CorEnergy Infrastructure Trust, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Credit Facilities

Credit Facilities

12 Months Ended

Dec. 31, 2016

The following is a summary of debt facilities and balances as of December 31, 2016 and December 31, 2015:



	Total Commitment or Original Principal		Quarterly Principal Payments			December 31, 2016				December 31, 2015
	Total Commitment or Original Principal		Quarterly Principal Payments		Maturity Date	Amount Outstanding		Interest Rate		Amount Outstanding		Interest Rate
7% Unsecured Convertible Senior Notes	$	115,000,000	$	—	6/15/2020	$	114,000,000	7.00	%	$	115,000,000	7.00	%
CorEnergy Credit Facility:
CorEnergy Revolver	$	105,000,000	$	—	12/15/2019	44,000,000		3.76	%	—		3.07	%
CorEnergy Term Loan	$	45,000,000	$	1,615,000	12/15/2019	36,740,000		3.74	%	43,200,000		3.07	%
MoGas Revolver	$	3,000,000	$	—	12/15/2019	—		3.77	%	—		3.07	%
Omega Line of Credit	$	1,500,000	$	—	7/31/2017	—		4.77	%	—		4.43	%
Pinedale Credit Facility:
$70M Term Loan	$	70,000,000	$	—	3/30/2016	—		—		62,532,000		4.67	%
$58.5M Term Loan – related party ⁽¹⁾	$	11,085,750	$	167,139	3/30/2021	8,860,577		8.00	%	—		—
Total Debt						$	203,600,577			$	220,732,000
Less:
Unamortized deferred financing costs ⁽²⁾						$	381,531			$	510,401
Unamortized discount on 7% Convertible Senior Notes						2,586,166				3,356,847
Long-term debt, net of deferred financing costs						$	200,632,880			$	216,864,752
Debt due within one year						$	7,128,556			$	66,132,000
(1) $47,414,250 of the original $58.5 million term loan is payable to CorEnergy under the same terms, and eliminates in consolidation.
(2) A portion of the unamortized deferred financing costs, related to our revolving credit facilities, are included in Deferred Costs in the Assets section of the Consolidated Balance Sheets. See the next table for deferred financing costs included in the Asset section of the Consolidated Balance Sheets.



Deferred Financing Costs, net ⁽¹⁾
	December 31, 2016		December 31, 2015
CorEnergy Credit Facility	$	2,168,518	$	2,975,476
Pinedale Credit Facility	—		156,330
Total Deferred Debt Costs, net	$	2,168,518	$	3,131,806
(1) This is the portion of deferred financing costs which relate to a revolving credit facility and are not presented as a reduction to Long-term debt but rather as Deferred Costs in the Asset section of the Consolidated Balance Sheets.



Deferred Financing Cost Amortization Expense⁽¹⁾⁽²⁾
	For the Years Ended December 31,
	2016		2015		2014
CorEnergy Credit Facility	$	1,078,526	$	926,930	$	284,709
Pinedale Credit Facility	156,330		500,326		516,864
Total Deferred Debt Cost Amortization	$	1,234,856	$	1,427,256	$	801,573
(1) Amortization of deferred debt issuance costs is included in interest expense in the Consolidated Statements of Income.
(2) For the amount of deferred debt costs amortization relating to the Convertible Notes included in the Consolidated Statements of Income, see the Convertible Debt footnote.

The remaining contractual principal payments as of December 31, 2016, under the credit facilities are as follows:



Total Remaining Contractual Payments
Year	CorEnergy Revolver		CorEnergy Term Loan		Pinedale Credit Facility		Total
2017	—		6,460,000		668,556		7,128,556
2018	—		6,460,000		668,556		7,128,556
2019	44,000,000		23,820,000		668,556		68,488,556
2020	—		—		668,556		668,556
2021	—		—		6,186,353		6,186,353
Total	$	44,000,000	$	36,740,000	$	8,860,577	$	89,600,577

CorEnergy Credit Facilities

On September 26, 2014, the Company entered into a $30 million revolving credit facility (the "CorEnergy Revolver") with certain lenders and Regions Bank, as an agent for such lenders. Then in conjunction with the MoGas Transaction on November 24, 2014, increased the credit facility to $90 million at the REIT level, and $3 million at the subsidiary entity level. For the first six months, subsequent to the increase, the facility bore interest on the outstanding balance at a rate of LIBOR plus 3.50 percent. Beginning on May 24, 2015 and through July 7, 2015, the interest rate was determined by a pricing grid where the applicable interest rate was LIBOR plus 2.75 percent to 3.50 percent, depending on the Company's leverage ratio at such time. On June 29, 2015, the Company borrowed against the CorEnergy Revolver in the amount of $42 million in conjunction with the GIGS transaction.

