Item 1.01.Entry into a Material Definitive Agreement.
Amendment No. 1 to Financing Agreement
As previously reported by FuelCell Energy, Inc. (the “Company”), on May 19, 2023 (the “Effective Date”), FuelCell Energy Opco Finance 1, LLC (“Borrower”), a wholly owned subsidiary of FuelCell Energy Finance, LLC (“FCEF”), which, in turn, is a wholly owned subsidiary of the Company, entered into a Financing Agreement (as amended from time to time, the “Financing Agreement”) with, by and among Investec Bank plc in its capacities as a lender (“Investec Lender”), administrative agent, and collateral agent; Investec, Inc. as coordinating lead arranger and sole bookrunner; Bank of Montreal (Chicago Branch) in its capacity as a lender (“BMO Lender”) and as mandated lead arranger; and each of Liberty Bank, Amalgamated Bank and Connecticut Green Bank as lenders (collectively with Investec Lender and BMO Lender, the “Lenders”) for a term loan facility in an amount not to exceed $80.5 million and a letter of credit facility in an amount not to exceed $6.5 million.
Effective as of August 14, 2023, Borrower, Investec Bank plc in its capacities as a Lender and administrative agent, and Liberty Bank, Bank of Montreal, Amalgamated Bank, and Connecticut Green Bank, as Lenders, entered into Amendment No. 1 to the Financing Agreement dated as of August 11, 2023 (“Amendment No. 1”). Amendment No. 1 amends certain provisions of the Financing Agreement to clarify (i) the manner in which the debt service coverage ratio set forth in the Financing Agreement is to be applied during the period between the Effective Date and June 30, 2024; and (ii) that financial information required to be provided by Borrower to the Lenders relating to debt service coverage ratios be based on the calendar year rather than Borrower’s fiscal year as the debt service coverage ratio covenants are applied and computed on calendar year time periods.
The Financing Agreement contains a covenant that Borrower maintain a debt service coverage ratio of not less than 1.20:1.00 (based on the preceding twelve-month period and tested semi-annually every six months during the calendar year). Amendment No. 1 clarifies that the first six month testing period will be for the six months ending December 31, 2023 and that the test for that date will be for the period commencing July 1, 2023 and ending December 31, 2023. Thereafter, the test for each semi-annual period, beginning with the six-month period ending June 30, 2024, will be for the preceding twelve-month period prior to the end of such six-month period. For purposes of applying the foregoing test for each six-month semi-annual period, the test is applied up to the last banking day of each such period rather than the last calendar day.
In addition, under the Financing Agreement, Borrower may make distributions to FCEF and the Company at the end of each calendar year quarter provided that, among other things, Borrower has maintained a greater than 1.20:1.00 debt service coverage ratio for the immediate twelve-month period preceding each quarter. Amendment No. 1 clarifies that, for each of the quarters preceding the quarter ending June 28, 2024 (meaning the calendar year quarters ended September 30, 2023, December 31, 2023 and March 31, 2024, respectively), the debt service coverage ratio will be tested for the period commencing July 1, 2023 to the end of the applicable quarter. For purposes of applying the foregoing test for each such calendar year quarter, the test is applied up to the last banking day of each such period rather than the last calendar day.
Finally, because, as described above, the debt service coverage ratio tests in the Financing Agreement are based on six month and quarterly calendar year periods, rather than Borrower’s fiscal years and fiscal quarters (i.e., Borrower’s fiscal year is November 1 through October 31), the information reporting requirements in the Financing Agreement were amended in Amendment No. 1 to clarify that information provided by Borrower to the Lenders regarding the computation of debt service coverage ratios will be based on calendar year periods.
The foregoing description of Amendment No. 1 is qualified in its entirety by reference to the full text of Amendment No. 1, a copy of which is attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated by reference herein.
The Financing Agreement is, and the related relationships among these parties are, described in greater detail in the Current Report on Form 8-K filed by the Company on May 25, 2023.
