Annual report pursuant to Section 13 and 15(d)

DEBT

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DEBT
 12 Months Ended
Dec. 31, 2023
Debt Disclosure [Abstract]  
DEBT DEBT
The following is a summary of debt facilities and balances as of December 31, 2023 and 2022:
Total Commitment
 or Original Principal
Quarterly Principal Payments(2)
December 31, 2023 December 31, 2022
Maturity
Date		 Amount Outstanding Interest
Rate		 Amount Outstanding Interest
Rate
Crimson Secured Credit Facility:
Crimson Revolver $ 50,000,000  5/3/2024 $ 50,000,000  10.18  % $ 35,000,000  8.41  %
Crimson Term Loan 80,000,000  3,000,000  5/3/2024 56,000,000  10.20  % 66,000,000  8.22  %
Crimson Uncommitted Incremental Credit Facility 25,000,000  5/3/2024 —  —  % —  —  %
5.875% Convertible Notes
 120,000,000  —  8/15/2025 118,050,000  5.875  % 118,050,000  5.875  %
Total Debt $ 224,050,000  $ 219,050,000 
Less:
Unamortized deferred financing costs on 5.875% Convertible Notes
 $ 135,316  $ 218,587 
Unamortized discount on 5.875% Convertible Notes
 933,455  1,507,883 
Unamortized deferred financing costs on Crimson Term Loan(1)
163,980  665,547 
Long-term debt, net of deferred financing costs $ 222,817,249  $ 216,657,983 
Debt due within one year(2)
$ 224,050,000  $ 10,000,000 
(1) Unamortized deferred financing costs related to the Company's revolving credit facility are included in Deferred Costs in the Assets section of the Consolidated Balance Sheets.
(2) Debt due within one year from December 31, 2023 includes $118.1 million of Convertible Notes due to a default subsequent to year end.

Crimson Credit Facility

The Crimson Credit Facility provided borrowing capacity of up to $155.0 million, consisting of: a $50.0 million revolving credit facility ("Crimson Revolver"), an $80.0 million term loan ("Crimson Term Loan") and an uncommitted incremental credit facility of $25.0 million. On September 14, 2022, the borrowers completed the first amendment to the Amended and Restated Credit Agreement, which replaced the use of a LIBOR reference rate with the Secured Overnight Financing Rate ("SOFR"). On March 6, 2023, the Company completed the second amendment to the Amended and Restated Credit Agreement, which extended the maturity of the Crimson Credit Facility from its maturity on February 4, 2024 to May 3, 2024 and amended the applicable total leverage ratio in the first two quarters of 2023 from 2.50 to 2.75, as well as increased the required quarterly amortization of the term loan from $2.0 million to $3.0 million beginning in the third quarter of 2023. On August 14, 2023, the parties entered into the third amendment to the Amended and Restated Credit Agreement, which amended the applicable total leverage ratio in the third and fourth quarters of 2023 from 2.50 to 3.75, which was intended to prevent any covenant violations before the completion of the sale of the MoGas and Omega assets.

