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Table of Contents
<br />connection with maintaining compliance with such laws. Globally, laws such as the General Data Protection Regulation ("GDPR') in Europe and new and emerging state laws
<br />in the United States on privacy, data, and related technologies, have created new compliance obligations and significantly increases fines for noncompliance. Although we take
<br />steps to protect the security of our customers' personal information, we may be required to expend significant resources to comply with data breach requirements if third parties
<br />improperly obtain and use the personal information of our customers or we otherwise experience a data loss with respect to customers' personal information. A major breach of
<br />our network security and systems could have negative consequences for our business and future prospects, including possible fines, penalties and damages, reduced customer
<br />demand for our services, and harm to our reputation and brand.
<br />Risks Related to our Indebtedness
<br />Our senior credit facility, energy asset financing term loans and construction loans contain financial and operating restrictions that may limit our business activities and
<br />our access to credit, and they may not be sufficient to fund our capital needs and growth.
<br />Provisions in our senior credit facility and term loan, project financing term loans and construction loans impose customary restrictions on our and certain of our subsidiaries'
<br />business activities and uses of cash and other collateral. These agreements also contain other customary covenants, including covenants that require us to meet specified
<br />financial ratios and financial tests.
<br />We have a $200 million revolving senior secured credit facility and $75 million term loan that mature March 2025 as well as a $220 million delayed draw term loan that
<br />matures April 15, 2024 (collectively, the "Senior Credit Facilities"). As of December 31, 2023, the balance of our Senior Credit Facilities was $279.9 million, $65.0 million of
<br />which was outstanding under the delayed draw term loan. These Senior Credit Facilities may not be sufficient to meet our needs as our business grows, and we may be unable
<br />to extend or replace them on acceptable terms, or at all. The Senior Credit Facilities are subject to quarter end ratio covenants, including a maximum ratio of total funded debt to
<br />EBITDA and a debt service coverage ratio (each as defined in the agreement and described in more detail in this Form 10-K) as well as certain other customary operational
<br />covenants. EBITDA for purposes of the facilities excludes the results of certain renewable energy projects that we own and which we finance in separate subsidiaries through
<br />project financing and the results of our joint ventures. In addition, our project financing term loans and construction loans require us to comply with a variety of financial and
<br />operational covenants. Our failure to comply with the covenants under our project financing debt or our Senior Credit Facilities may result in the declaration of an event of
<br />default and cause us to be unable to borrow under our Senior Credit Facilities. In addition to preventing additional borrowings under these facilities, an event of default, if not
<br />cured or waived, may result in the acceleration of the maturity of indebtedness outstanding under it or the applicable project financing term loan, which would require us to pay
<br />all amounts outstanding. If an event of default occurs under our project financing debt or our Senior Credit Facilities, we may not be able to cure it within any applicable cure
<br />period, if at all. Certain of our debt agreements, including our Senior Credit Facilities, also contain subjective acceleration clauses based on a lender deeming that a "material
<br />adverse change" in our business has occurred. If these clauses are implicated, and the lender declares that an event of default has occurred, the outstanding indebtedness would
<br />likely be immediately due and owing. If the maturity of our indebtedness is accelerated, we may not have sufficient funds available for repayment or we may not have the
<br />ability to borrow or obtain sufficient funds to replace the accelerated indebtedness on terms acceptable to us or at all.
<br />If our subsidiaries default on their obligations under their debt instruments, we may need to make payments to lenders or to prevent foreclosure on the collateral securing
<br />the debt.
<br />We typically set up subsidiaries to own and finance our renewable energy projects. These subsidiaries incur various types of debt which can be used to finance one or more
<br />projects. This debt is typically structured as non -recourse or limited recourse debt, which means it is repayable solely from the revenues from the projects financed by the debt
<br />and is secured by such projects' physical assets, major contracts and cash accounts and a pledge of our equity interests in the subsidiaries involved in the projects. Although our
<br />subsidiary debt is typically non -recourse to Ameresco, if a subsidiary of ours defaults on such obligations, or if one project financed by a particular subsidiary's indebtedness
<br />encounters difficulties or is terminated, then we may from time to time determine to provide financial support to the subsidiary in order to maintain rights to the project or
<br />otherwise avoid the adverse consequences of a default. In the event a subsidiary defaults on its indebtedness, its creditors may foreclose on the collateral securing the
<br />indebtedness, which may result in our losing our ownership interest in some or all of the subsidiary's assets. Furthermore, our $300 million construction and development loan,
<br />which we use to finance a number of our early stage development and construction projects, requires us, in the case of default under the facility, a default under our Senior
<br />Credit Facilities or a change in control of Ameresco, to make required capital contributions to the borrower entity who then would be required to use the proceeds from the
<br />capital contributions to repay the construction and development loan. The loss of our ownership interest in a subsidiary or some or all of a subsidiary's assets or the requirement
<br />to make capital contributions under our construction and development loan could have a material adverse effect on our business, financial condition and operating results.
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