Item 1.01 Entry into a Material Definitive Agreement.
The information set forth in Item 2.03 with respect to the Amendment and Credit Agreement is incorporated herein in its entirety.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
Second Amendment to the Credit Agreement
On August 12, 2021, the Company entered into an Amended and Restated Credit Agreement, as subsequently amended (the “Credit Agreement”), with PNC Bank, National Association, as administrative agent, swing loan lender, issuing lender and green loan coordinator (“PNC”), and several other financial institutions (together with PNC, collectively, the “Lenders”), pursuant to which the Lenders committed to provide the Company an unsecured $400 million revolving credit facility, including a $200 million five year facility (the “Five Year Facility”) and a $200 million 364 days facility (the “364 Days Facility” and, together with the Five Year Facility, the “Revolver”), subject to the terms and conditions in the Credit Agreement. Participating Lenders included PNC, Bank of America, N.A., Citizens Bank N.A., Truist Bank, Wells Fargo Bank, National Association Royal Bank of Canada, and City National Bank.
On August 9, 2023, the Company entered into a Second Amendment to the Amended and Restated Credit Agreement (“Second Amendment”) with the Lenders, providing for $175 million of short-term debt capacity over the next 364-day period. The Second Amendment provides for, among other things, the following: borrowings under the 364 Days Facility shall now bear interest (i) based upon the Secured Overnight Financing Rate (“SOFR”), plus a 10-basis point credit spread adjustment, and an applicable margin of 1.05% or less, with such margin based on Total Indebtedness as a percentage of Total Capitalization or (ii) the Base Rate, as selected by the Company in its discretion. Further, the Second Amendment provided that Borrowings under the 364 Days Green Loan shall now bear interest at (i) the SOFR Rate plus a 10-basis point credit spread adjustment and an applicable margin of 1.00% or less, with such margin based on Total Indebtedness as a percentage of Total Capitalization or (ii) the Base Rate plus 0.05% or less, as selected by the Company in its discretion.
Simultaneous with the execution of the Second Amendment, an updated 364 Days Facility was made available to the Company for the upcoming year expiring on August 8, 2024. In conjunction with this updated Facility, Truist Bank and City National Bank relinquished all of their rights and interests under the 364 Days Facility, including their commitments to extend $30 million and $12.5 million, respectively, to the Company on a short-term basis for the upcoming 364-day period. Additionally, Royal Bank of Canada, and Wells Fargo increased their rights and interests under the updated 364 Days Facility by $15 million and $2.5 million, raising each bank’s commitment to $27.5 million. At this time, Truist Bank and City National Bank have retained all such interests and obligations under the Five Year Facility.
All other terms and conditions of the Credit Agreement were unchanged and remain in full force and effect.
The following summarizes certain of the key provisions for the Revolver, including the changes discussed above:
Borrowings under the Five Year Facility shall bear interest at (i) the SOFR Rate plus a 10-basis point credit spread adjustment and an applicable margin of 1.25% or less, with such margin based on Total Indebtedness as a percentage of Total Capitalization as defined in the Credit Agreement or (ii) the Base Rate plus 0.25% or less, as selected by the Company in its discretion. The Five Year Facility has a reduced interest rate margin with respect to borrowed amounts allocated to certain sustainable investments (the “Five Year Green Loan”). The maximum principal amount that can be borrowed under the Five Year Green Loan is $50,000,000. Borrowings under the Green Loan shall bear interest at (i) the SOFR Rate plus a 10-basis point credit spread adjustment and an applicable margin of 1.20% or less, with such margin based on Total Indebtedness as a percentage of Total Capitalization or (ii) the Base Rate plus 0.20% or less.
Borrowings under the 364 Days Facility shall bear interest at (i) the SOFR Rate plus a 10-basis point credit spread adjustment and an applicable margin of 1.05% or less, with such margin based on Total Indebtedness as a percentage of Total Capitalization or (ii) the Base Rate, as selected by the Company in its discretion. The 364 Days Facility has a reduced interest rate margin with respect to borrowed