The loans under the Crimson Credit Facility were to mature on May 3, 2024. The Crimson Term Loan required quarterly payments of $3.0 million per quarter beginning September 30, 2023. Subject to certain conditions, all loans made under the Crimson Credit Facility, at the option of the borrowers, bear interest at either (a) SOFR plus an adjustment based tenor ("Adjusted SOFR") plus a spread of 325 to 450 basis points, or (b) a rate equal to the highest of (i) the prime rate established by the Administrative Agent, (ii) the federal funds rate plus 0.5%, or (iii) the one-month Adjusted SOFR rate plus 1.0%, plus a spread of 225 to 350 basis points. The applicable spread for each interest rate was based on the Total Leverage Ratio (as defined in the Crimson Credit Facility). The effective interest rate for the Crimson Credit Facility was approximately 10.2% as of December 31, 2023.
Outstanding balances under the facility were guaranteed by certain subsidiary guarantors pursuant to the Amended and Restated Guaranty Agreement and secured by all assets of the borrowers and guarantors (including the equity in such parties), other than any assets regulated by the CPUC and other customary excluded assets, pursuant to an Amended and Restated Pledge Agreement and an Amended and Restated Security Agreement. Pursuant to the second amendment, under certain circumstances, the stock and assets of the Company's Omega Gas Pipeline, LLC and Omega Gas Marketing subsidiaries were required to be pledged as collateral. Also, under certain circumstances, the proceeds from specified asset sales were required to be used to repay the term loan and revolving credit facility after which the borrowing availability under the revolving credit facility would be reduced to $30.0 million. Under the terms of the Crimson Credit Facility, as amended, the borrowers and their restricted subsidiaries would be subject to certain financial covenants commencing with the fiscal quarter ended June 30, 2021 as follows (i): the total leverage ratio shall not be greater than: (a) 3.00 to 1.00 commencing with the fiscal quarter ended June 30, 2021 through and including the fiscal quarter ending December 31, 2021; (b) 2.75 to 1.00 commencing with the fiscal quarter ending March 31, 2022 through and including the fiscal quarter ending June 30, 2023; and (c) 2.50 to 1.00 commencing with the fiscal quarter ending September 30, 2023 and for each fiscal quarter thereafter and (ii) the debt service coverage ratio, shall not be less than 2.00 to 1.00.
Cash distributions to the Company from the borrowers were subject to certain restrictions, including without limitation, no default or event of default, compliance with financial covenants, minimum undrawn availability and available free cash flow. Pursuant to the second amendment, no distributions could be made from the co-borrowers to their parent until the proceeds of specified asset sales had been used to repay the loans and other financial conditions had been met. The borrowers and their restricted subsidiaries were also subject to certain additional affirmative and negative covenants customary for credit transactions of this type. The Crimson Credit Facility contained default and cross-default provisions (with applicable customary grace or cure periods) customary for transactions of this type. Upon the occurrence of an event of default, payment of all amounts outstanding under the Crimson Credit Facility would become immediately due and payable at the election of the Required Lenders (as defined in the Crimson Credit Facility).
In conjunction with the closing of the sale of MoGas and Omega Pipelines to Spire on January 19, 2024, the Company repaid the outstanding balance and accrued interest of the Crimson Credit Facility in the amount of $108.5 million and terminated the facility.
Contractual Payments
The remaining contractual principal payments as of December 31, 2023 are as follows:
Year Crimson Term Loan Crimson Revolver
5.875% Convertible Notes(1)
Total
2024 56,000,000  50,000,000  —  106,000,000 
2025 —  —  118,050,000  118,050,000 
Total Remaining Contractual Payments $ 56,000,000  $ 50,000,000  $ 118,050,000  $ 224,050,000 
(1) As of the bankruptcy filing date of February 25, 2024, the Convertible Notes are in default and callable.
Crimson Credit Facility Interest Expense
A summary of the Crimson Credit Facility interest expense and deferred debt cost amortization expense for the years ended December 31, 2023, 2022 and 2021 is as follows:
Crimson Credit Facility Interest Expense
For the Years Ended December 31,
2023 2022 2021
Interest Expense $ 10,349,210  $ 5,791,386  $ 4,468,500 
Deferred Debt Cost Amortization Expense(1)(2)
814,867  990,540  899,304 
Less: Capitalized Interest 669,994  446,625  344,446 
Total Crimson Credit Facility Interest Expense $ 10,494,083  $ 6,335,301  $ 5,023,358 
(1) Amortization of deferred debt issuance costs is included in interest expense in the Consolidated Statements of Operations.
(2) For the amount of deferred debt cost amortization relating to the convertible notes included in the Consolidated Statements of Operations, refer to the Convertible Notes Interest Expense table below.
In conjunction with the closing of the sale of MoGas and Omega Pipelines to Spire on January 19, 2024, the Company repaid the outstanding balance and accrued interest of the Crimson Credit Facility in the amount of $108.5 million.
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 continued to be deferred and amortized under the amended and restated facility. Additionally, the Company incurred approximately $1.3 million in new debt issuance costs that were deferred and amortized over the term of the new facility. The total deferred financing costs of $2.9 million were being amortized on a straight-line basis over the 5-year term of the amended and restated CorEnergy Credit Facility prior to its termination in February 2021 (as described above). Deferred financing costs for the year ended December 31, 2021 were $48 thousand. In connection with such termination, the Company wrote-off the remaining deferred debt costs of approximately $862 thousand as a loss on extinguishment of debt in the Consolidated Statement of Operations in the first quarter of 2021.
Convertible Debt
Convertible Notes
