v3.19.3.a.u2

Long-term debt | 12 Months Ended
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Dec. 31, 2019
Long-term debt excluding debentures |
Long-term debt | 12. Long‑term debt Long‑term debt consists of the following:
|  | December 31, |  | December 31, |  |  |  |  |
|  | 2019 |  | 2018 |  | Interest Rate |
Recourse Debt: |  |  |  |  |  |  |  |  |  |  |
Senior secured term loan facility, due 2025(1) |  | $ | 380.0 |  | $ | 450.0 |  | LIBOR(2) | plus | 2.75 | %
Senior unsecured notes, due June 2036 (Cdn$210.0) |  |  | 161.7 |  |  | 154.0 |  |  |  | 5.95 | %
Non-Recourse Debt: |  |  |  |  |  |  |  |  |  |  |
Cadillac term loan, due 2025 (3) |  |  | 18.7 |  |  | 21.0 |  | LIBOR | plus | 1.61 | %
Less: unamortized discount |  |  | (5.8) |  |  | (9.0) |  |  |  |  |
Less: unamortized deferred financing costs |  |  | (4.7) |  |  | (7.2) |  |  |  |  |
Less: current maturities |  |  | (76.4) |  |  | (68.1) |  |  |  |  |
Total long-term debt |  | $ | 473.5 |  | $ | 540.7 |  |  |  |  |
Current maturities consist of the following:
|  | December 31, |  | December 31, |  |  |  |  |
|  | 2019 |  | 2018 |  | Interest Rate |
Current Maturities: |  |  |  |  |  |  |  |  |  |  |
Senior secured term loan facility, due 2025(1) |  | $ | 72.5 |  | $ | 65.0 |  | LIBOR(2) | plus | 2.75 | %
Cadillac term loan, due 2025 (3) |  |  | 3.9 |  |  | 3.1 |  | LIBOR | plus | 1.61 | %
Total current maturities |  | $ | 76.4 |  | $ | 68.1 |  |  |  |  |
| (1) |  | On a quarterly basis, we make a cash sweep payment to fund the principal balance, based on terms as defined in the Credit Agreement and disclosed below. The portion of the Term Loan classified as current is based on principal payments required to reduce the aggregate principal amount of Term Loan outstanding to achieve a target principal amount that declines quarterly based on a pre-determined specified schedule.
| (2) |  | LIBOR cannot be less than 1.00%. We have entered into interest rate swap agreements to mitigate the exposure to changes in LIBOR for $370.6 million of the $380.0 million remaining aggregate borrowings under our Term Loan at December 31, 2019. See Note 15, Accounting for derivative instruments and hedging activities for further details. On January 31, 2020, the repricing of the Term Loan became effective, reducing the interest rate to LIBOR plus 2.50% with no change to the 1.00% LIBOR floor. The maturity date for the Term Loan was also extended to April 2025. The repricing also adds customary new provisions relating to the replacement of LIBOR as the benchmark for the Eurodollar Rate (as defined in the Credit Agreement) replacement.
| (3) |  | We have entered into interest rate swap agreements to economically fix our exposure to changes in interest rates for this non-recourse debt. See Note 15, Accounting for derivative instruments and hedging activities, for further details.