On July 8, 2015, the Company amended and upsized its existing $93 million credit facility with Regions Bank (as lender and administrative agent for the other participating lenders) to provide borrowing commitments of $153 million, consisting of (i) an increase in the CorEnergy Revolver at the CorEnergy parent entity level to $105 million, (ii) a $45 million term loan at the CorEnergy parent entity level (the "CorEnergy Term Loan") and (iii) a $3 million revolving credit facility at the subsidiary entity level (the "MoGas Revolver" as detailed below and, collectively with the upsized CorEnergy Revolver and the CorEnergy Term Loan, the "CorEnergy Credit Facility"). Upon closing the CorEnergy Credit Facility, CorEnergy drew $45 million on the CorEnergy Term Loan to pay off the balance on the CorEnergy Revolver that had been used in funding the GIGS acquisition in June 2015.

The CorEnergy Credit Facility has a maturity date of December 15, 2019 for both the CorEnergy Revolver and the CorEnergy Term Loan. Borrowings under the credit facility will generally bear interest on the outstanding principal amount using a LIBOR pricing grid that is expected to equal a LIBOR rate plus an applicable margin of 2.75 percent to 3.75 percent, based on the Company's senior secured recourse leverage ratio. Total availability is subject to a borrowing base. The term note required quarterly principal payments of $900 thousand which began on September 30, 2015. Quarterly principal payments were subsequently increased to $1.6 million in conjunction with the financing of the Pinedale Credit Facility, discussed further, below. The CorEnergy Credit Facility contains, among other restrictions, certain financial covenants including the maintenance of certain financial ratios, as well as default and cross-default provisions customary for transactions of this nature (with applicable customary grace periods). Upon the occurrence of an event of default, payment of all amounts outstanding under the CorEnergy Credit Facility shall become immediately due and payable. As of December 31, 2016, the Company was in compliance with all covenants of the CorEnergy Credit Facility.

The CorEnergy Credit Facility is secured by substantially all of the assets owned by the Company and its subsidiaries other than (i) the assets held by Mowood, LLC, Omega Pipeline Company, Pinedale Corridor, LP and Pinedale, GP Inc. (the "Unrestricted Subs") and (ii) the equity investments in the Unrestricted Subs.

On May 8, 2013, the Company entered into a $20 million revolving line of credit with KeyBank. The primary term of the facility was three years with the option for a one-year extension. Outstanding balances under the revolving credit facility accrued interest at a variable annual rate equal to LIBOR plus 4.0 percent or the Prime Rate plus 2.75 percent. The facility was for the purpose of funding general working capital needs and if necessary, to provide short-term financing for the acquisition of additional real property assets. The amount available to be drawn under this facility was subject to a borrowing base limitation. The agreement was terminated on September 26, 2014.

MoGas Revolver

In conjunction with the MoGas Transaction, MoGas and United Property Systems, as co-borrowers, entered into a revolving credit agreement dated November 24, 2014 (the “MoGas Revolver”), with certain lenders, including Regions Bank as agent for such lenders. Pursuant to the MoGas Revolver, the co-borrowers may borrow, prepay and re-borrow loans up to $3.0 million outstanding at any time. The MoGas Revolver is secured by the assets held at MoGas and has a maturity date of December 15, 2019. Interest accrues under the MoGas Revolver at the same rate and pursuant to the same terms as it accrues under the CorEnergy Revolver. As of December 31, 2016, there were no outstanding borrowings against the MoGas Revolver. As of December 31, 2016, the co-borrowers are in compliance with all covenants of the MoGas Revolver.

