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Long-term debt | 12 Months Ended
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Dec. 31, 2012
Long-term debt |
Long-term debt | 9. Long-term debt Long-term debt consists of the following:
|  | December 31, 2012 |  | December 31, 2011 |  | Interest Rate
--- | --- | --- | --- | --- | --- | ---
Recourse Debt: |  |  |  |  |  |  |  |
Senior unsecured notes, due 2018 |  | $ | 460,000 |  | $ | 460,000 |  | 9.00%
Senior unsecured notes, due June 2036 (Cdn$210,000) |  |  | 211,071 |  |  | 206,490 |  | 5.95%
Senior unsecured notes, due July 2014 |  |  | 190,000 |  |  | 190,000 |  | 5.90%
Series A senior unsecured notes, due August 2015 |  |  | 150,000 |  |  | 150,000 |  | 5.87%
Series B senior unsecured notes, due August 2017 |  |  | 75,000 |  |  | 75,000 |  | 5.97%
Non-Recourse Debt: |  |  |  |  |  |  |  |
Epsilon Power Partners term facility, due 2019 |  |  | 33,482 |  |  | 34,982 |  | 7.40%
Auburndale term loan, due 2013 |  |  | — | (3) |  | 11,900 |  | 5.10%
Cadillac term loan, due 2025 |  |  | 37,831 |  |  | 40,231 |  | 6.02% - 8.00%
Piedmont construction loan, due 2013 |  |  | 127,446 | (2) |  | 100,796 |  | Libor plus 3.50%
Meadow Creek construction loan, due 2013 |  |  | 208,698 | (4) |  | — |  | 1.31% - 5.08%
Rockland term loan, due 2031 |  |  | 86,560 |  |  | — |  | 6.40%
Ridgeline working capital loan |  |  | 253 |  |  | — |  | 5.50% - 5.90%
Path 15 senior secured bonds |  |  | — | (1) |  | 145,879 |  | 7.90% - 9.00%
Purchase accounting fair value adjustments |  |  | — | (1) |  | 10,580 |  |
Less current maturities |  |  | (121,203 | ) |  | (20,958 | ) |
Total long-term debt |  | $ | 1,459,138 |  | $ | 1,404,900 |  |
Current maturities consist of the following:
|  | December 31, 2012 |  | December 31, 2011 |  | Interest Rate
--- | --- | --- | --- | --- | --- | ---
Current Maturities: |  |  |  |  |  |  |  |
Epsilon Power Partners term facility, due 2019 |  | $ | 3,000 |  | $ | 1,500 |  | 7.40%
Path 15 senior secured bonds |  |  | — | (1) |  | 8,667 |  | 7.90% - 9.00%
Auburndale term loan, due 2013 |  |  | — | (3) |  | 7,000 |  | 5.10%
Cadillac term loan, due 2025 |  |  | 2,400 |  |  | 3,791 |  | 6.02% - 8.00%
Piedmont construction loan, due 2013 |  |  | 55,061 | (2) |  | — |  | Libor plus 3.50%
Meadow Creek construction loan, due 2013 |  |  | 59,508 | (4) |  | — |  | 1.31% - 5.08%
Ridgeline working capital loan |  |  | 7 |  |  | — |  | 5.50% - 5.90%
Rockland term loan, due 2031 |  |  | 1,227 |  |  | — |  | 6.40%
Total current maturities |  | $ | 121,203 |  | $ | 20,958 |  |
(1) During 2012, we designated the Path 15 project as an asset held for sale. Accordingly, Path 15 senior secured bonds current maturities of $9.4 million and long term debt of $128.0 million, including a purchase accounting fair value adjustment of $9.9 million, are recorded as a component of liabilities associated with assets held for sale in the current section of the consolidated balance sheets at year-end December 31, 2012. See Note 19 for further discussion. (2) The terms of the Piedmont project-level debt financing include a $51.0 million bridge loan, a portion of which we expect to repay with the proceeds from the stimulus grant expected to be received from the U.S. Treasury 60 days after the start of commercial operations, and an $82.0 million construction term loan that will convert to a term loan upon commercial operations of the project. However, because such grant proceeds are subject to Congressional action, we cannot provide any assurances with respect to the timing, availability or amount, if any, of such grants. The $51.0 million bridge loan will be repaid in early 2013 and repayment of the expected $82.0 million term loan will commence in 2013. (3) During 2012, we designated the Auburndale project as an asset held for sale. Accordingly, the Auburndale term loan due 2013 with current maturities of $4.9 million is recorded as a component of liabilities associated with assets held for sale in the current section of the consolidated balance sheets at year-end December 31, 2012. See Note 19 for further discussion. (4) Meadow Creek debt consists of $152.2 million drawn on a construction term loan which will become a term loan in June 2013, and a $56.5 million cash grant loan, which we expect to repay in the first half of 2013 through proceeds from a grant expected to be received from the U.S. Treasury. Notes of Atlantic Power Corporation On November 5, 2011, we completed a private placement of $460.0 million aggregate principal amount of 9.0% senior notes due 2018 (the "Atlantic Notes" or "Senior Notes") to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and to non-U.S. persons outside of the United States in compliance with Regulation S under the Securities Act. The Senior Notes were issued at an issue price of 97.471% of the face amount of the Atlantic Notes for aggregate gross proceeds to us of $448.0 million. The Atlantic Notes are senior unsecured obligations, guaranteed by certain of our subsidiaries. Notes of the Partnership The Partnership, a wholly-owned subsidiary acquired on