of the Company entered into secured credit facilities agreements with a syndicate of banks for up to $195.4 million in committed facilities. These facilities include a $158.5 million senior term loan (“Term Loan A”) and a $24.0 million subordinated term loan (“Term Loan B”). In addition, the credit facilities also include a $5.0 million working capital revolver commitment and a $7.9 million senior secured revolving letter of credit facility which draws are solely for the purpose of satisfying the required debt service reserve amount if necessary. Prepayments are permitted under Term Loan A at par without premium or penalty, and under Term Loan B prepayment penalties range from 0% - 2%, depending on the timing of the prepayment.

One of the Company’s subsidiaries is the borrower under the Term Loan A agreement and another of the Company’s subsidiaries is the borrower under the Term Loan B agreement. All obligations under Term Loan A, working capital revolver and letter of credit are collateralized by the subsidiary borrower’s membership interests and assets in the Company’s investment Funds. All obligations under the Term Loan B are collateralized by the membership interest in the subsidiary borrower. The credit facilities also contain certain provisions in the event of default, which entitle lenders to take actions, including acceleration of amounts due under the credit facilities and acquisition of membership interests and assets that are pledged to the lenders under the terms of the credit facilities.

The Company is required to maintain certain financial measurements and reporting covenants under the terms of the credit facilities. The Company was in compliance with the credit facility covenants as of March 31, 2017.

Bank Term Loans

As of March 2017, a subsidiary of the Company owes $12.9 million on a non-recourse loan. The loan is secured by substantially all of the assets of a subsidiary including this subsidiary’s membership interests and assets in its investment funds. The loan contains certain provisions in the event of default which entitles the lender to take certain actions including acceleration of amounts due under the loan. The Company was in compliance with all debt covenants as of March 31, 2017.

A subsidiary of the Company has borrowings under a $35.3 million secured credit agreement, as amended. The facility is non-recourse to the Company and is secured by substantially all of the assets of the subsidiary, including its rights in and the net cash flows from the generation of contracted and uncontracted solar renewable energy credits (“SRECs”) by certain subsidiaries. The facility contains customary covenants including the requirement to provide lender reporting. The Company guarantees the delivery of SRECs on the subsidiary’s underlying contracts in the event of a delivery shortfall pursuant to the SREC contracts with counterparties. The Company does not guarantee payments of principal or interest on the loan. The credit facility also contains certain provisions in the event of default which entitles the lender to take certain actions including acceleration of amounts due under the facilities. The Company was in compliance with all debt covenants as of March 31, 2017.

In March 2016, a subsidiary of the Company entered into a $24.5 million secured, non-recourse loan agreement. The loan will be repaid through cashflows from a lease pass-through arrangement previously entered into by the Company. The loan agreement contains customary covenants including the requirement to maintain certain financial measurements and provide lender reporting. The loan also contains certain provisions in the event of default which entitles the lender to take certain actions including acceleration of amounts due under the loan. The Company was in compliance with all debt covenants as of March 31, 2017.

In December 2013, a subsidiary of the Company entered into an agreement for a term loan of $38.0 million. The proceeds of this term loan were distributed to the members of this subsidiary, including the Company. The loan is secured by the assets and related cash flow of this subsidiary and is non-recourse to the Company’s other assets. The Company was in compliance with all debt covenants as of March 31, 2017.

Notes Payable

In December 2013, a subsidiary of the Company entered into a note purchase agreement with an investor for the issuance of senior notes in exchange for proceeds of $27.2 million. The loan proceeds were distributed to the Company for general corporate purposes. On the last business day of each quarter, commencing with March 31, 2014, to the extent the Company’s subsidiary has insufficient funds to pay the full amount of the stated interest of the outstanding loan balance, a payment-in-kind (“PIK”) interest rate of 12% is accrued and added to the outstanding balance. As of March 31, 2017 and December 31, 2016, the portion of the outstanding loan balance that related to PIK interest was $10.6 million and $9.5 million, respectively. The senior notes are secured by the assets and related cash flows of certain of the Company’s subsidiaries and are non-recourse to the Company’s other assets. The entire outstanding principal balance is payable in full on the December 2018 maturity date. The Company was in compliance with all debt covenants as of March 31, 2017.

Solar Asset-Backed Notes

In July 2015, the Company entered into a securitization transaction pursuant to which the Company pooled and transferred qualifying solar energy systems and related lease agreements secured by associated customer contracts (“Solar Assets”) into a special purpose entity (“Issuer”), and issued $100.0 million in aggregate principal of Solar Asset-Backed Notes, Series 2015-1, Class A, and $11.0 million in aggregate principal of Solar Asset-Backed Notes, Class B, backed by these Solar Assets to certain investors (“Notes”). The Issuer 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 assets. As of March 31, 2017 and December 31, 2016, these Solar Assets had a carrying value of $179.7 million and $181.8 million, respectively, and are included under solar energy systems, net, in the consolidated balance sheets. The Notes were issued at a discount of 0.08%.

The Company retained $7.3 million net of fees from proceeds from the Notes. In connection with the transaction, the Company modified two lease pass-through arrangements with an investor. The lease pass-through arrangements had been accounted for as a borrowing and any amounts outstanding from the arrangements were reported as lease pass-through financing obligation as further explained in Note 8, Lease Pass-Through Financing Obligations. The Company accounted for the modification of the lease pass-through obligation as a modification of debt and did not record any gain or loss on the transaction.

The modified lease-pass through arrangements require the majority of the cash flows generated by the Solar Assets to be passed on to the Issuer through monthly lease payments from the Fund investor. Those cash flows are used to service the monthly principal of the Notes and interest payments and satisfy the Issuer’s expenses, and any residual cash flows are retained by the Fund investor and recorded as a reduction in the remaining financing obligation. The Company recognizes revenue earned from the associated Customer Agreements in accordance with the Company’s revenue recognition policy. The assets and cash flows generated by the Solar Assets are not available to the other creditors of the Company, and the creditors of the Issuer, including the Note holders, have no recourse to the Company’s other assets. The Company was in compliance with all debt covenants as of March 31, 2017.