Mowood/Omega Credit Facility

On October 15, 2014, Mowood and Omega entered into a Revolving Note Payable Agreement ("2014 Note Payable Agreement"), which extended the maturity date of a prior agreement to January 31, 2015. Then on January 30, 2015, Mowood and Omega modified the 2014 Note Payable Agreement to extend the maturity date to July 31, 2015. On July 31, 2015, the 2014 Note Payable Agreement was allowed to expire and a new $1.5 million revolving line of credit ("Mowood/Omega Revolver") was established. The new Mowood/Omega Revolver is used for working capital and general business purposes, is guaranteed and secured by the assets of Mowood and initially had a maturity of July 31, 2016. On July 28, 2016, the maturity date was extended to July 31, 2017. Interest accrues at LIBOR plus 4 percent and is payable monthly in arrears with no unused fee. There was no outstanding balance at December 31, 2016.

Pinedale Credit Facility

On December 20, 2012, Pinedale LP closed on a $70 million secured term credit facility. Outstanding balances under the original facility generally accrued interest at a variable annual rate equal to LIBOR plus 3.25 percent. This credit facility was secured by the Pinedale LGS asset. Under the original agreement, Pinedale LP was obligated to pay all accrued interest monthly and was further obligated to make monthly principal payments, which began on March 7, 2014, in the amount of $294 thousand or 0.42 percent of the principal balance as of March 1, 2014.

The credit facility remained in effect until December 31, 2015, with an option to extend through December 31, 2016. Although the Company elected not to extend the facility for an additional one-year period it did amend the facility to extend the maturity date to March 30, 2016. During the extension period, the company made principal payments of $3.2 million and the credit facility bore interest on the outstanding principal amount at LIBOR plus 4.25 percent.

On March 4, 2016, the Company obtained a consent from its lenders under the CorEnergy Credit Facility, which permitted the Company to utilize the CorEnergy Credit Facility to refinance the Company's pro rata share of the remaining balance of the Pinedale secured term credit facility. On March 30, 2016, the Company and Prudential ("the Refinancing Lenders"), refinanced the remaining $58.5 million principal balance of the $70 million credit facility (on a pro rata basis equal to their respective equity interests in Pinedale LP, with the Company’s 81.05 percent share being approximately $47.4 million) and executed a series of agreements assigning the credit facility to CorEnergy Infrastructure Trust, Inc. as Agent for the Refinancing Lenders. The facility was further modified to extend the maturity date to March 30, 2021; to increase the LIBOR Rate to the greater of (i) 1.00 percent and (ii) the one-month LIBOR rate; and to increase the LIBOR Rate Spread to seven percent (7.00 percent) per annum. The Company's portion of the debt and interest is eliminated in consolidation and Prudential's portion of the debt is shown as a related-party liability. The Company also terminated one of two related interest rate swaps with a notional amount of $26.3 million.

The Company has provided to Prudential a guarantee against certain inappropriate conduct by or on behalf of Pinedale LP or CorEnergy. The credit agreement contains, among other restrictions, specific financial covenants including the maintenance of certain financial coverage ratios and a minimum net worth requirement. Pinedale LP was in compliance with all covenants under the Pinedale Credit Facility as of December 31, 2016.

Pinedale LP's credit facility with the Refinancing Lenders requires all lease payments by Ultra Wyoming to be made to an account under the control of the company as Agent and limits distributions by Pinedale LP to the Company. Distributions by Pinedale LP to the Company are permitted to the extent required for the Company to maintain its REIT qualification, so long as Pinedale LP's obligations under the credit facility have not been accelerated following an Event of Default (as defined in the credit facility). However, Pinedale LP automatically entered into a Cash Control Period (as defined in the credit facility) with the Refinancing Lenders upon the April 29, 2016, bankruptcy filing by Ultra Wyoming and its parent guarantor, Ultra Petroleum. During a Cash Control Period, the Company as Agent may (and, upon the request of any lender, shall) sweep all funds for the repayment of accrued interest, scheduled principal payments and principal prepayments on the loans, in all cases to the extent of such available funds, until such time as the Cash Control Period has terminated or the Ultra Lease has been affirmed by Ultra Wyoming in a lawful bankruptcy proceeding. For the year ended December 31, 2016, pursuant to these additional cash sweep provisions, an additional $9.1 million was distributed (pro rata, based on ownership percentages) to the Refinancing Lenders as a reduction to the outstanding principal. The credit facility also requires that Pinedale LP maintain minimum net worth levels and certain leverage ratios, which along with other provisions of the credit facility limit cash dividends and loans to the Company. At December 31, 2016, the net assets of Pinedale LP were $144.3 million.