November 5, 2011, has outstanding Cdn$210.0 million ($211.1 million at December 31, 2012) aggregate principal amount of 5.95% senior unsecured notes, due June 2036 (the "Partnership Notes"). Interest on the Partnership Notes is payable semi-annually at 5.95%. Pursuant to the terms of the Partnership Notes, we must meet certain financial and other covenants, including a financial covenant generally based on the ratio of debt to capitalization of the Partnership. The Partnership Notes are guaranteed by Atlantic Power Preferred Equity Ltd., an indirect, wholly-owned subsidiary acquired in connection with the acquisition of the Partnership and Atlantic Power. Notes of Curtis Palmer LLC Curtis Palmer LLC has outstanding $190.0 million aggregate principal amount of 5.90% senior unsecured notes, due July 2014 (the "Curtis Palmer Notes"). Interest on the Curtis Palmer Notes is payable semi-annually at 5.90%. Pursuant to the terms of the Curtis Palmer Notes, we must meet certain financial and other covenants, including a financial covenant generally based on the ratio of debt to capitalization of the Partnership. The Curtis Palmer Notes are guaranteed by the Partnership. Notes of Atlantic Power (US) GP Atlantic Power (US) GP, an indirect, wholly-owned subsidiary acquired in connection with the acquisition of the Partnership, has outstanding $150.0 million aggregate principal amount of 5.87% senior guaranteed notes, Series A, due August 2017 (the "Series A Notes"). Interest on the Series A Notes is payable semi-annually at 5.87%. Atlantic Power (US) GP has also outstanding $75.0 million aggregate principal amount of 5.97% senior guaranteed notes, Series B, due August 2019 (the "Series B Notes" and together with the Series A Notes, the "Notes"). Interest on the Series B Notes is payable semi-annually at 5.97%. Pursuant to the terms of the Series A Notes and the Series B Notes, we must meet certain financial and other covenants, including a financial covenant generally based on the ratio of debt to capitalization of the Partnership and Atlantic Power (US) GP. The Series A Notes and the Series B Notes are guaranteed by Atlantic Power, the Partnership, Curtis Palmer LLC and the existing and future guarantors of Atlantic Power's Senior Notes, senior credit facility and refinancings thereof. On June 22, 2012, Atlantic Power, Atlantic Power (US) GP and certain other of our subsidiaries entered into an amendment to the Note Purchase and Parent Guaranty Agreement, dated as of August 15, 2007 (the "Note Purchase Agreement"), which governs the Series A Notes and the Series B Notes of Atlantic Power (US) GP. Under the amendment, we agreed: (i) that Atlantic Power and the existing and future guarantors of Senior Notes, our senior credit facility and refinancings thereof would provide guarantees of the Notes; (ii) to shorten the maturity of the Series A Notes from August 15, 2017 to August 15, 2015; (iii) to shorten the maturity of the Series B Notes from August 15, 2019 to August 15, 2017; (iv) to include an event of default that would be triggered if certain defaults occurred under the debt instruments of Atlantic Power and certain of its subsidiaries; and (v) to add certain covenants, including covenants that limit the ability of Curtis Palmer LLC ("Curtis Palmer"), a wholly-owned subsidiary of the Partnership to incur debt or liens, make distributions other than in the ordinary course of business, prepay debt or sell material assets and that limit our ability to sell Curtis Palmer. The parties entered into the amendment following a series of discussions concerning our acquisition of the Partnership. Although we believe that the acquisition of the Partnership was in full compliance with the terms and conditions of the Note Purchase Agreement, the holders of the Notes agreed to waive certain defaults or events of default that they alleged may have occurred as a result of our acquisition of the Partnership in return for Atlantic Power and its subsidiaries entering into the amendment. Non-Recourse Debt Project-level debt of our consolidated projects is secured by the respective project and its contracts with no other recourse to us. Project-level debt generally amortizes during the term of the respective revenue generating contracts of the projects. The loans have certain financial covenants that must be met. At December 31, 2012, all but one of our projects was in compliance with the covenants contained in project-level debt. Epsilon Power Partners, our 100% owned holding company for our 40% interest in Chambers, Delta-Person and Gregory had not achieved the levels of debt service coverage ratios required by the project-level debt arrangements as a condition to make distributions and were therefore restricted from making distributions to us. None of these covenant failures result in the non-recourse debt being callable at December 31, 2012. The required coverage ratio at Epsilon Power Partners is calculated based on the most recent four quarters cash flow results from Chambers. The Chambers project began to meet the cash flow coverage ratio for its non-recourse