Business Context and Reporting Period
This Form 8-K Current Report was filed on September 23, 2021, by PNM Resources, Inc. and its subsidiary, Public Service Company of New Mexico (PNM). The filing discloses the entry into a material definitive agreement regarding a private placement of senior unsecured notes.
Key Financial Metrics and Debt Issuance
PNM entered into a Note Purchase Agreement to sell $150.0 million in aggregate principal amount of senior unsecured notes. The issuance consists of two series:
- Series A: $50.0 million at 2.29% interest, due December 30, 2031.
- Series B: $100.0 million at 2.97% interest, due December 30, 2041.
Interest is payable semiannually beginning June 30, 2022. The filing does not provide specific revenue, profit, cash flow, or margin figures for the reporting period.
Material Changes and Use of Proceeds
The primary material change is the creation of a new direct financial obligation of $150.0 million. PNM intends to use the gross proceeds for:
- Funding capital expenditures, specifically the purchase of the Western Spirit transmission line.
- Refinancing existing short-term debt.
- General corporate purposes.
Guidance, Covenants, and Risks
The Note Purchase Agreement includes customary covenants and risks:
- Debt-to-Capitalization Covenant: PNM must maintain a ratio of less than or equal to 65%.
- Change of Control: PNM must offer to prepay the notes at par in the event of a change of control. The filing explicitly notes that the pending merger between PNM Resources, Inc. and Avangrid, Inc. does not constitute a change of control under this definition.
- Redemption: PNM retains the right to redeem notes prior to maturity subject to a make-whole premium.
- Default Provisions: The agreement includes customary events of default, including a cross-default provision.
The filing does not contain forward-looking guidance on revenue or earnings.
Investor Verification Checklist
- Verify the final closing date of the $150.0 million note issuance (expected on or before December 30, 2021).
- Confirm the impact of the Western Spirit transmission line purchase on future capital expenditure budgets.
- Monitor PNM's debt-to-capitalization ratio to ensure compliance with the 65% covenant.
- Review the definitive Note Purchase Agreement (Exhibit 10.1) for specific terms regarding the cross-default provision and parity of financial covenants.