What happens when equipment is sold, or its appraised value falls?
Fermi’s lenders expect some turbines to be sold. A sale releases the equipment against a mandatory prepayment of the lower of the proceeds and the debt sized against it. The borrower reports an annual sales forecast and a quarterly sales report. If a new appraisal falls more than 2% and the loan-to-value goes above target for 30 days, it is an event of default unless the shortfall is paid. A problem with one manufacturer, purchase contract or warehouse is not a default if the value test still passes without that equipment, or the borrower prepays to make it pass.
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What the filed contracts say
Contract
What the filed wording says
Fermi turbine warehouse loan
A sale releases the equipment against a prepayment of the lower of the proceeds and the debt sized against that equipment.
Fermi turbine warehouse loan
The borrower gives an annual sales forecast and a quarterly report of equipment sold.
Fermi turbine warehouse loan
If a new appraisal falls more than 2% and loan-to-value stays above target for 30 days, it is a default unless the shortfall is paid.
Fermi turbine warehouse loan
A problem with one manufacturer, purchase contract or warehouse is not a default if the value test passes without that equipment.
The filed wording
(C) Disposition of Equipment. In connection with a Transfer of Equipment by a Loan Party (other than to another Loan Party) pursuant to Section 6.4, and as a condition to the release from Collateral of such Equipment and the associated interests and rights under the Material Equipment Documents in respect of such Equipment (which release shall be effective concurrently with such prepayment), Borrower shall make a Mandatory Prepayment of the Loans in an amount equal to the lower of (1) the proceeds received by the Borrower and (2) an amount equal to (I) the Debt Sizing Percentage multiplied by (II) the lower of (x) the Equipment Acquisition Costs of such Equipment as of the Closing Date and (y) the Appraisal Value of such Equipment as of the Closing Date
Fermi turbine warehouse equipment supply loan (Siemens and GE gas turbines), MUFG as agent, section 2.2(g)(iv)(C) · Fermi 8-K, Exhibit 10.1
Each extract is quoted from the contract as filed with the SEC, checked against the filed text when it was added; “…” marks words left out. Filers redact commercial terms, so a [***] or [*] is the filer's, not ours. The summaries describe the wording, not how a court would read it, and each contract's defined terms and other clauses can change the effect. General information drawn from public filings. It is not legal advice on any transaction, and using this page does not create a lawyer-client relationship. Views are personal.
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