debt as of September 30, 2010, and the project began distributions to our project holding company, Epsilon Power Partners, in October 2010. However, the required cash flow coverage ratio on the debt at Epsilon Power Partners has not been achieved and, as a result, Epsilon has not made any distributions to us during 2010, 2011 and 2012. Based on our current projections, Epsilon will continue receiving distributions from the project in 2013 based on meeting the required debt service coverage ratios. Epsilon resumed making distributions in January 2013. The required coverage ratio at Delta is based on the most recent four-quarter period. The higher operations and maintenance costs caused Delta to fail its debt service coverage ratio and restrict cash distributions for 2011 and 2012. Although we expect to resume receiving distributions from Delta-Person in 2014, we cannot provide any assurances that this project will generate enough cash flow to meet the ratio tests and be able to resume distributions to us. The required coverage ratio at Gregory is calculated based on both historical project cash flows for the previous six months, as well as projected cash flows for the next six months. Increased fuel costs are the primary contributors to the project not currently meeting its debt service coverage ratio requirements. Although we expect to resume receiving distributions from Gregory in 2014, we cannot provide any assurances that this project will generate enough cash flow to meet the ratio tests and be able to resume distributions to us. Senior Credit Facility On November 5, 2011, we entered into an Amended and Restated Credit Agreement, pursuant to which we increased the capacity under our existing credit facility from $100.0 million to $300.0 million on a senior secured basis, $200.0 million of which may be utilized for letters of credit. Borrowings under the facility are available in U.S. dollars and Canadian dollars and bear interest at a variable rate equal to the U.S. Prime Rate, the London Interbank Offered Rate or the Canadian Prime Rate, as applicable, plus an applicable margin of between 0.75% and 3.00% that varies based on our corporate credit rating. The credit facility matures on November 4, 2015. On November 2, 2012, we amended the senior credit facility in order to change certain financial and leverage ratio covenants. These changes involved the better accommodation of construction stage projects with no historical financial performance, the better accommodation of the possibility of certain asset sales, including our Florida Projects, by waiving a material disposition covenant and permitting inclusion of the disposed assets' trailing twelve months EBITDA for covenant calculations, and the better accommodation of the same possible asset sales by temporarily modifying the Total Leverage Ratio. The credit facility contains customary representations, warranties, terms and conditions, as well as covenants limiting our ability to, among other things, incur additional indebtedness, merge or consolidate with others, change our business, and sell or dispose of assets. The covenants also include limitations on investments, limitations on dividends and other restricted payments, limitations on entering into certain types of restrictive agreements, limitations on transactions with affiliates and limitations on the use of proceeds from the credit facility. We must meet certain financial covenants under the terms of the credit facility, which are generally based on ratios of debt to EBITDA and EBITDA to interest. At a ratio of 7.25 of debt to EBITDA, we are restricted from paying dividends to our shareholders. The credit facility is secured by pledges of certain assets and interests in certain subsidiaries. This description does not purport to be complete and is qualified in its entirety by reference to the Amended and Restated Credit Agreement, which is filed with our Annual Report on Form 10-K for the year ended December 31, 2012 as Exhibit 10.1 and incorporated by reference therein. At December 31, 2012, $67.0 million has been drawn under the credit facility and the applicable margin was 2.75%. We expect to pay the outstanding amounts under the credit facility with a portion of the proceeds from the sale of Florida Projects which is expected to close in the remaining part of the first quarter of 2013. As of December 31, 2012, $112.9 million was issued in letters of credit, but not drawn, to support contractual credit requirements at several of our projects, which include the projects acquired in the Partnership acquisition. Principal payments on the maturities of our debt due in the next five years and thereafter are as follows:
2013 |  | $ | 121,203 |
2014 |  |  | 207,845 |
2015 |  |  | 170,473 |
2016 |  |  | 19,138 |
2017 |  |  | 94,954 |
Thereafter |  |  | 966,728 |
|  | $ | 1,580,341 |

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- Definition The entire disclosure for long-term debt. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 22 -Article 5 + Details
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