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Note 11 - Long-term Debt and Credit Agreements | 12 Months Ended
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Dec. 31, 2017
Notes to Financial Statements |
Long-term Debt [Text Block] | NOTE 11 — LONG-TERM DEBT AND CREDIT AGREEMENTS Long-term debt consists of notes payable under the following agreements:
|  | December 31, |
|  | 2017 |  |  | 2016 |
|  | (Dollars in thousands) |
Limited and non-recourse agreements: |  |  |  |  |  |  |  |
Loans: |  |  |  |  |  |  |  |
Non-recourse: |  |  |  |  |  |  |  |
Other loans |  | $ | 7,252 |  |  | $ | 6,368 |
Limited recourse: |  |  |  |  |  |  |  |
Loan agreement with OPIC (the Olkaria III power plant) |  |  | 228,635 |  |  |  | 246,630 |
Loan agreement with Banco Industrial S.A. and Westrust Bank (International) Limited |  |  | 33,251 |  |  |  | 36,750 |
Senior Secured Notes: |  |  |  |  |  |  |  |
Non-recourse: |  |  |  |  |  |  |  |
OFC Senior Secured Notes |  |  | - |  |  |  | 17,026 |
OrCal Senior Secured Notes |  |  | 32,142 |  |  |  | 35,181 |
DAC 1 Senior Secured Notes |  |  | 88,339 |  |  |  | 92,361 |
Limited recourse: |  |  |  |  |  |  |  |
OFC 2 Senior Secured Notes |  |  | 232,526 |  |  |  | 247,232 |
|  |  | 622,145 |  |  |  | 681,548 |
Less current portion |  |  | (54,720 | ) |  |  | (53,729 | )
Non current portion |  | $ | 567,425 |  |  | $ | 627,819 |
Full recourse agreements: |  |  |  |  |  |  |  |
Senior Unsecured Bonds |  | $ | 204,332 |  |  | $ | 204,332 |
Loans from institutional investors |  |  | - |  |  |  | 3,333 |
Loan agreements with DEG (the Olkaria III and IV power plants) |  |  | 50,000 |  |  |  | 65,789 |
Loan from a commercial bank |  |  | 587 |  |  |  | 1,529 |
Revolving credit lines with banks |  |  | 51,500 |  |  |  | - |
|  |  | 306,419 |  |  |  | 274,983 |
Less current portion |  |  | (54,587 | ) |  |  | (12,242 | )
Non current portion |  | $ | 251,832 |  |  | $ | 262,741 |
Loan Agreement with Banco Industrial S.A. and Westrust Bank (International) Limited On July 31, 2015, Ortitlản, Limitada, the Company’s wholly owned subsidiary, obtained a 12 -year secured term loan in the principal amount of $42.0 million for the 20 MW Amatitlan power plant in Guatemala. Under the credit agreement with Banco Industrial S.A. and Westrust Bank (International) Limited, we can expand the Amatitlan power plant with financing to be provided either via equity, additional debt from Banco Industrial S.A. or from other lenders, subject to certain limitations on expansion financing in the credit agreement. The loan is payable in 48 quarterly payments commencing September 30, 2015. The loan bears interest at a rate per annum equal to of the sum of the LIBO Rate (which cannot be lower than 1.25% ) plus a margin of (i) 4.35% as long as the Company’s guaranty of the loan (as described below) is outstanding or (ii) 4.75% otherwise. Interest is payable quarterly, on March 30, June 30, September 30 and December 30 of each year, on the stated maturity date of the loan and on any prepayment or payment of the loan. The loan must be prepaid on the occurrence of certain events, such as casualty, condemnation, asset sales and expansion financing not provided by the lenders under the credit agreement, among others. The loan may be voluntarily prepaid if certain conditions are satisfied, including payment of a premium (ranging from 100 - 50 basis points) if prepayment occurs prior to the eighth anniversary of the loan. There are various restrictive covenants under the Amatitlan credit agreement. These include, among others, (i) a financial covenant to maintain a Debt Service Coverage Ratio (as defined in the credit agreement) of not less than 1.15 to 1.00 as of the last day of any fiscal quarter and (ii) limitations on Restricted Payments (as defined in the credit agreement) that among other things would limit dividends that could be paid to us unless the historical and projected Debt Service Coverage Ratio is not less than 1.25 to 1.00 for the four fiscal quarterly periods (calculated as a single accounting period). As of December 31, 2017, the actual historical and projected 12 -month Debt Service Coverage Ratio was 1.49 and 1.89, respectively. The credit agreement includes various events of default that would permit acceleration of the loan (subject in some cases to grace and cure periods). These include, among others, a Change of Control (as defined in the credit agreement) and failure to maintain certain required balances in debt service and maintenance reserve accounts. The credit agreement includes certain equity cure rights for failure to maintain the Debt Service Coverage Ratio and the minimum amounts required in the debt service and maintenance reserve accounts. The loan is collateralized by substantially all the assets of the borrower and a pledge of all of the membership interests of the borrower. The Company has guaranteed payment of all obligations under the credit agreement and related financing documents. The guaranty is limited in the