Long-Term Debt

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term DebtIn connection with the acquisition of Legacy Spruce Power, the Company assumed certain long-term debt instruments as of September 9, 2022, the acquisition date of Legacy Spruce Power. In connection with accounting for the business combination, the Company adjusted the carrying value of this long-term debt to its fair value as of the acquisition date. This fair value adjustment resulted in a reduction of the carrying value of the debt by $35.2 million. This adjustment to fair

value will be amortized to interest expense over the life of the related debt instruments using the effective interest method. Amortization expense for the fair value adjustment for the three months ended March 31, 2023 was $1.5 million.

As part of the acquisition of SEMTH (See Note 4. Acquisition of Master lease agreement (SEMTH)), the Company assumed newly added Debt with Deutsche Bank AG, New York Bank.

Deutsche Bank Credit Agreement

Prior to acquisition of SEMTH (SET Borrower 2022, LLC (“SET Borrower”) by the Company, SEMTH entered into a Credit Agreement with Deutsche Bank AG, New York Bank (“DB Credit Agreement”) as the Facility Agent, On June 10, 2022, which consisted of a term loan of $125.0 million. The DB Credit Agreement is collateralized with all of the assets and property of SET Borrower. The term loan bears interest at the Secured Overnight Financing Rate (“SOFR”) plus the applicable margin. The applicable margin is 2.25% per annum through the first twelve months, 2.50% for the following six months, and 2.75% for the next six months, and 3.00% through the maturity date. The interest rate on the DB Credit Agreement as of March 31, 2023 was 7.03%. The DB Credit Agreement requires SET Borrower to be in compliance with various affirmative and negative covenants. As of March 31, 2023, SET Borrower was in compliance with the covenants contained in the DB Credit Agreement. The term loan requires quarterly payments, which began on August 17, 2022, should the outstanding loan balance exceed the borrowing base on such calculation date with the remaining balance due in a single payment on August 18, 2025.