Eversource Energy 8-K Summary: Credit Facility Amendments
Business Context and Reporting Period
This Form 8-K, filed on October 29, 2015, reports events occurring on October 26, 2015. Eversource Energy and its subsidiaries (including The Connecticut Light and Power Company, NSTAR Electric Company, Public Service Company of New Hampshire, Western Massachusetts Electric Company, NSTAR Gas Company, and Yankee Gas Services Company) amended and restated their existing senior, unsecured revolving credit facilities.
Key Financial Metrics and Debt Structure
- Total Credit Capacity: The Eversource Facility maintains a total cap of $1.45 billion. The NSTAR Electric Facility maintains a principal amount of $450 million.
- Allocation: Under the Eversource Facility, Eversource is allocated $1.45 billion, CL&P $600 million, PSNH and WMECO $300 million each, and NSTAR Gas and Yankee Gas $200 million each.
- Interest Rates: Loans are based on LIBOR plus a margin ranging from 80 to 147.5 basis points, dependent on credit ratings.
- Facility Fees: Quarterly fees range from 7.5 to 27.5 basis points of the facility amount, regardless of borrowing activity.
- Financial Covenant: Borrowers must maintain a Consolidated Indebtedness to Capitalization Ratio not exceeding 0.65:1.00 at the end of any fiscal quarter.
Material Changes Versus Prior Period
The primary material change is the extension of the expiration date for both the Eversource Facility and the NSTAR Electric Facility to September 4, 2020. The principal amounts and overall caps for both facilities remain unchanged from their prior terms.
Outlook, Risks, and Contingencies
The facilities are designated for working capital, capital expenditures, debt repayment, and backing commercial paper programs. The agreements contain restrictive covenants limiting mergers, consolidations, asset sales, affiliate transactions, sale-leaseback transactions, and the incurrence of liens. A significant risk is the acceleration clause: upon the occurrence of certain financial or economic events, corporate events, or events of default, all outstanding loans may be declared immediately due and payable, and commitments may be terminated.
Investor Verification Checklist
- Verify the current credit ratings of Eversource and its subsidiaries to determine the applicable interest rate margins and facility fees.
- Confirm the company's current Consolidated Indebtedness to Capitalization Ratio to ensure compliance with the 0.65:1.00 covenant.
- Review the full text of the Facility agreements (to be filed as exhibits to the 2015 Form 10-K) for specific definitions of "events of default" and restricted transactions.
- Monitor the company's commercial paper program usage, as these facilities serve as a backstop.