sense that the Company is only required to pay the guaranteed obligations if a “trigger event” occurs. A trigger event is the occurrence and continuation of a default by INDE in its payment obligations under the PPA for the Amatitlàn power plant or a refusal by INDE to receive capacity and energy sold under that PPA. Th e Company’s obligations under the guaranty may be terminated prior to payment in full of the guaranteed obligations under certain circumstances described in the guaranty. If the guaranty is terminated early, the interest rate payable on the loan would increase as described above. As of December 31, 2017, $33.3 million of this loan is outstanding. Finance Agreement with OPIC (the Olkaria III Complex) On August 23, 2012, OrPower 4, the Company’s wholly owned subsidiary, entered into a Finance Agreement with Overseas Private Investment Corporation (“OPIC”), an agency of the U.S. government, to provide limited-recourse senior secured debt financing in an aggregate principal amount of up to $310.0 million (the “OPIC Loan”) for the refinancing and financing of the Olkaria III geothermal power complex in Kenya. The Finance Agreement was amended on November 9, 2012. The OPIC Loan is comprised of up to three tranches:
| • | Tranche I in an aggregate principal amount of $85.0 million, which was drawn in November 2012, was used to prepay approximately $20.5 million (plus associated prepayment penalty and breakage costs of $1.5 million) of the DEG Loan, as described below. The remainder of the Tranche I proceeds were used for reimbursement of prior capital costs and other corporate purposes.
| • | Tranche II in an aggregate principal amount of $180.0 million was used to fund the construction and well field drilling for the expansion of the Olkaria III geothermal power complex (“Plant 2” ). In November 2012, $135.0 million was disbursed under this Tranche II, and in February 2013, the remaining $45.0 million was distributed under this Tranche II.
| • | Tranche III in an aggregate principal amount of $45.0 million was used to fund the construction of Plant 3 of the Olkaria III complex. In November 2013, an amount of $45.0 million was disbursed under this Tranche.
I n July 2013, we completed the conversion of the interest rate applicable to both Tranche I and Tranche II from a floating interest rate to a fixed interest rate. The average fixed interest rate for Tranche I, which has an outstanding balance as of December 31, 2017 of $61.4 million and matures on December 15, 2030, and Tranche II, which has an outstanding balance as of December 31, 2017 of $132.4 million and matures on June 15, 2030, is 6.31%. In November 2013, we fixed the interest rate for Tranche III. The fixed interest rate for Tranche III, which has an outstanding balance as of December 31, 2017 of $34.9 million and matures on December 15, 2030, is 6.12%. OrPower 4 has a right to make voluntary prepayments of all or a portion of the OPIC Loan subject to prior notice, minimum prepayment amounts, and a prepayment premium of 2.0% in the first two years after the Plant 2 commercial operation date, declining to 1% in the third year after the Plant 2 commercial operation date, and without premium thereafter, plus a redemption premium. In addition, the OPIC Loan is subject to customary mandatory prepayment in the event of certain reductions in generation capacity of the power plants, unless such reductions will not cause the projected ratio of cash flow to debt service to fall below 1.7. The OPIC Loan is collateralized by substantially all of OrPower 4’ s assets and by a pledge of all of the equity interests in OrPower 4. The finance agreement includes customary events of default, including failure to pay any principal, interest or other amounts when due, failure to comply with covenants, breach of representations and warranties, non-payment or acceleration of other debt of OrPower 4, bankruptcy of OrPower 4 or certain of its affiliates, judgments rendered against OrPower 4, expropriation, change of control, and revocation or early termination of security documents or certain project-related agreements, subject to various exceptions and notice, cure and grace periods. There are various restrictive covenants under the OPIC Loan, which include a required historical and projected 12 -month DSCR of not less than 1.4 (measured as of March 15, June 15, September 15 and December 15 of each year). If OrPower 4 fails to comply with these financial ratios it will be prohibited from making distributions to its shareholders. In addition, if the DSCR falls below 1.1, subject to certain cure rights, such failure will constitute an event of default by OrPower 4. This covenant in respect of Tranche I became effective on December 15, 2014. As of December 31, 2017, the actual historical and projected 12 -month DSCR was 2.64 and 3.09, respectively. As of December 31, 2017, $228.6 million of the OPIC Loan was outstanding. Debt service reserve As required under the terms of the OPIC Loan, OrPower 4 maintains an