Fluence Energy Inc

Current report

Our ABL Credit Agreement imposes certain restrictions that may affect our ability to operate our business and make payments on our indebtedness and may limit our ability to borrow under the ABL Facility.

Current report

We are party to the ABL Credit Agreement with revolving commitments in an aggregate principal amount of $400.0 million, as amended from time to time. The ABL Credit Agreement contains covenants that, among other things, restrict our ability to incur indebtedness; incur liens; sell, transfer, or dispose of property and assets; invest; pay dividends, make distributions or other restricted payments and engage in affiliate transactions. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources— Asset-Based Lending Facility” for further discussion of the ABL Facility. These restrictions may restrict our current and future operations, particularly our ability to respond to certain changes in our business or industry or take future actions, including raising additional debt or equity financing to operate during general economic or business downturns, to compete effectively or to take advantage of new business opportunities. As of each of March 31, 2024 and the date of this Report, we had no borr owings under the ABL Facility and no letters of credit outstanding.

Current report

Our ability to meet the restrictive covenants under the ABL Credit Agreement may be impacted by events beyond our control. Our ABL Credit Agreement and related security agreements provide that our breach or failure to satisfy certain covenants constitutes an event of default. Upon the occurrence of an event of default, our lenders could elect to declare all amounts outstanding, if any, under its debt agreements to be immediately due and payable. In addition, our lenders, to whom we granted a security interest in substantially all of our assets, would have the right to proceed against such assets we provided as collateral pursuant to the ABL Credit Agreement and related security agreement. If our borrowings under our ABL Facility was to be accelerated, we may not have sufficient cash on hand or be able to sell sufficient collateral to repay it or be able to borrow sufficient funds to refinance it, which would have an immediate adverse effect on our business and operating results.

Current report

Borrowing availability under the ABL Facility is subject to a borrowing base calculated in part on percentage of Net Orderly Liquidation Value (as defined in the ABL Credit Agreement) of our Eligible Inventory and Eligible In-Transit Inventory (both as defined under the ABLCredit Agreement), which, may be impacted by factors outside of our control, including demand for the Company’s products, production levels, operating activities, competition with producers of similar products, U.S. legislation and regulation, and supply chain factors. For example, if our inventory in the United States is limited and lower than expected, then our borrowing base availability under the ABL has and may in the future decline and we have had, and may in the future have, no borrowing capacity under the ABL Facility. In addition, the agent under the ABL Credit Agreement is permitted to adjust what is included in Eligible Inventory and Eligible In-Transit Inventory definitions and impose reserves under the ABL Facility, in its discretion, which could materially adversely affect the borrowing base availability. As a result of the foregoing, we may not have full or any access to borrowings or letters of credit under the ABL Facility based on the actual borrowing base calculation with respect to any period. As of the date of this Report, based on the most current borrowing base certificate delivered to the ABL Lenders, we had no borrowing availability under the ABL Facility as a result of limited U.S. Eligible Inventory and Eligible In-Transit Inventory, due primarily to timing of our U.S. projects. Any limitation on our ability to borrow against the ABL Facility may have a material adverse impact on our liquidity and out ability to fund future operations.

Current report

Amendment No. 2 to the ABL Credit Agreement expands the borrowing base calculation under the ABL Facility to include borrowing base qualified cash, which would be held in a specific borrowing base qualified cash account with Barclays. In addition, the borrowers must satisfy certain release conditions prior to the transfer of funds out of the borrowing base qualified cash account, and there is no guarantee that the borrowers will be able to satisfy such conditions at any given time. To the extent the Company maintains such borrowing base qualified cash account, the cash deposited into such account will be restricted under the terms of the ABL Credit Agreement and not available to the Company for other business purposes. The ABL Credit Agreement also requires us to dedicate a portion of our cash flow from operations to interest payments, thereby reducing the availability of cash flow to fund working capital, capital expenditures and other general corporate purposes.

Current report

Further, to the extent that no Covenant Relief Period is in effect, the ABL Credit Agreement provides for a full cash dominion period if certain thresholds are not met under the ABL Credit Agreement. During a full cash dominion period, Barclays has ability to conduct daily sweeps of our controlled accounts, which may place constraints on our cash management system and could impede our access to liquidity.