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

Quarterly report pursuant to Section 13 or 15(d)

Debt

Debt

9 Months Ended

Sep. 30, 2017

The following is a summary of the Company's debt facilities and balances as of September 30, 2017 and December 31, 2016:



	Total Commitment or Original Principal		Quarterly Principal Payments			September 30, 2017				December 31, 2016
	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	$	10,000,000	3.99	%	$	44,000,000	3.76	%
CorEnergy Term Loan ⁽¹⁾	45,000,000		1,615,000		12/15/2019	—		—		36,740,000		3.74	%
MoGas Revolver	1,000,000		—		7/28/2022	—		3.99	%	—		3.77	%
Omega Line of Credit	1,500,000		—		7/31/2018	—		5.24	%	—		4.77	%
Pinedale Secured Credit Facility:
$58.5M Term Loan – related party ⁽²⁾	11,085,750		167,139		3/30/2021	7,534,177		8.23	%	8,860,577		8.00	%
7.00% Unsecured Convertible Senior Notes	115,000,000		—		6/15/2020	114,000,000		7.00	%	114,000,000		7.00	%
Total Debt						$	131,534,177			$	203,600,577
Less:
Unamortized deferred financing costs ⁽³⁾						$	132,732			$	381,531
Unamortized discount on 7.00% Convertible Senior Notes						2,031,983				2,586,166
Long-term debt, net of deferred financing costs						$	129,369,462			$	200,632,880
Debt due within one year						$	668,556			$	7,128,556
(1) The CorEnergy Term Loan was paid off during the third quarter of 2017 in connection with entering into the amended and restated CorEnergy Credit Facility discussed below.
(2) $47.4 million of the original $58.5 million term loan is payable to CorEnergy under the same terms and eliminates in consolidation.
(3) Unamortized deferred financing costs related to our 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 8, 2015, the Company amended and upsized its credit facility with Regions Bank (as lender and administrative agent for the other participating lenders) to provide borrowing commitments of $153.0 million, consisting of (i) a $105.0 million revolver at the CorEnergy parent entity level (the "CorEnergy Revolver"), (ii) a $45.0 million term loan at the CorEnergy parent entity level (the "CorEnergy Term Loan") and (iii) a $3.0 million revolving credit facility at the MoGas subsidiary entity level (the "MoGas Revolver" and, collectively with the CorEnergy Revolver and the CorEnergy Term Loan, the "CorEnergy Credit Facility").

On April 18, 2017, the Company repaid the $44.0 million in outstanding borrowings on the CorEnergy Revolver with a portion of the proceeds from a follow-on offering of its 7.375% Series A Preferred Stock, as discussed further in Note 11 ("Stockholder's Equity").

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. In connection with entering into the amended and restated facility on July 28, 2017, the Company used cash on hand and $10.0 million of borrowings under the amended facility to repay the $33.5 million outstanding balance on the CorEnergy Term Loan.

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. 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 September 30, 2017, the Company was in compliance with all covenants of the CorEnergy Credit Facility.

As of September 30, 2017, the Company had approximately $130.5 million and $1.0 million of availability under the CorEnergy Revolver and MoGas Revolver, respectively.

Pinedale Credit Facility

On December 20, 2012, Pinedale LP closed on a $70.0 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. 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 Revolving 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 $70.0 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 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.

Pinedale LP's credit facility with the Refinancing Lenders limits distributions by Pinedale LP to the Company. Such distributions 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). 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 the Cash Control Period, the Company as Agent swept all funds for the repayment of accrued interest, scheduled principal payments and principal prepayments on the loans. Ultra Petroleum emerged from bankruptcy in April 2017, resulting in the end of the Cash Control Period and, in May 2017, Pinedale LP resumed distributions.

The Company has provided to Prudential a guarantee against certain inappropriate conduct by or on behalf of Pinedale LP or CorEnergy. The credit facility also requires Pinedale LP to 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 September 30, 2017, the net assets of Pinedale LP were $145.0 million and Pinedale LP was in compliance with all of the financial covenants of the Pinedale Credit Facility.

Deferred Financing Costs

Previously existing deferred financing costs related to the CorEnergy Credit Facility were approximately $1.8 million, of which approximately $1.6 million will 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 will be amortized over the term of the new facility. The 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. Approximately $234 thousand of existing deferred costs and new debt issuance costs were expensed as a loss on extinguishment of debt related to the amendment and restatement in the Consolidated Statements of Income for each of the three and nine months ended September 30, 2017.

A summary of deferred financing cost amortization expenses for the three and nine months ended September 30, 2017 and 2016 is as follows:



	For the Three Months Ended				For the Nine Months Ended
	September 30, 2017		September 30, 2016		September 30, 2017		September 30, 2016
CorEnergy Credit Facility	$	185,948	$	272,074	$	730,096	$	806,452
Pinedale Credit Facility	—		—		—		156,330
Total Deferred Debt Cost Amortization Expense ⁽¹⁾⁽²⁾	$	185,948	$	272,074	$	730,096	$	962,782
(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.

Contractual Payments

The remaining contractual principal payments as of September 30, 2017 under the CorEnergy and Pinedale credit facilities are as follows:



Year	CorEnergy Revolver		Pinedale Credit Facility		Total
2017	$	—	$	167,139	$	167,139
2018	—		668,556		668,556
2019	—		668,556		668,556
2020	—		668,556		668,556
2021	—		5,361,370		5,361,370
Thereafter	10,000,000		—		10,000,000
Total Remaining Contractual Payments	$	10,000,000	$	7,534,177	$	17,534,177

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. On May 23, 2016, the Company repurchased $1.0 million of its convertible bonds on the open market.

The following is a summary of the impact of Convertible Notes on interest expense for the three and nine months ended September 30, 2017 and 2016:



Convertible Note Interest Expense
	For the Three Months Ended				For the Nine Months Ended
	September 30, 2017		September 30, 2016		September 30, 2017		September 30, 2016
7.00% Convertible Notes	$	1,995,000	$	2,017,167	$	5,985,000	$	6,013,195
Discount Amortization	184,728		185,391		554,184		559,353
Deferred Debt Issuance Amortization	12,069		11,539		36,207		36,497
Total Convertible Note Interest Expense	$	2,191,797	$	2,214,097	$	6,575,391	$	6,609,045

The Convertible Notes were initially issued with an underwriters' discount of $3.7 million which is being amortized over the life of the Convertible Notes. 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 nine months ended September 30, 2017 and 7.8 percent and 7.7 percent for the three and nine months ended September 30, 2016, respectively.