account which may be funded by cash or backed by letters of credit in an amount sufficient to pay scheduled debt service amounts, including principal and interest, due under the terms of the OPIC Loan in the following six months. This restricted cash account is classified as current in the consolidated balance sheets. As of December 31, 2017 and 2016, the balance of the account was $3.7 million and $4.3 million, respectively. In addition, as of December 31, 2017, part of the required debt service reserve was backed by a letter of credit in the amount of $16.7 million (see Note 22 ). Well drilling reserve As required under the terms of the OPIC Loan, OrPower 4 may be required to maintain an account which may be funded by cash or backed by letters of credit to reserve funds for future well drilling, based on determination upon the completion of the expansion work . OFC Senior Secured Notes In February 2004, OFC, the Company ’s wholly owned subsidiary, issued $190.0 million of 8.25% Senior Secured Notes (“OFC Senior Secured Notes”) and received net cash proceeds of approximately $179.7 million, after deduction of issuance costs of approximately $10.3 million. The OFC Senior Secured Notes had a final maturity date of December 30, 2020. Principal and interest on the OFC Senior Secured Notes were payable in semi-annual payments. The OFC Senior Secured Notes were collateralized by substantially all of the assets of OFC and those of its wholly owned subsidiaries and were fully and unconditionally guaranteed by all of the wholly owned subsidiaries of OFC. In June 2015, the Company repurchased $30.6 million aggregate principal amount of OFC Senior Secured Notes from the OFC noteholders and recognized a loss of approximately $1.7 million in the second quarter of 2015. In September 2016, the Company repurchased $6.8 million aggregate principal amount of OFC Senior Secured Notes from the OFC noteholders and recognized a loss of $0.6 million, in the third quarter of 2016. In September 2017, the Company fully prepaid the outstanding amount of $14.3 million of OFC Senior Secured Notes, plus an additional make-whole premium of $1.3 million. OrCal Senior Secured Notes In December 2005, OrCal, the Company ’s w holly owned subsidiary, issued $165.0 million, 6.21% Senior Secured Notes (“OrCal Senior Secured Notes”) and received net cash proceeds of approximately $161.1 million, after deduction of issuance costs of approximately $3.9 million, which have been included in deferred financing costs in the consolidated balance sheet. The OrCal Senior Secured Notes have been rated BBB- by Fitch Ratings. The OrCal Senior Secured Notes have a final maturity date of December 30, 2020. Principal and interest on the OrCal Senior Secured Notes are payable in semi-annual payments. The OrCal Senior Secured Notes are collateralized by substantially all of the assets of OrCal, and those of its subsidiaries and are fully and unconditionally guaranteed by all of the wholly owned subsidiaries of OrCal. There are various restrictive covenants under the OrCal Senior Secured Notes, which include limitations on additional indebtedness of OrCal and its wholly owned subsidiaries. Failure to comply with these and other covenants will, subject to customary cure rights, constitute an event of default by OrCal. In addition, there are restrictions on the ability of OrCal to make distributions to its shareholders, which include a required historical and projected 12 -month debt service coverage ratio (“DSCR”) of not less than 1.25 (measured semi-annually as of June 30 and December 31 of each year). If OrCal fails to comply with the DSCR ratio it will be prohibited from making distributions to its shareholders. OrCal is only required to measure these covenants on a semi-annual basis and as of December 31, 2017, the last measurement date of the covenants, the actual historical 12 -month DSCR was 1.54 and the pro-forma 12 -month DSCR was 2.63. There was $32.1 million and $35.2 million of OrCal Senior Secured Notes outstanding as of December 31, 2017 and December 31, 2016, respectively. OrCal may redeem the OrCal Senior Secured Notes, in whole or in part, at any time at a redemption price equal to the principal amount of the OrCal Senior Secured Notes to be redeemed plus accrued interest, and a “make-whole” premium. Upon certain events, as defined in the indenture governing the OrCal Senior Secured Notes, OrCal may be required to redeem a portion of the OrCal Senior Secured Notes at a redemption price of 100% of the principal amount of the OrCal Senior Secured Notes being redeemed plus accrued interest . Debt service reserve As required under the terms of the OrCal Senior Secured Notes, OrCal maintains an account which may be funded by cash or backed by letters of credit (see below) in an amount sufficient to pay scheduled debt service amounts, including principal and interest, due under the terms of the OrCal Senior Secured Notes in the following six months. This restricted cash account is classified as