OPAL Fuels unit gets $500 million senior secured facility

By Mary-Katherine Stinson

Lexington, Ky., Sept. 5 – OPAL Fuels Intermediate Holdco LLC, an indirect wholly owned subsidiary of OPAL Fuels Inc., entered into a new senior secured credit facility on Sept. 1 with Bank of America, NA as the administrative agent that provides for up to $450 million of initial and delayed-draw term loans and $50 million of revolving loans, according to an 8-K filing with the Securities and Exchange Commission.

The delayed-draw term loans will be available for up to 18 months after closing.

The company has the ability, during the delayed-draw availability period and subject to some credit and project-related conditions, to join other newly acquired subsidiaries with comparable renewable projects in development under the facility for comparable funding.

Borrowings bear interest initially at term SOFR plus 350 basis points, increasing by 25 bps annually during the 18-month term.

After the delayed-draw term loan availability period expires, the outstanding principal amount is subject to quarterly amortization payments of 1% per quarter, and the borrower is obligated to pay a leverage-based cash sweep ranging from 25% to 100% of distributable cash of borrower and the guarantors, subject to some other mandatory prepayment requirements.

The term loans and revolving loans mature on the five-year anniversary of the closing date.

The borrower must maintain a consolidated debt service coverage ratio of no less than 1.2x and to maintain a consolidated debt to cash flow ratio of not greater than 4.5x during the delayed-draw availability period and not greater than 4x after.

Apterra Infrastructure Capital LLC is the bookrunner and is joined by Barclays Bank plc, BofA Securities, Inc., Celtic Bank Corp., Citibank, NA, JPMorgan Chase Bank, NA, Investec Inc. and ICBC Standard Bank plc as joint lead arrangers.

Proceeds will be used to prepay OPAL Fuels Intermediate Holdco’s existing secured debt totaling about $87.6 million plus accrued interest, accrued returns in the amount of $15.7 million to some preferred equity investors in Opal Fuels LLC and about $30.1 million of debt owing by Opal Fuels LLC to ARCC Beacon LLC under the terms of a promissory note dated July 21, 2022; and to fund a portion of the construction costs of renewable natural gas projects owned, either in full or through a joint venture with a third party, by the guarantors.

Proceeds of the revolving loans will be used to provide for the issuance of letters of credit to support the borrower’s and guarantor’s operations and other general corporate purposes and to pay transaction fees and expenses of roughly $10.6 million.

Following closing, the company expects to have about $300 million of availability to fund capital expenditures in connection with its development and construction projects, subject to the terms and conditions of the facility.

Given previously reported construction delays, the company currently estimates total capital expenditures for fiscal year 2023 to range between $175 million and $195 million, assuming timely issuance of key permits and completion of certain development activities.

Based in White Plains, N.Y., OPAL Fuels is a vertically integrated renewable fuels platform involved in the production and distribution of renewable natural gas for the heavy-duty truck market.

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