Principal payments on the maturities of our debt due in the next five years and thereafter are as follows:
2020 |  | $ | 76.4 |
2021 |  |  | 95.7 |
2022 |  |  | 109.3 |
2023 |  |  | 63.3 |
2024 |  |  | 39.7 |
Thereafter |  |  | 176.0 |
|  | $ | 560.4 |
Credit Facilities On April 13, 2016, APLP Holdings, our wholly-owned subsidiary, entered into new Senior Secured Credit Facilities, comprising $700 million in aggregate principal amount of Senior Secured Term Loan facilities (the “Term Loan”) and $200 million in aggregate principal amount of senior secured credit facilities (the “Revolver” and together with the Term Loan, the “Credit Facilities”). At December 31, 2019, $380.0 million of the Term Loan is outstanding and letters of credit in an aggregate face amount of $78.3 million are issued (but not drawn) pursuant to the revolving commitments under the Revolver and used (i) to fund a debt service reserve in an amount equivalent to six months of debt service, and (ii) to support contractual credit support obligations of APLP Holdings and its subsidiaries and of certain other affiliates of the Company. Borrowings under Credit Facilities are available in U.S. dollars and Canadian dollars and, at inception, bore interest at a rate equal to the Adjusted Eurodollar Rate, the Base Rate or the Canadian Prime Rate as applicable, plus an applicable margin between 4.00% and 5.00% that varied depending on whether the loan is a Eurodollar Rate Loan, Base Rate Loan, or Canadian Prime Rate Loan. In April 2017, the repricing of the Credit Facilities became effective reducing the interest rate margin on the Term Loan and Revolver by 0.75% to LIBOR plus 4.25%. In October 2017, a second repricing reduced the interest rate margin on the Credit Facilities by another 0.75% to LIBOR plus 3.50%. In April 2018, a third repricing reduced the interest rate margin on the Credit Facilities by an additional 0.50% to LIBOR plus 3.00% and in October 2018, a fourth repricing reduced the interest rate margin on the Credit Facilities by 0.25% to LIBOR plus 2.75%. In January 2020, APLP Holdings completed the repricing of the $380 million Term Loan and Revolver. As a result of the repricing, the interest rate margin on the Term Loan and the Revolver was reduced by 0.25% to LIBOR plus 2.50% with no change to the 1.00% LIBOR floor. An additional 0.25% step down in the interest rate margin will become effective in the event the Leverage Ratio (as defined in the Credit Agreement) is 2.75:1.00. Additionally, APLP Holdings amended its existing Term Loan to extend the maturity date by two years to April 2025. The repricing also adds customary new provisions relating to the replacement of LIBOR as the benchmark for the Eurodollar Rate (as defined in the Credit Agreement) replacement. The Revolver will mature in April 2022. Targeted debt balances were adjusted to reflect the previously announced anticipated closing of the sale of our Manchief power plant in 2022, resulting in lower targeted debt repayment in 2020 and higher targeted debt repayment in 2022 as compared to the previous schedule. The Term Loan includes a 3% original issue discount. Letters of credit are available to be issued under the Revolver until 30 days prior to the Letter of Credit Expiration Date under, and as defined in, the Credit Agreement. In addition to paying interest on outstanding principal under the Credit Facilities, APLP Holdings is required to pay a commitment fee of 0.75% times the unused commitments under the Revolver. The Credit Facilities are secured by a pledge of the equity interests in APLP Holdings and certain of its subsidiaries, guaranties from certain of the subsidiaries of APLP Holdings (the “Subsidiary Guarantors”), a downstream guarantee from the Company, a limited recourse guaranty from Atlantic Power GP II, Inc., the entity that holds all of the equity interest in APLP Holdings, a pledge of certain material contracts and certain mortgages over material real estate rights, an assignment of all revenues, funds and accounts of APLP Holdings and its subsidiaries (subject to certain exceptions), and certain other assets. The Credit Facilities also have the benefit of a debt service reserve account, which is required to be funded and maintained at the debt service reserve requirement, equal to six months of debt service. The reserve requirement is maintained utilizing a letter of credit. APLP, a wholly-owned, indirect subsidiary of the Company, is a party to an existing indenture governing its Cdn$210 million aggregate principal amount of MTNs that prohibits APLP (subject to certain exceptions) from granting liens on its assets (and those of its material subsidiaries) to secure indebtedness, unless the MTNs are secured equally and ratably with such other indebtedness. Accordingly, in connection with the execution of the Credit Agreement, APLP Holdings has granted an equal and ratable security interest in the collateral package securing the Credit Facilities in favor of the trustee under the indenture governing the MTNs for the benefit of the holders of the MTNs. The Credit Agreement contains customary representations, warranties, terms and conditions, and covenants. The negative covenants include a requirement that APLP Holdings and its subsidiaries maintain a Leverage Ratio (as defined in the Credit Agreement) ranging from 5.00:1.00 at December 2019 to 4.25:1.00 from June 30, 2020, and an Interest Coverage Ratio (as defined in the