On August 12, 2019, the Company completed a private placement offering of $120.0 million aggregate principal amount of Convertible Notes to the initial purchasers of such notes for cash in reliance on a registration exemption provided by Section 4(a)(2) of the Securities Act. The initial purchasers then resold the Convertible Notes for cash equal to 100% of the aggregate principal amount thereof to qualified institutional buyers, as defined in Rule 144A under the Securities Act, in reliance on a registration exemption provided by Rule 144A. The Convertible Notes mature on August 15, 2025 and bear interest at a rate of 5.875% per annum, payable semiannually in arrears on February 15 and August 15 of each year, beginning on February 15, 2020.
The Convertible Notes were issued with an initial purchasers' discount of $3.5 million, which is being amortized over the life of the notes. The Company also incurred approximately $508 thousand of deferred debt costs in issuing the Convertible Notes, which are also being amortized over the life of the notes.
Holders may convert all or any portion of their Convertible Notes into shares of the Company's Common Stock at their option at any time prior to the close of business on the business day immediately preceding the maturity date. The initial conversion rate for the Convertible Notes is 20.0 shares of Common Stock per $1,000 principal amount of the Convertible Notes, equivalent to an initial conversion price of $50.00 per share of the Company's Common Stock. Such conversion rate will be subject to adjustment in certain events as specified in the Indenture.
Upon the occurrence of a make-whole fundamental change (as defined in the indenture governing the notes, and which includes the failure to maintain the Company’s common stock listing on the NYSE or Nasdaq), holders may require the Company to repurchase for cash all or any portion of their Convertible Notes at a fundamental change repurchase price equal to 100.0% of the principal amount of the Convertible Notes to be repurchased, plus any accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date as prescribed in the Indenture. Following the occurrence of a make- whole fundamental change, or if the Company delivers a notice of redemption (as discussed below), the Company will, in certain circumstances, increase the applicable conversion rate for a holder that elects to convert its notes in connection with such make-whole fundamental change or notice of redemption.
On February 25, 2024 the Company filed for Chapter 11 bankruptcy and on March 11, 2024 was subsequently delisted from the NYSE. This triggered the occurrence of a make-whole fundamental change, and the Convertible Notes were in default as of the bankruptcy filing date.
The Company may not redeem the Convertible Notes prior to August 15, 2023. On or after August 15, 2023, the Company may redeem for cash all or part of the Convertible Notes, at its option, if the last reported sale price of its Common Stock has been at least 125.0% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption. The redemption price will equal 100.0% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
The indenture for the Convertible Notes specifies events of default, including default by the Company or any of its subsidiaries with respect to any debt agreements under which there may be outstanding, or by which there may be secured or evidenced, any debt in excess of $25.0 million in the aggregate of the Company and/or any such subsidiary, resulting in such indebtedness becoming or being declared due and payable prior to its stated maturity.
The Convertible Notes rank equal in right of payment to any other current and future unsecured obligations of the Company and senior in right of payment to any other current and future indebtedness of the Company that is contractually subordinated to the
Convertible Notes. The Convertible Notes are structurally subordinated to all liabilities (including trade payables) of the Company’s subsidiaries. The Convertible Notes are effectively junior to all of the Company’s existing or future secured debt, to the extent of the value of the collateral securing such debt.
Convertible Debt Interest Expense
As discussed above, on March 11, 2024, the NYSE delisted the Company's Common Stock and Series A Preferred Stock from the NYSE. The delisting constituted a "fundamental change" under the Indenture governing the Convertible Notes, which required the Company to make an offer to repurchase all of the outstanding Convertible Notes. The Company does not have sufficient cash on hand or liquidity to repurchase all of the outstanding Convertible Notes, and the failure to make or complete the repurchase offer would result in a default under the Indenture. Furthermore, as discussed above, the filing of the Chapter 11 Case constituted an event of default that accelerated obligations under the Indenture. The Company anticipates restructuring the Convertible Notes through the Chapter 11 bankruptcy filing.

A summary of the Convertible Notes interest expense, discount amortization, and deferred debt issuance amortization expense for the years ended December 31, 2023, 2022 and 2021 is as follows:
Convertible Note Interest Expense
For the Years Ended December 31,
2023 2022 2021
5.875% Convertible Notes:
Interest Expense $ 6,935,438  $ 6,935,438  $ 6,935,438 
Discount Amortization 574,428  574,428  574,428 
Deferred Debt Issuance Amortization 83,272  83,272  83,272 
Total 5.875% Convertible Notes Interest Expense
 $ 7,593,138  $ 7,593,138  $ 7,593,138 
Including the impact of the convertible debt discount and related deferred debt issuance costs, the effective interest rate on the Convertible Notes was approximately 6.4% for each of the years ended December 31, 2023, 2022, and 2021.
Note Payable
For the years ended December 31, 2023 and 2022, the Company entered into short-term financing agreements in order to fund corporate insurance needs. As of December 31, 2023, the outstanding balance on the note payable was $4.6 million. The note bears interest at 9.5% with monthly payments due until September 2024. As of December 31, 2022, the outstanding balance on the note payable was $3.5 million. The note bore interest at 5.7% with monthly payments made through September 2023.