current in the consolidated balance sheets. As of each of December 31, 2017 and 2016, the balance of such account was $1.9 million. In addition, as of each of December 31, 2017 and 2016, part of the required debt service reserve was backed by a letter of credit in the amount of $4.6 million (see Note 22 ). OFC 2 Senior Secured Notes In September 2011, OFC 2, the Company ’s wholly owned subsidiary, and OFC 2’s wholly owned project subsidiaries (collectively, the “OFC 2 Issuers”) entered into a note purchase agreement (the “Note Purchase Agreement”) with OFC 2 Noteholder Trust, as purchaser, John Hancock Life Insurance Company (U.S.A.), as administrative agent, and the DOE, as guarantor, in connection with the offer and sale of up to $350.0 million aggregate principal amount of OFC 2 Senior Secured Notes (“OFC 2 Senior Secured Notes”) due December 31, 2034. Subject to the fulfillment of customary and other specified conditions precedent, the OFC 2 Senior Secured Notes may be issued in up to six distinct series associated with the phased construction (Phase I and Phase II) of the Jersey Valley, McGinness Hills and Tuscarora geothermal power plants, which are owned by the OFC 2 Issuers. The OFC 2 Senior Secured Notes will mature and the principal amount of the OFC 2 Senior Secured Notes will be payable in equal quarterly installments and in any event not later than December 31, 2034. Each series of notes will bear interest at a rate calculated based on a spread over the Treasury yield curve that will be set at least ten business days prior to the issuance of such series of notes. Interest will be payable quarterly in arrears. The DOE will guarantee payment of 80% of principal and interest on the OFC 2 Senior Secured Notes pursuant to Section 1705 of Title XVII of the Energy Policy Act of 2005, as amended. The conditions precedent to the issuance of the OFC 2 Senior Secured Notes includes certain specified conditions required by the DOE in connection with its guarantee of the OFC 2 Senior Secured Notes. On October 31, 2011, the OFC 2 Issuers completed the sale of $151.7 million in aggregate principal amount of 4.687% Series A Notes due 2032 (the “Series A Notes”). The net proceeds from the sale of the Series A Notes, after deducting transaction fees and expenses, were approximately $141.1 million, and were used to finance a portion of the construction costs of Phase I of the McGinness Hills and Tuscarora power plants and to fund certain reserves. Principal and interest on the Series A Notes are payable quarterly in arrears on the last day of March, June, September and December of each year. On June 20, 2014, Phase 1 of Tuscarora Facility achieved Project Completion under the Note Purchase Agreement. In accordance with the terms of the Note Purchase Agreement and following recalibration of the financing assumptions, the loan amount was adjusted through a principal prepayment of $4.3 million. On August 29, 2014, OFC 2 sold $ 140.0 million of OFC 2 Senior Secured Notes (the “Series C Notes”) to finance the construction of the second phase of the McGinness Hills project. The Series C Notes are the last tranche under the Note Purchase Agreement with John Hancock Life Insurance Company and are guaranteed by the DOE’s Loan Programs Office in accordance with and subject to the DOE's Loan Guarantee Program under Section 1705 of Title XVII of the Energy Policy Act of 2005. The Series C Notes, which mature in December 2032, carry a 4.61% coupon with principal to be repaid on a quarterly basis. The OFC 2 Senior Secured Notes, which include loans for the Tuscarora, Jersey Valley and McGinness Hills complexes, are rated “BBB” by Standard & Poor's. In connection with the anticipated sale of the Series C Notes, on August 13, 2014, the Company entered into an on-the-run interest rate lock agreement with a financial institution with a termination date of August 15, 2014. This on-the-run interest rate lock agreement had a notional amount of $140.0 million and was designated as a cash flow hedge. The objective of this cash flow hedge was to eliminate the variability in the changes in the 10 -year U.S. Treasury rate as that is one of the components in the annual interest rate of the OFC 2 Senior Secured Notes that was forecasted to be fixed on August 15, 2014. The Company hedged the variability in total proceeds attributable to changes in the 10 -year U.S. Treasury rate for the forecasted sale of Series C Notes. On August 18, 2014, the settlement date, the Company paid $1.5 million to the counterparty of the on-the-run interest rate lock agreement. The Company concluded that the cash flow hedge was fully effective with no ineffective portion and no amounts excluded from the effectiveness testing, thus , in 2014, the total loss from the cash flow hedge was fully recognized in “Loss in respect of derivatives instruments designated for cash flow hedge” under other comprehensive income of $0.9 million noted above, which was net of related taxes of $0.6 million. The cash flow hedge loss