Tennenbaum Capital Partners (TCP) has provided a $25 million term loan to Enphase Energy, a facility that comes shortly after the borrower identified uncertainty in its ability to achieve or sustain profitability.
The term loan, made through Tennenbaum Special Situations Fund IX, carries an interest rate of either 10 percent or L+ 9.6 percent, whichever is higher, according to an SEC filing shown earlier this month (8 July). According to the agreement, this interest rate will be reduced by 1 percent if Enphase achieves undisclosed minimum levels of revenue and EBITDA over 12 months ending 30 June 2017.
The financing is secured by second-priority security interest on substantially all of the company's assets, excluding its intellectual property. Obsidian Agency Services acted as administrative agent and collateral agent on the facility, which will mature on 1 July, 2020.
Enphase, an energy technology company specializing in the provision of microinverters used in the solar industry, also paid a commitment fee of 3.3 percent of the loan amount and a closing fee of 10 percent of the loan amount.
The TCP facility comes amid mounting net losses for Enphase, as the company has reported shortfalls since at least 2010. The company recently reported an $18.8 million net loss for the three months ending March 31, which brought its accumulated deficit to $201.9 million. Enphase attributed potential slowing revenue growth or declines in revenue to increased competition and a decline in demand for Enphase's offerings.
In the same filing, Enphase disclosed amendments to a covenant within an existing loan from Wells Fargo that will require the Petaluma, California-based company to maintain $12.5 million in undrawn availability rather than the previous requirement of $5 million.
TCP is a mid-market focused alternative investment management firm that pursues direct lending and special situations strategies through private funds, separate accounts, registered funds and a publicly-traded BDC. Based in Los Angles, the firm was founded in 1999 and maintains additional offices in New York and San Francisco. The firm manages $6 billion for investors that include public and private pension funds, endowments, family offices and others. In April, TCP secured a $250 million investment from CNO Financial Group, a publicly-traded insurance holding company.