Long-Term Debt

3 Months Ended

Mar. 31, 2022

On March 31, 2022 and December 31, 2021, the Company’s consolidated long-term debt balance comprised the following ($ in thousands):


	March 31, 2022		December 31, 2021

Term Loan - Hawaii Gas	$	80,000	$	80,000
Term Loan - Solar Facilities in Hawaii	12,424		12,698
2.00% Convertible Senior Notes	6,821		6,821
Total	99,245		99,519
Current portion	(1,118)		(1,107)
Long-term portion	98,127		98,412
Unamortized debt financing costs(1)	(684)		(757)
Long-term portion less unamortized debt discount and debt financing costs	$	97,443	$	97,655

___________

(1)The weighted average remaining life of the debt financing costs on March 31, 2022 was 2.7 years.

2.00% Convertible Senior Notes due October 2023 (2.00% Convertible Senior Notes)

In October 2016, the Company completed an underwritten public offering of a seven year, $402.5 million aggregate principal amount of 2.00% Convertible Senior Notes. The Notes are convertible, at the holder’s option, only upon satisfaction of one or more conditions set forth in the indenture governing the Notes. Upon conversion, the Company will pay or deliver, as the case may be, cash, common units of Company, or a combination thereof, at the Company’s election.

The $402.5 million of 2.00% Convertible Senior Notes had an initial value of the principal amount recorded as a liability of $375.8 million, using an effective interest rate of 3.1%. The remaining $26.7 million of principal amount was allocated to the conversion feature and recorded in Common Units Paid in Capital. This amount represents a discount to the debt to be amortized through interest expense using the effective interest method through maturity. The Company also recorded $11.2 million in debt financing costs from the issuance of the 2.00% Convertible Senior Notes, of which $744,000 was recorded as equity issuance costs as a component of Unitholders’ Equity.

On January 1, 2021, the Company adopted ASU 2020-06 under the modified retrospective method. ASU 2020-06 removes the accounting for cash conversion feature of the Notes such that the Notes would only be classified as a liability. The adoption of ASU 2020-06 resulted in the reversal of the initial equity component recorded of $26.7 million and made an adjustment to the beginning balance to Retained Earnings of $7.0 million primarily for the reversal of the amortization of debt discount taken through that date, net of taxes.

During 2021, the Company repurchased $395.7 million in aggregate principal amount of the 2.00% Convertible Senior Notes, of which $358.6 million and $26.9 million were repurchased in tender offers on March 16, 2021 and October 22, 2021, respectively. In connection with the repurchases, the Company incurred $1.2 million of transaction costs and wrote-off $3.7 million of debt financing costs recorded in Selling, general and administrative expenses and Interest expense, respectively, in the consolidated condensed statements of income (loss).

On March 31, 2022 and December 31, 2021, the outstanding balance of the 2.00% Convertible Senior Notes was $6.8 million. On March 31, 2022 and December 31, 2021, the fair value of the 2.00% Convertible Senior Notes was approximately $6.6 million and $6.8 million, respectively. The conversion rate was 162.9223 common units per $1,000 principal amount on March 31, 2022.

Interest expense related to the 2.00% Convertible Senior Notes consisted of the following ($ in thousands):



	Quarter Ended March 31,
	2022		2021
Contractual interest expense	$	34	$	1,754

Amortization of debt financing cost	—		345
Write-off of debt financing cost	—		3,644
Total interest expense	$	34	$	5,743

Hawaii Gas

On April 19, 2021, Hawaii Gas fully repaid all of its $100.0 million senior secured notes outstanding and incurred a $4.7 million 'make-whole' payment and wrote-off $154,000 of debt financing costs both recorded in Interest expense in the consolidated condensed statements of income (loss).

On March 31, 2022 and December 31, 2021, Hawaii Gas had an $80.0 million term loan outstanding and a $60.0 million revolving credit facility that was undrawn. During the quarter ended June 30, 2021, Hawaii Gas extended the maturity on its term loan and revolving credit facility from February 2023 to February 2024.