Business Context and Reporting Period
This Form 8-K is a combined current report filed by Pinnacle West Capital Corporation and its subsidiary, Arizona Public Service Company (APS), on June 29, 2017. The filing discloses the entry into and termination of material definitive agreements regarding corporate credit facilities.
Key Financial Metrics and Agreements
- New Credit Facility: APS entered into a five-year unsecured revolving credit facility with a capacity of $500 million, maturing on June 29, 2022.
- Terminated Facility: APS concurrently terminated a prior $500 million unsecured revolving credit facility that was set to expire on September 2, 2020.
- Interest Rate: Borrowings bear interest based on APS's then-current senior unsecured debt ratings.
- Usage: The facility is designated for general corporate purposes, including as a standby for commercial paper issuances and the issuance of letters of credit.
- Covenants: The agreement includes a requirement to maintain a consolidated debt-to-capitalization ratio no greater than a prescribed level and compliance with lien restrictions.
Material Changes Versus Prior Period
The primary material change is the extension of the maturity date for APS's $500 million revolving credit facility. The previous facility was scheduled to expire in September 2020, whereas the new facility extends the maturity to June 2022. The aggregate borrowing capacity remains unchanged at $500 million.
Guidance, Risks, and Contingencies
- Events of Default: The facility includes customary events of default, including a cross-default provision and a change of control provision specifically relating to Pinnacle West Capital Corporation.
- Consequences of Default: In the event of default, lenders may terminate loan obligations and declare outstanding amounts due and payable.
- Conditions Precedent: Borrowings are conditioned on APS's ability to make certain representations at the time of borrowing, with specific exceptions for material adverse effect and litigation representations made at the inception of the facility.
Investor Verification Checklist
- Verify APS's current senior unsecured debt rating to determine applicable interest rates.
- Review the specific "prescribed level" for the consolidated debt-to-capitalization ratio covenant in the full agreement text.
- Confirm the status of any existing commercial paper issuances supported by this standby facility.
- Monitor for any potential change of control events at Pinnacle West Capital Corporation that could trigger a default.