Debt

9 Months Ended

Sep. 30, 2019

The Company’s debt consists of the following for periods presented below (in millions):



							As of September 30, 2019
	September 30, 2019			December 31, 2018			Contractual Interest Rate			Effective Interest Rate
	September 30, 2019			December 31, 2018			Contractual Interest Rate			Effective Interest Rate			Maturity
Corporate-level
Corporate Revolving Credit Facility	$	39		$	198		Varies		⁽¹⁾	3.70	%	⁽¹⁾	November 2022
Incremental Bank Loan	250			—			Varies		⁽⁶⁾	3.41	%	⁽⁶⁾	July 2022
2020 Notes	225			225			4.00	%		6.60	%		July 2020
2024 Notes	350			350			5.88	%		5.88	%		February 2024
Project-level
Fixed interest rate
Santa Isabel term loan	97			100			4.57	%		4.57	%		September 2033
Mont Sainte Marguerite-med term loan	60			62			3.97	%		3.97	%		December 2029
Mont Sainte Marguerite-long term loan	96			93			5.04	%		5.04	%		June 2042
Variable interest rate
Gulf Wind Promissory Note	22			—			2.84	%		2.84	%		December 2019
Japan Credit Facility	25			25			Varies		⁽⁵⁾	1.82	%		August 2022
Ocotillo commercial term loan	269			281			3.60	%		4.01	%	⁽³⁾	June 2033
St. Joseph term loan ⁽²⁾	150			152			3.72	%		4.08	%	⁽³⁾	November 2033
Western Interconnect term loan	90			52			3.49	%		4.21	%	⁽³⁾	May 2034
Meikle term loan ⁽²⁾	242			239			3.48	%		3.94	%	⁽³⁾	May 2024
Futtsu term loan	73			75			1.07	%		1.86	%	⁽³⁾	December 2033
Ohorayama term loan	92			93			0.87	%		1.50	%	⁽³⁾	February 2036
Tsugaru Construction Loan	276			131			0.72	%		0.72	%		March 2038
Tsugaru Holdings Loan Agreement	62			59			3.13	%		3.13	%		July 2022
Imputed interest rate
Hatchet Ridge financing lease obligation	172			180			1.43	%		1.43	%		December 2032
	2,590			2,315
Unamortized discount, net⁽⁴⁾	(6		)	(11		)
Unamortized financing costs	(19		)	(21		)
Total debt, net	2,565			2,283

As reflected on the consolidated balance sheets
Revolving credit facility, current	$	39		$	198
Revolving credit facility	25			25
Current portion of long-term debt, net of financing costs	329			56
Long term debt, net of financing costs	2,172			2,004
Total debt, net	$	2,565		$	2,283


⁽¹⁾	Refer to Corporate Revolving Credit Facility in the Annual Report on Form 10-K for the year ended December 31, 2018 for interest rate details.


⁽²⁾	The amortization for the St. Joseph term loan and the Meikle term loan are through September 2036 and December 2038, respectively, which differs from the stated maturity date of such loans due to prepayment requirements.


⁽³⁾	Includes impact of interest rate swaps. See Note 10, Derivative Instruments, for discussion of interest rate swaps.


⁽⁴⁾	The discount relates to the 2020 Notes and MSM term loans.


⁽⁵⁾	Refer to Japan Credit Facility for interest rate details.


⁽⁶⁾	Refer to Incremental Bank Loan for interest rate details.

Interest and commitment fees incurred and interest expense for debt consisted of the following (in millions):



	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Corporate-level interest and commitment fees incurred	$	11		$	10		$	33		$	28
Project-level interest and commitment fees incurred	13			16			40			47
Capitalized interest, commitment fees, and letter of credit fees	(1		)	(2		)	(4		)	(3		)
Amortization of debt discount/premium, net	2			2			5			4
Amortization of financing costs	2			2			4			5
Interest expense	$	27		$	28		$	78		$	81

Corporate Level Debt

Corporate Revolving Credit Facility

On November 21, 2017, certain of the Company's subsidiaries have entered into a Second Amended and Restated Credit and Guaranty Agreement (the Revolving Credit Facility). The Revolving Credit Facility provides for a revolving credit facility of $440 million. The facility has a five-year term and is comprised of a revolving loan facility, a letter of credit facility and a swingline facility. The facility is secured by pledges of the capital stock and ownership interests in certain of the Company's holding company subsidiaries, in addition to other customary collateral.

As of September 30, 2019, $347 million was available for borrowing under the $440 million Revolving Credit Facility. The Revolving Credit Facility contains a broad range of covenants that, subject to certain exceptions, restrict the Company’s holding company subsidiaries' ability to incur debt, grant liens, sell or lease assets, transfer equity interests, dissolve, pay distributions and change its business. As of September 30, 2019, the Company's holding company subsidiaries were in compliance with covenants contained in the Revolving Credit Facility.

As of September 30, 2019 and December 31, 2018, letters of credit of $54 million and $45 million, respectively, were issued under the Revolving Credit Facility.

Incremental Bank Loan

On July 31, 2019, certain of the Company's subsidiaries entered into Amendment No. 2 to the Revolving Credit Facility (the Amendment). The Amendment provides for the incurrence of an incremental term loan credit facility of $250 million (the Incremental Bank Loan), which the Company incurred upon closing of the Amendment and is in addition to the Revolving Credit Facility. The Incremental Bank Loan has a three-year term and will not amortize. The Incremental Bank Loan is secured by the same collateral as the Revolving Credit Facility on a pari passu basis. Proceeds from the Incremental Bank Loan were used to repay a portion of the Company's Revolving Credit Facility.