recorded is amortized over the life of the OFC 2 Senior Secured Notes using the effective interest method. In 2016 and 2015, the Company reclassified $0.1 million, each year, of the loss from “Accumulated other comprehensive income (loss)” into interest expense. The OFC 2 Senior Secured Notes are collateralized by substantially all of the assets of OFC 2 and those of its wholly owned subsidiaries and are fully and unconditionally guaranteed by all of the wholly owned subsidiaries of OFC 2. There are various restrictive covenants under the OFC 2 Senior Secured Notes, which include limitations on additional indebtedness of OFC 2 and its wholly owned subsidiaries. Failure to comply with these and other covenants will, subject to customary cure rights, constitute an event of default by OFC 2. In addition, there are restrictions on the ability of OFC 2 to make distributions to its shareholders. Among other things, the distribution restrictions include a historical debt service coverage ratio requirement of at least 1.2 (on a blended basis for all OFC 2 power plants), measured, at the time of any proposed distribution, over each of the two six -months periods comprised of distinct consecutive fiscal quarters immediately preceding the proposed distribution, and a projected future DSCR requirement of at least 1.5 (on a blended basis for all OFC 2 power plants), measured, at the time of any proposed distribution, over each of the two six -months periods comprised of distinct consecutive fiscal quarters immediately following such proposed distribution. As of December 31, 2017, our historical DSCR was 2.70 and 2.25, respectively, for each of the two six -month periods, and our projected future DSCR was 2.04 and 2.13, respectively, for each of the two six -month periods. There were $2 32.5 million and $247.2 million of OFC 2 Senior Secured Notes outstanding as of December 31, 2017 and December 31, 2016, respectively. The Company provided a guaranty in connection with the issuance of the Series A Notes and Series C Notes. The guaranty may be drawn in the event of, among other things, the failure of any facility financed by the relevant series of OFC 2 Senior Secured Notes to reach completion and meet certain operational performance levels (the “non-performance trigger”) which gives rise to a prepayment obligation on the OFC 2 Senior Secured Notes. The guarantee may also be drawn if there is a payment default on the OFC 2 Senior Secured Notes or upon the occurrence of certain fundamental defaults that result in the acceleration of the OFC 2 Senior Secured Notes, in each case, prior to the date that the relevant facility(ies) financed by such OFC 2 Senior Secured Notes reaches completion and meets the applicable operational performance levels. The Company ’s liability under the guaranty with respect to the non-performance trigger is limited to an amount equal to the prepayment amount on the OFC 2 Senior Secured Notes necessary to bring the OFC 2 Issuers into compliance with certain coverage ratios. The Company’s liability under the guarantee with respect to the other trigger event described above is not so limited. Debt service reserve ; other restricted funds Under the terms of the OFC 2 Senior Secured Notes, OFC 2 is required to maintain a debt service reserve and certain other reserves, as follows:
| (i) | A debt service reserve account which may be funded by cash or backed by letters of credit (see below) in an amount sufficient to pay scheduled debt service amounts, including principal and interest, due under the terms of the OFC 2 Senior Secured Notes in the following six months. This restricted cash account is classified as current in the consolidated balance sheet. As of December 31, 2017, part of the required debt service reserve was backed by a letter of credit in the amount of $18.7 million (see Note 22 ).
| (ii) | A performance level reserve account, intended to provide additional security for the OFC 2 Senior Secured Notes, which may be funded by cash or backed by letters of credit. This reserve builds up over time and reduces gradually each time the project achieves certain milestones. Upon issuance of the Series A Notes, this reserve was funded in the amount of $28.0 million. As of December 31, 2017, the balance of such account was zero million, and no letter of credit was required to be issued.
| (iii) | Under the terms of the OFC 2 Senior Secured Notes, OFC 2 is also required to maintain a well field drilling and maintenance reserve that builds up over time and is dedicated to costs and expenses associated with drilling and maintenance of the project's well field, which may be funded by cash or backed by letters of credit.
| (iv) | A performance level reserve account for McGinness Hills Phase II, intended to provide additional security for the OFC 2 Senior Secured Notes, which may be funded by cash or backed by letters of credit. As of December 31, 2017, there was no requirement for an additional security to be issued as the project was completed.