Credit Agreement) ranging from 3.25:1.00 at December 31, 2019 to 4.00:1.00 from June 30, 2022. At December 31, 2019, we were in compliance with these covenants. In addition, the Credit Agreement includes customary restrictions and limitations on APLP Holdings’ and its subsidiaries’ ability to (i) incur additional indebtedness, (ii) grant liens on any of their assets, (iii) change their conduct of business or enter into mergers, consolidations, reorganizations, or certain other corporate transactions, (iv) dispose of assets, (v) modify material contractual obligations, (vi) enter into affiliate transactions, (vii) incur capital expenditures, and (viii) make dividend payments or other distributions, in each case subject to certain exceptions and other customary carve-outs and various thresholds. Specifically, APLP Holdings may be restricted from making dividend payments or other distributions to Atlantic Power Corporation, and APLP and its subsidiaries may be prohibited from making dividends or distributions to Atlantic Power Preferred Equity Limited shareholders in the event of a covenant default or if APLP Holdings fails to achieve a target principal amount on the new Term Loan that declines quarterly based on a predetermined specified schedule. Under the Credit Agreement, if a Change of Control (as defined in the Credit Agreement) occurs, unless APLP Holdings elects to make a voluntary prepayment of the Term Loan under the Credit Facilities, it will be required to offer each electing lender a prepayment of such lender’s term loan under the Credit Facilities at a price equal to 101% of par. In addition, in the event that APLP Holdings elects to repay, prepay, refinance or replace all or any portion of the Term Loan within six months from the repricing date under the Credit Agreement, it will be required to do so at a price of 101% of the principal amount so repaid, prepaid, refinanced or replaced. The Credit Agreement also contains a mandatory amortization feature and other mandatory prepayment provisions, including prepayments:  from the proceeds of asset sales (except from the sale proceeds of certain excluded projects), insurance proceeds, and incurrence of indebtedness, in each case subject to applicable thresholds and customary carve-outs; and  with respect to excess cash flows, to be determined by using the greater of (i) 50% of the cash flow of APLP Holdings and its subsidiaries that remains after the application of funds, in accordance with a customary priority, to operations and maintenance expenses of APLP Holdings and its subsidiaries, debt service on the Credit Facilities and the MTNs, funding of the debt service reserve account, debt service on other permitted debt of APLP Holdings and its subsidiaries, capital expenditures permitted under the Credit Agreement, and payment on the preferred equity issued by Atlantic Power Preferred Equity Ltd., a subsidiary of APLP Holdings or (ii) such other amount up to 100% of the cash flow described in clause (i) above that is required to reduce the aggregate principal amount of Term Loan outstanding to achieve a target principal amount that declines quarterly based on a pre-determined specified schedule. Failure to achieve the specified target principal amount for any quarter does not constitute a default by APLP Holdings. Under certain conditions the lending commitments under the Credit Agreement may be terminated by the lenders and amounts outstanding under the Credit Agreement may be accelerated. Such events of default include failure to pay any principal, interest or other amounts when due, failure to comply with covenants, breach of representations or warranties in any material respect, non-payment or acceleration of other material debt of APLP Holdings and its subsidiaries, bankruptcy, material judgments rendered against APLP Holdings or certain of its subsidiaries, certain ERISA or regulatory events, a Change of Control of APLP Holdings (solely with respect to the Revolver), or defaults under certain guaranties and collateral documents securing the Credit Facilities, in each case subject to various exceptions and notice, cure and grace periods. Notes of the Partnership Atlantic Power Limited Partnership (the “Partnership”), a wholly-owned subsidiary acquired on November 5, 2011, has outstanding Cdn$210.0 million ($161.7 million as of December 31, 2019) aggregate principal amount of 5.95% senior unsecured notes, due June 2036 (MTNs). Interest on the MTNs is payable semi-annually at 5.95%. Pursuant to the terms of the MTNs, we must meet certain financial and other covenants, including a financial covenant generally based on the ratio of debt to capitalization of the Partnership. At December 31, 2019, we were in compliance with these covenants. The MTNs are guaranteed by Atlantic Power Corporation and Atlantic Power Preferred Equity Ltd., an indirect, wholly-owned subsidiary acquired in connection with the acquisition of the Partnership. Non‑Recourse Debt Project-level debt at 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 in order to distribute available cash. At December 31, 2019, all of our projects were in compliance with the covenants contained in project-level debt. Projects that do not meet their debt service coverage ratios are limited from making distributions, but the debt is not callable or subject to acceleration under the terms of their debt agreements.

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