Long-Term Debt

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term DebtIn connection with the acquisition of Legacy Spruce Power effective September 9, 2022, the Company assumed certain long-term debt instruments valued at approximately $507.2 million as of that date. 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 is being 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 and six months ended June 30, 2023 were $1.5 million and $2.9 million, respectively.

As part of the acquisition of SEMTH (See Note 4. Acquisition of SEMTH Master Lease Agreement), the Company assumed debt with Deutsche Bank AG, New York Bank (“Deutsche Bank”).

Deutsche Bank Credit Agreement

Prior to the SEMTH Acquisition, SET Borrower 2022, LLC (“SET Borrower”), a wholly owned subsidiary of SEMTH, entered into a Credit Agreement effective June 10, 2022 (the "Closing Date") with Deutsche Bank as the facility agent (the “DB Credit Agreement”), which consisted of a term loan of $125.0 million. The DB Credit Agreement is collateralized by 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. For the period from the Closing Date through the first twelve months, the applicable margin is 2.25% per annum, 2.50% for the following six months, and 2.75% for the next six months, and 3.00% through the maturity date. The effective interest rate on the DB Credit Agreement as of June 30, 2023 was 7.16%. The DB Credit Agreement requires SET Borrower to be in compliance with various affirmative and negative covenants and as of June 30, 2023, SET Borrower was in compliance with the covenants contained within the DB Credit Agreement. The term loan requires quarterly payments, which began on August 17, 2022, and should the outstanding loan balance exceed the borrowing base on such calculation date, the remaining balance would become due in a single payment on August 18, 2025.