Don A. Campbell Senior Secured Notes — Non-Recourse On November 29, 2016, ORNI 47 LLC (“ORNI 47” ), the Company’s subsidiary, entered into a note purchase agreement (the “ORNI 47 Note Purchase Agreement”) with MUFG Union Bank, N.A., as collateral agent, Munich Reinsurance America, Inc. and Munich American Reassurance Company (the “Purchasers”) pursuant to which ORNI 47 issued and sold to the Purchasers $92.5 million aggregate principal amount of its 4.03% Senior Secured Notes due September 27, 2033 ( the “DAC 1 Senior Secured Notes”) in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended. ORNI 47 is the owner of the first phase of the Don A. Campbell geothermal power plant (“DAC 1” ), and part of the ORPD LLC (“ORPD”) portfolio. The net proceeds from the sale of the DAC 1 Senior Secured Notes, after deducting certain transaction expenses and the funding of a debt service reserve account, were approximately $ 87.1 million and ORNI 47 used the proceeds from the sale of the Notes to refinance the development and construction costs of the DAC 1 geothermal power plant, which were originally financed using equity. ORNI 47 began paying a scheduled amount of principal of the DAC 1 Senior Secured Notes on December 27, 2016 and now makes principal payments quarterly, on the 27th day of each March, June, September and December, until the DAC 1 Senior Secured Notes mature. The DAC 1 Senior Secured Notes constitute senior secured obligations of ORNI 47 and are secured by all of the assets of ORNI 47. Under the ORNI 47 Note Purchase Agreement, ORNI 47 may prepay at any time all, or from time to time any part of, the DAC 1 Senior Secured Notes in an amount equal to at least $2 million or such lesser amount as may remain outstanding under the DAC 1 Senior Secured Notes at 100% of the principal amount to be prepaid plus the applicable make-whole amount determined for the prepayment date with respect to such principal amount. Upon the occurrence of a Change of Control (as defined in the ORNI 47 Note Purchase Agreement), ORNI 47 must make an offer to each holder of DAC 1 Senior Secured Notes to repurchase all of the holder ’s notes at 101% of the aggregate principal amount of such notes to be repurchased plus accrued and unpaid interest, if any, on such notes to, but not including, the date of repurchase. Each holder of DAC 1 Senior Secured Notes may accept such offer in whole or in part. In certain events, including certain asset sales outside the ordinary course of business, ORNI 47 must make mandatory prepayments of the DAC 1 Senior Secured Notes at 100% of the principal amount to be prepaid. The ORNI 47 Note Purchase Agreement requires ORNI 47 to comply with certain covenants, including, among others, restrictions on the incurrence of indebtedness or liens, amendment or modification of material project documents, the ability of ORNI 47 to merge or consolidate with another entity. The ORNI 47 Note Purchase Agreement also contains customary events of default. In addition, there are restrictions on the ability of ORNI 47 to make distributions to its shareholders, which include a required historical and projected DSCR of not less than 1.20 for the four fiscal quarterly periods. As of December 31, 2017, the historical and projected DSCR were 1.47 and 1.81, respectively. As of December 31, 2017, $88.3 million is outstanding under the DAC 1 Senior Secured Notes. Senior Unsecured Bonds In August 2010, the Company entered into a trust instrument governing the issuance of, and accepted subscriptions for, an aggregate principal amount of approximately $142.0 million of senior unsecured bonds (the “Bonds”). Subject to early redemption, the principal of the Bonds was repayable in a single bullet payment upon the final maturity of the Bonds on August 1, 2017. The Bonds bore interest at a fixed rate of 7%, payable semi-annually . In February 2011, the Company accepted subscription for an aggregate principal amount of approximately $107 .5 million of additional senior unsecured bonds (the “Additional Bonds”) under two addendums to the trust instrument. The terms and conditions of the Additional Bonds were identical to the original Bonds. The Additional Bonds were issued at a premium which reflects an effective fixed interest of 6.75%. In September 2016, the Company concluded an auction tender and accepted subscriptions for two series of senior unsecured bonds comprised of approximately $67 million aggregate principal amount of senior unsecured bonds (the “Series 2 Bonds”) and approximately $137 million aggregate principal amount of senior unsecured bonds (the “Series 3 Bonds”, and, together with the Series 2 Bonds, the “Senior Unsecured Bonds”). The proceeds from the Series 2 Bonds and Series 3 Bonds were used on September 29, 2016 to prepay the Company ’s $250 million aggregate principal amount of Bonds and Additional Bonds that were payable on August 1, 2017. The Series 2 Bonds will mature in September 2020 and bear interest at a fixed rate of 3.7% per annum, payable semi-annually. The Series 3 Bonds will mature in September 2022 and bear interest at a fixed rate of 4.45% per annum, payable semi-annually. The Series 2 Bonds and Series 3 Bonds will be repaid at maturity in a single bullet payment, unless earlier prepaid by the Company pursuant to the terms and conditions of the trust instrument that governs such Senior Unsecured Bonds. Both tranches received a rating of ilA+ from Maloot S&P in Israel with a stable