Ameren Corporation 8-K Summary
Business Context and Reporting Period
This Form 8-K, dated June 30, 2009, reports on Ameren Corporation and its subsidiaries (including Union Electric Company, Central Illinois Public Service Company, and others) entering into new material definitive credit agreements. The filing details the restructuring of the company's liquidity facilities to provide substantial funding for general corporate purposes, working capital, and commercial paper support.
Key Financial Metrics and Liquidity
The filing establishes two primary credit facilities with the following terms:
- 2009 Multi-Year Credit Agreements: A combined facility of $1.3 billion (initially $2.1 billion through July 14, 2010, reducing to $1.8795 billion through July 14, 2011).
- Borrowing Sublimits: Ameren ($1.15 billion), Union Electric Company ($500 million), and Ameren Energy Generating Company ($150 million).
- Structure: Unsecured, revolving loans with interest rates based on ABR or Eurodollar plus a margin tied to credit ratings.
- Letters of Credit: Up to $287.5 million available.
- 2009 Illinois Credit Agreement: An $800 million senior secured facility replacing prior Illinois facilities.
- Borrowing Sublimits: Ameren ($300 million), CIPS ($135 million), CILCO ($150 million), and Illinois Power Company ($350 million).
- Structure: Secured by mortgage bonds for Illinois utilities; unsecured for Ameren. Revolving loans with a 364-day term per borrowing.
- Letters of Credit: Up to $200 million available.
The filing does not provide specific revenue, profit, cash flow, or margin figures for the period.
Material Changes Versus Prior Period
The new agreements replace and terminate the following prior facilities effective June 30, 2009:
- The Prior Multi-Borrower Credit Agreement (originally dated July 14, 2005/2006).
- The Prior Illinois Credit Agreements (dated July 14, 2006, and February 9, 2007), which totaled $1 billion in facilities.
- Specific collateral agreements related to CILCORP and AmerenEnergy Resources Generating Company (AERG) were terminated, with all liens released and obligations repaid.
The new structure consolidates liquidity, extends maturities (with the Multi-Year agreement extending one year beyond the prior agreement for Ameren), and adjusts borrowing sublimits among subsidiaries.
Guidance, Covenants, and Risks
Covenants:
- Capitalization: Borrowers must maintain consolidated indebtedness of not more than 65% of consolidated total capitalization.
- Interest Coverage: Ameren must maintain a ratio of consolidated funds from operations plus interest expense to consolidated interest expense of 2.0 to 1 (under the Illinois Credit Agreement).
- Non-Financial: Restrictions on incurring liens, transacting with affiliates, disposing of assets, and merging with other entities.
Risks and Contingencies:
- Cross-Default: Default under other indebtedness agreements exceeding $25 million in the aggregate constitutes a default under these facilities.
- Rating Conditions: The Illinois Credit Agreement requires a Moody's rating of Baa3 or higher (or S&P BBB- or higher) to satisfy certain conditions.
- Subsidiary Defaults: A default by an Ameren Illinois Utility constitutes a default by Ameren under the Illinois agreement, but defaults by UE or Genco under the Multi-Year agreement do not constitute a default under the Illinois agreement.
Investor Verification Checklist
- Verify the current credit ratings of Ameren and its subsidiaries to confirm applicable interest rate margins and compliance with rating covenants.
- Confirm compliance with the 65% consolidated indebtedness to total capitalization ratio.
- Review the specific terms of the "Ameren money pool arrangements" referenced as a liquidity source for AERG and CILCORP.
- Monitor the July 14, 2010, date when the Supplemental Agreement terminates and the facility size adjusts, noting Ameren's option to seek additional commitments.
- Check for any material adverse changes or litigation that could impact the "material accuracy of representations and warranties" required for borrowing.