CorEnergy Infrastructure Trust, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Debt

Debt

6 Months Ended

Jun. 30, 2019

The following is a summary of the Company's debt facilities and balances as of June 30, 2019 and December 31, 2018:



	Total Commitment or Original Principal		Quarterly Principal Payments			June 30, 2019				December 31, 2018
	Total Commitment or Original Principal		Quarterly Principal Payments		Maturity Date	Amount Outstanding		Interest Rate		Amount Outstanding		Interest Rate
CorEnergy Secured Credit Facility:
CorEnergy Revolver	$	160,000,000	$	—	7/28/2022	$	—	5.15	%	$	—	5.25	%
MoGas Revolver	1,000,000		—		7/28/2022	—		5.15	%	—		5.25	%
Omega Line of Credit	1,500,000		—		7/31/2020	—		6.40	%	—		6.50	%
Pinedale Secured Credit Facility:
Amended Pinedale Term Credit Facility	41,000,000		882,000		12/29/2022	35,708,000		6.50	%	37,472,000		6.50	%
7.00% Unsecured Convertible Senior Notes	115,000,000		—		6/15/2020	69,592,000		7.00	%	113,958,000		7.00	%
Total Debt						$	105,300,000			$	151,430,000
Less:
Unamortized deferred financing costs ⁽¹⁾						$	213,807			$	283,278
Unamortized discount on 7.00% Convertible Senior Notes						449,034				1,108,342
Total Debt, net of deferred financing costs						$	104,637,159			$	150,038,380
Debt due within one year						$	72,641,639			$	3,528,000
(1) Unamortized deferred financing costs related to the Company's revolving credit facilities are included in Deferred Costs in the Assets section of the Consolidated Balance Sheets. Refer to the "Deferred Financing Costs" paragraph below.

CorEnergy Credit Facility

On July 28, 2017, the Company entered into an amendment and restatement of the CorEnergy Credit Facility with Regions Bank (as lender and administrative agent for other participating lenders). The amended facility provides for borrowing commitments of up to $161.0 million, consisting of (i) $160.0 million on the CorEnergy Revolver, subject to borrowing base limitations, and (ii) $1.0 million on the MoGas Revolver.

The amended facility has a 5-year term maturing on July 28, 2022, and provides for a springing maturity on February 28, 2020, and thereafter, if the Company fails to meet certain liquidity requirements from the springing maturity date through the maturity of the Company's Convertible Notes on June 15, 2020. This springing maturity would be triggered on the first date on or after February 28, 2020 that both (i) the outstanding principal amount of the Convertible Notes exceeds $28,750,000 and (ii) the Company's unrestricted cash liquidity (including, for purposes of this calculation, the undrawn portion of the Borrowing Base that is then available for borrowing under the CorEnergy Credit Facility) is less than the sum of (x) the outstanding principal amount of the Convertible Notes plus (y) $5,000,000.

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 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). As of June 30, 2019, the Company was in compliance with all covenants of the CorEnergy Credit Facility.

As of June 30, 2019, the Company had approximately $123.2 million and $1.0 million of availability under the CorEnergy Revolver and MoGas Revolver, respectively.

Amended Pinedale Term Credit Facility

On December 29, 2017, Pinedale LP entered into the Amended Pinedale Term Credit Facility with Prudential and a group of lenders affiliated with Prudential as the sole lenders and Prudential serving as administrative agent. Under the terms of the Amended Pinedale Term Credit Facility, Pinedale LP was provided with a 5-year $41.0 million term loan facility, bearing interest at a fixed rate of 6.5 percent, which matures on December 29, 2022. Principal payments of $294 thousand, plus accrued interest, are payable monthly.

Outstanding balances under the facility are secured by the Pinedale LGS assets. The Amended Pinedale Term Credit Facility contains, among other restrictions, specific financial covenants including the maintenance of certain financial coverage ratios and a minimum net worth requirement which, along with other provisions of the credit facility, limit cash dividends and loans by Pinedale LP to the Company. At June 30, 2019, the net assets of Pinedale LP were $134.4 million and Pinedale LP was in compliance with all of the financial covenants of the Amended Pinedale Term Credit Facility.