outlook. Loans from institutional investors In July 2009, the Company entered into an 8 -year loan agreement of $20.0 million with a group of institutional investors (the “Second Loan”). The Second Loan matured on August 1, 2017, was payable in 12 semi-annual installments, which commenced on February 1, 2012, and bore interest at 6 -month LIBOR plus 5.0% . Loan Agreement s with DEG (the Olkaria III Complex ) In March 2009, O rPower 4, the Company ’s wholly owned subsidiary, entered into a project financing loan of $105.0 million to refinance its investment in Phase I of the Olkaria III complex located in Kenya (the “DEG Loan”). The DEG Loan was provided by a group of European Development Finance Institutions (“DFIs”) arranged by DEG — Deutsche Investitions — und Entwicklungsgesellschaft mbH (“DEG”). The DEG Loan was to mature on December 15, 2018, and payable in 19 equal semi-annual installments. Interest on the loan was variable based on 6 -month LIBOR plus 4.0%. We fixed the interest rate on most of the loan at 6.90%. In September 2017, the Company prepaid the outstanding amount of $11.8 million of the DEG Loan, plus an additional prepayment fee of $0.1 million. On October 20, 2016, OrPower 4 entered into a new $50 million subordinated loan agreement with DEG (the “DEG 2 Loan Agreement”) and on December 21, 2016, OrPower 4 completed a drawdown of the full loan amount of $50 million, with a fixed interest rate of 6.28% for the duration of the loan (the “DEG 2 Loan”). The DEG 2 Loan will be repaid in 20 equal semi-annual principal installments commencing December 21, 2018, with a final maturity date of June 21, 2028. Proceeds of the DEG 2 Loan were used by OrPower 4 to refinance Plant 4 of the Olkaria III Complex, which was originally financed using equity. The DEG 2 Loan is subordinated to the senior loan provided by OPIC for Plants 1 - 3 of the Olkaria III Complex. The DEG 2 Loan is guaranteed by the Company. Under the DEG 2 Loan Agreement, OrPower 4 may prepay at any time all, or from time to time any part of the DEG 2 Loan in an amount equal to at least $5 million or such lesser amount as may remain outstanding under the DEG 2 Loan at 100% of the principal amount to be prepaid plus the applicable make-whole amount and certain prepayment premium amount determined for the prepayment date with respect to such principal amount. In certain events, OrPower 4 must make mandatory prepayments of the DEG 2 Loan at 100% of the principal amount to be prepaid plus the applicable make-whole amount and certain prepayment premium amount determined for the prepayment date with respect to such principal amount. The DEG 2 Loan Agreement requires OrPower 4 to comply with certain covenants, including, among others, restrictions on the incurrence of indebtedness or liens. The DEG 2 Loan Agreement also contains customary events of default. As of December 31, 2017, $50.0 million is outstanding under the DEG 2 Loan. Revolving credit lines with commercial banks As of December 31, 2017, the Company has credit agreements with eight commercial banks for an aggregate amount of $468.0 million (including $60.0 million from Union Bank, N.A. (“Union Bank”) and $35.0 million from HSBC), as described below. Under the terms of these credit agreements, the Company, or its Israeli subsidiary, Ormat Systems Ltd. (“Ormat Systems), can request: (i) extensions of credit in the form of loans and/or the issuance of one or more letters of credit in the amount of up to $233.0 million; and (ii) the issuance of one or more letters of credit in the amount of up to $235.0 million. The credit agreements mature between end of March 2018 and July 2019. Loans and draws under the credit agreements or under any letters of credit will bear interest at the respective bank’s cost of funds plus a margin. As of December 31, 2017, $51.5 million in loans were outstanding, and letters of credit with an aggregate stated amount of $277.7 million were issued and outstanding under such credit agreements. Credit Agreements Credit agreement with Union Bank In February 2012, Ormat Nevada Inc. (“Ormat Nevada”), the Company’s wholly owned subsidiary, entered into an amended and restated credit agreement with Union Bank. Under the credit agreement, the credit termination date is June 30, 2018. On December 31. 2017, the aggregate amount available under the credit agreement was $6 0 million. The facility is limited to the issuance, extension, modification or amendment of letters of credit. Union Bank is currently the sole lender and issuing bank under the credit agreement, but is also designated as an administrative agent on behalf of banks that may, from time to time in the future, join the credit agreement as lenders. In connection with this transaction, the Company entered into a guarantee in favor of the administrative agent for the benefit of the banks, pursuant to which the Company agreed to guarantee Ormat Nevada’s obligations under the credit agreement. Ormat Nevada’s obligations under the credit agreement are otherwise unsecured. There are various restrictive covenants under the credit agreement, which include a requirement to comply with the following financial ratios, which are measured quarterly: (i) a 12 -month debt to EBITDA ratio not to exceed 4.5; (ii) 12 -month DSCR of not less than 1.35; and (iii) distribution leverage ratio not to exceed 2.0. As of December 31, 2017: ( i) the actual 12 -month debt to EBITDA ratio was 2.17; (ii) the 12 -month DSCR was 