The Incremental Bank Loan are base rate loans or Eurodollar rate loans, denominated in U.S. dollars. The base rate loans accrue interest at the fluctuating rate per annum equal to the greater of the (i) U.S. dollar prime rate, (ii) the federal funds rate plus 0.50% and (iii) the Eurodollar rate that would be in effect for a Eurodollar rate loan with an interest period of one month plus 1.0%, plus an applicable margin ranging from 0.175% to 0.425% (corresponding to applicable leverage ratios of borrowers). The Eurodollar rate loans accrue interest at a rate per annum equal to LIBOR plus an applicable margin ranging from 1.175% to 1.425% (corresponding to applicable leverage ratios of borrowers).

2020 Notes

In July 2015, the Company issued $225 million aggregate principal amount of 4.00% convertible senior notes due 2020 (Convertible Senior Notes or 2020 Notes). The 2020 Notes bear interest at a rate of 4.00% per year, payable semiannually in arrears on January 15 and July 15 of each year, beginning on January 15, 2016. The 2020 Notes will mature on July 15, 2020 and are presented on the Company's consolidated balance sheets as a component of "Current portion of long-term debt, net." The 2020 Notes were sold in a private placement. The following table presents a summary of the equity and liability components of the 2020 Notes (in millions):



	September 30, 2019			December 31, 2018
Principal	$	225		$	225
Less:
Unamortized debt discount	(4		)	(8		)
Unamortized financing costs	(1		)	(2		)
Carrying value of convertible senior notes	$	220		$	215
Carrying value of the equity component ⁽¹⁾	$	24		$	24


⁽¹⁾	Included in the consolidated balance sheets as additional paid-in capital, net of $1 million in equity issuance costs.

Project Debt

Gulf Wind Promissory Note

In September 2019, Gulf Wind entered into a non-amortizing short-term bridge loan (Gulf Bridge Loan) of $22 million. The Gulf Bridge Loan matures on or before the earliest to occur of December 31, 2019 or the date additional project financing has been secured. The base rate on the Gulf Bridge Loan is based on LIBOR plus 0.75%.

Japan Credit Facility

In August 2018, GPG entered into a credit agreement for a revolving credit facility (the Japan Credit Facility). Under the Japan Credit Facility, GPG may borrow up to $33 million and the Japan Credit Facility matures in August 2022. The base rate is based on the Japan Credit Facility Tokyo Interbank Offered Rate (TIBOR) plus an applicable margin between 1.75% and 2.25% plus an annual commitment fee of 0.30%. As of September 30, 2019, $8 million was available for borrowing.

Tsugaru Facility

In March 2018, Tsugaru entered into a credit agreement for a construction facility (Tsugaru Construction Loan), a term facility, a letter of credit facility (the LC Facility) and a Japanese consumption tax facility (the JCT Facility) (collectively, the Tsugaru Facility). Under the Tsugaru Facility, up to $371 million may be borrowed to fund the construction of Tsugaru which automatically converts to a term facility upon the earlier of completion of construction of the project (expected to be March 2020) or September 2020 (the Term Conversion Date). The Tsugaru Construction Loan, including the term facility and LC Facility, mature 18 years following the Term Conversion Date, not later than March 2039. The interest rate on the Tsugaru Construction Loan and term facility is TIBOR plus 0.65%. The LC Facility establishes a $20 million debt service reserve account letter of credit and an $8 million operations and maintenance reserve account letter of credit with amounts outstanding under the letters of credit owing interest at a rate of 1.10% and fees on the undrawn amounts of 0.30%. The JCT Facility provides for up to $34 million to pay Japanese consumption taxes arising from payment of project costs, with an interest rate of TIBOR plus 0.30% and a maturity date corresponding to the Term Conversion Date. A commitment fee of 0.3% is owed on any available amounts under the Construction Facility and the JCT Facility and on any undrawn amounts on the letters of credit up to the Term Conversion Date. Collateral for the credit facility includes Tsugaru's tangible assets and contractual rights and cash on deposit with the depository agent. The credit agreement contains a broad range of covenants that, subject to certain exceptions, restrict Tsugaru's ability to incur debt, grant liens, sell or lease certain assets, transfer equity interests, dissolve, make distributions or change its business. As of September 30, 2019, outstanding borrowings under the Tsugaru Construction Loan totaled $276 million.

Tsugaru Holdings Loan Agreement

In March 2018, Tsugaru Holdings entered into a loan agreement (Tsugaru Holdings Loan Agreement) that provides for borrowings of up to $70 million during the Tsugaru construction period, until no later than September 2020. The interest rate on outstanding borrowings under the Tsugaru Holdings Loan Agreement is TIBOR plus 3.0% with principal due July 2022 and a commitment fee of 0.50% on the unused portion of the Tsugaru Holdings Loan Agreement. The Tsugaru Holdings Loan Agreement is subject to certain covenants and is secured by the membership interests and other rights. As of September 30, 2019, outstanding borrowings under the Tsugaru Holdings Loan Agreement totaled $62 million.