Deferred Financing Costs

A summary of deferred financing cost amortization expenses for the three and six months ended June 30, 2019 and 2018 is as follows:



	For the Three Months Ended				For the Six Months Ended
	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
CorEnergy Credit Facility	$	143,635	$	143,635	$	287,271	$	287,270
Amended Pinedale Term Credit Facility	13,205		13,205		26,411		26,317
Total Deferred Debt Cost Amortization Expense ⁽¹⁾⁽²⁾	$	156,840	$	156,840	$	313,682	$	313,587
(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 cost amortization relating to the Convertible Notes included in the Consolidated Statements of Income, refer to the Convertible Note Interest Expense table below.

CorEnergy Credit Facilities

Prior to the July 28, 2017 credit facility amendment and restatement, previously existing deferred financing costs related to the CorEnergy Credit Facility were approximately $1.8 million, of which approximately $1.6 million continue to be deferred and amortized under the amended and restated facility. Additionally, the Company incurred approximately $1.3 million in new debt issuance costs which have been deferred and are being amortized over the term of the new facility. Total deferred financing costs of $2.9 million are being amortized on a straight-line basis over the 5-year term of the amended and restated CorEnergy Credit Facility.

Amended Pinedale Term Credit Facility

In connection with entering into the Amended Pinedale Term Credit Facility, Pinedale LP incurred approximately $367 thousand in new debt issuance costs, of which $264 thousand were deferred and are being amortized on a straight-line basis over the 5-year term of the Amended Pinedale Term Credit Facility.

Contractual Payments

The remaining contractual principal payments as of June 30, 2019 under the Amended Pinedale Term Credit Facility are as follows:



Year	Amended Pinedale Term Credit Facility
2019	$	1,764,000
2020	3,528,000
2021	3,528,000
2022	26,888,000
2023	—
Thereafter	—
Total Remaining Contractual Payments	$	35,708,000

Convertible Debt

On June 29, 2015, the Company completed a public offering of $115.0 million aggregate principal amount of 7.00% Convertible Senior Notes Due 2020 (the "Convertible Notes"). The Convertible Notes mature on June 15, 2020 and bear interest at a rate of 7.00 percent per annum, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2015. As of December 31, 2018, the Company had $114.0 million Convertible Notes outstanding following certain repurchases and conversions. The conversion rate for the Convertible Notes is 30.3030 shares of common stock per $1,000 principal amount of Convertible Notes, equivalent to a conversion price of $33.00 per share of common stock.

On January 16, 2019, the Company agreed with three holders of its Convertible Notes, pursuant to privately negotiated agreements, to exchange $43.8 million face amount of such notes for an aggregate of 837,040 shares of the Company's common stock, par value $0.001 per share, plus aggregate cash consideration of $19.8 million, including $315 thousand of interest expense. The Company's agent and lenders under the CorEnergy Credit Facility provided a consent for the convertible note exchange. The Company recorded a loss on extinguishment of debt of approximately $5.0 million in the Consolidated Statements of Income for the six months ended June 30, 2019. The loss on extinguishment of debt included the write-off of a portion of the underwriter's discount and deferred debt costs of $409 thousand and $27 thousand, respectively. The remaining underwriter's discount and deferred debt costs continue to be amortized over the remaining term of the Convertible Notes.

During the three months ended June 30, 2019, certain holders elected to convert $584 thousand of Convertible Notes for approximately 17,690 shares of CorEnergy common stock. Subsequent to June 30, 2019, an additional $70 thousand of Convertible Notes were converted for approximately 2,121 shares of CorEnergy common stock.

The following is a summary of the impact of Convertible Notes on interest expense for the three and six months ended June 30, 2019 and 2018:



Convertible Note Interest Expense
	For the Three Months Ended				For the Six Months Ended
	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
7.00% Convertible Notes	$	1,226,580	$	1,995,000	$	2,633,437	$	3,990,000
Discount Amortization	117,139		184,728		250,049		369,456
Deferred Debt Issuance Amortization	7,650		12,069		16,331		24,138
Total Convertible Note Interest Expense	$	1,351,369	$	2,191,797	$	2,899,817	$	4,383,594

The Convertible Notes were initially issued with an underwriters' discount of $3.7 million, a portion of which is being amortized over the life of the Convertible Notes as discussed above. Including the impact of the convertible debt discount and related deferred debt issuance costs, the effective interest rate on the Convertible Notes is approximately 7.7 percent for each of the three and six months ended June 30, 2019 and 2018, respectively.