BKH

Business Context and Reporting Period

Company: Black Hills Corporation
Filing Type: Form 8-K (Current Report)
Date of Report: July 30, 2018
Event: Entry into Material Definitive Agreements involving the amendment and restatement of two existing credit facilities.

Key Financial Metrics and Debt Structure

This filing details specific debt facility terms rather than operational financial performance (revenue, profit, or cash flow). Key debt metrics as of July 30, 2018:

• Restated Revolver:
  • Capacity: $750 million (expandable to $1 billion via accordion feature).
  • Outstanding Borrowings: $0.
  • Letters of Credit Issued: $11 million.
  • Interest Spread: 125 basis points over LIBOR for borrowings; 20 basis points over LIBOR for unused commitments.
  • Maturity: Extended to July 30, 2023 (with two one-year extension options).
• Restated Term Loan:
  • Outstanding Principal Balance: $300 million.
  • Interest Spread: Reduced to 75 basis points over LIBOR (previously 105 basis points).
  • Maturity: Extended to July 30, 2020 (previously August 9, 2019).

Material Changes Versus Prior Period

• Revolver Extension: The maturity date was extended by approximately two years from August 9, 2021, to July 30, 2023.
• Term Loan Cost Reduction: The borrowing cost for the Term Loan decreased by 30 basis points (from 105 bps to 75 bps over LIBOR).
• Term Loan Extension: The maturity date was extended by approximately one year from August 9, 2019, to July 30, 2020.
• Capacity Flexibility: The Revolver now includes an accordion feature allowing capacity increases up to $1 billion, subject to lender consent.

Outlook, Risks, and Management Commentary

Management Commentary: The amendments were executed to extend maturities and reduce borrowing costs on the Term Loan. The Revolver terms remain largely similar to the prior agreement, with the exception of the maturity extension and the addition of the accordion feature.

Risks and Contingencies:

• Interest rates on both facilities are variable and tied to LIBOR, subject to change based on the Company's senior unsecured long-term debt ratings.
• Extension options on the Revolver and the accordion feature are subject to the consent of lenders and the administrative agent.

Unusual Items: None reported in this filing.

Investor Verification Checklist

• Verify the current senior unsecured long-term debt ratings to confirm the applicable interest spreads.
• Confirm the status of the $11 million in letters of credit issued under the Revolver.
• Review the full text of Exhibit 10.1 and 10.2 for specific covenants and conditions regarding the extension options and accordion feature.
• Monitor future LIBOR fluctuations to assess the impact on the $300 million Term Loan interest expense.