2.96; and (iii) the distribution leverage ratio was 0.99. In addition, there are restrictions on dividend distributions in the event of a payment default or noncompliance with such ratios, and subject to specified carve-outs and exceptions, a negative pledge on the assets of Ormat Nevada in favor of Union Bank. As of December 31, 2017, letters of credit in the aggregate amount of $37.4 million remain issued and outstanding under this credit agreement with Union Bank . Credit agreement with HSBC In May 2013, Ormat Nevada, entered into a credit agreement with HSBC Bank USA, N.A for one year with annual renewals. The current expiration date of the facility under this credit agreement is August 31, 2018. The aggregate amount available under the credit agreement was increased by $10 million to $35 million. Other than the $10 million of this credit facility which may be drawn for our working capital needs, this credit line is limited to the issuance, extension, modification or amendment of letters of credit. HSBC is currently the sole lender and issuing bank under the credit agreement, but is also designated as an administrative agent on behalf of banks that may, from time to time in the future, join the credit agreement as parties thereto. In connection with this transaction, we entered into a guarantee in favor of the administrative agent for the benefit of the banks, pursuant to which we agreed to guarantee Ormat Nevada’s obligations under the credit agreement. Ormat Nevada’s obligations under the credit agreement are otherwise unsecured. There are various restrictive covenants under the credit agreement, including a requirement to comply with the following financial ratios, which are measured quarterly: (i) a 12 -month debt to EBITDA ratio not to exceed 4.5; (ii) 12 -month DSCR of not less than 1.35; and (iii) distribution leverage ratio not to exceed 2.0. As of December 31, 2017: ( i) the actual 12 -month debt to EBITDA ratio was 2.17; (ii) the 12 -month DSCR was 2.96; and (iii) the distribution leverage ratio was 0.99. In addition, there are restrictions on dividend distributions in the event of a payment default or noncompliance with such ratios, and subject to specified carve-outs and exceptions, a negative pledge on the assets of Ormat Nevada in favor of HSBC. As of December 31, 2017, letters of credit in the aggregate amount of $16.2 million remain issued and outstanding under this credit agreement. Chubb Surety Bond In May 2017, the Company entered into a surety bond agreement (the “Surety Agreement”) with Chubb Limited (“Chubb”) pursuant to which the Company may request that Chubb issue up to an aggregate $200.0 million of surety bonds with respect to the contractual obligations of the Company and its subsidiaries in exchange for bank letters of credit or as otherwise may be required. There is no expiration date for the Surety Agreement, but it may be terminated by the Company at any time upon twenty days’ prior written notice to Chubb. Delivery of such termination notice will not affect any surety bonds issued and outstanding prior to the date on which such notice is delivered. As of December 31, 2017, Chubb issued a surety bond in the amount of $106.2 million under the Surety Agreement. Restrictive covenants The Company ’s obligations under the credit agreements, the loan agreements, and the trust instrument governing the bonds, described above, are unsecured, but are subject to a negative pledge in favor of the banks and the other lenders and certain other restrictive covenants. These include, among other things, a prohibition on: (i) creating any floating charge or any permanent pledge, charge or lien over our assets without obtaining the prior written approval of the lender; (ii) guaranteeing the liabilities of any third party without obtaining the prior written approval of the lender; and (iii) selling, assigning, transferring, conveying or disposing of all or substantially all of our assets, or a change of control in our ownership structure. Some of the credit agreements, the term loan agreements, as well as the trust instrument contain cross-default provisions with respect to other material indebtedness owed by us to any third party. In some cases, the Company has agreed to maintain certain financial ratios, which are measured quarterly, such as: (i) equity of at least $600.0 million and in no event less than 25% of total assets; (ii) 12 -month debt, net of cash, cash equivalents marketable securities and short-term bank deposits to Adjusted EBITDA ratio not to exceed 6; and (iii) dividend distribution not to exceed 35% of net income for that year. As of December 31, 2017: ( i) total equity was $1,320.5 million and the actual equity to total assets ratio was 51.1%, and (ii) the 12 -month debt, net of cash, cash equivalents marketable securities and short-term bank deposits to Adjusted EBITDA ratio was 2.58. During the year ended December 31, 2017, the Company distributed interim dividends in an aggregate amount of $20.5 million. Future minimum payments Future minimum payments under long-term obligations, excluding revolving credit lines with commercial banks, as of December 31, 2017 are as follows:
|  | (Dollars in thousands) |
Year ending December 31: |  |  |  |
2018 |  | $ | 57,807 |
2019 |  |  | 55,539 |
2020 |  |  | 123,093 |
2021 |  |  | 46,579 |
2022 |  |  | 184,148 |
Thereafter |  |  | 409,898 |
Total |  | $ | 877,064 |

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