Business Context and Reporting Period
This Form 8-K, dated May 13, 2016, reports material definitive agreements entered into by Pinnacle West Capital Corporation (Pinnacle West) and its subsidiary, Arizona Public Service Company (APS). The filing details the replacement of existing credit facilities with new five-year unsecured revolving credit facilities to support general corporate purposes and commercial paper issuances.
Key Financial Metrics and Agreements
Pinnacle West Capital Corporation
- New Facility Amount: $200 million unsecured revolving credit facility.
- Term: Five years, expiring May 13, 2021.
- Interest Basis: Tied to Pinnacle West's senior unsecured debt ratings.
- Key Covenants: Maintain specified ownership percentage of APS stock; maintain consolidated debt-to-capitalization ratio below a prescribed level; comply with lien restrictions.
Arizona Public Service Company (APS)
- New Facility Amount: $500 million unsecured revolving credit facility.
- Term: Five years, expiring May 13, 2021.
- Interest Basis: Tied to APS's senior unsecured debt ratings.
- Key Covenants: Maintain consolidated debt-to-capitalization ratio below a prescribed level; comply with lien restrictions.
Note: The filing does not provide specific values for revenue, profit, cash flow, or current debt levels, as this is a transactional report regarding credit facility restructuring.
Material Changes Versus Prior Period
Both registrants terminated their prior credit facilities on May 13, 2016, to replace them with new agreements:
- Pinnacle West: Terminated a $200 million facility that was set to expire on May 9, 2019. The new facility extends the maturity date by two years to May 13, 2021.
- APS: Terminated a $500 million facility that was set to expire on May 9, 2019. The new facility extends the maturity date by two years to May 13, 2021.
- Lender Composition: The new facilities include Mizuho Bank, Ltd., and BNP Paribas as agents/issuing banks, while The Royal Bank of Scotland PLC, which was a syndication agent on the prior facilities, is not listed as an agent on the new facilities.
Guidance, Risks, and Contingencies
Management Commentary: The facilities are intended for general corporate purposes, including serving as a standby facility to support commercial paper issuances and for letters of credit.
Risks and Events of Default: Both facilities include customary events of default, including cross-default provisions. The APS facility specifically includes a change of control provision relating to Pinnacle West. Upon an event of default, lenders may terminate commitments and declare outstanding obligations due and payable.
Conditions: Borrowings are conditioned on the registrants' ability to make certain representations at the time of borrowing, excluding representations regarding material adverse effects and litigation, which were made only at the inception of the facility.
Investor Verification Checklist
- Verify the specific "prescribed level" for the consolidated debt-to-capitalization ratio covenant in the full credit agreement text.
- Confirm the current senior unsecured debt ratings for both Pinnacle West and APS to determine applicable interest rates.
- Review the full list of lenders to assess concentration risk and banking relationships.
- Check for any subsequent filings regarding the utilization of these facilities or changes in the ownership percentage of APS by Pinnacle West.