Business Context and Reporting Period
This Form 8-K Current Report is filed by Northwest Natural Holding Company (NW Holdings) and its subsidiary Northwest Natural Gas Company (NW Natural) on March 20, 2020. The filing addresses material definitive agreements, new debt obligations, and corporate responses to the emerging global COVID-19 pandemic.
Key Financial Metrics and Liquidity
The filing details significant liquidity actions taken to secure cash reserves:
- New Term Loan: NW Natural entered into a $150 million 364-Day Term Loan on March 23, 2020, with full proceeds borrowed immediately.
- Revolving Credit Borrowings: On March 20, 2020, NW Natural borrowed $122 million and NW Holdings borrowed $35 million under existing revolving credit facilities.
- Cash Position (as of March 23, 2020): NW Holdings reported approximately $280 million in consolidated cash on hand. NW Natural reported approximately $245 million in cash on hand on a stand-alone basis.
- Available Credit: Under the NW Natural Credit Facility, $178 million remains available for drawing.
- Covenants: NW Natural is required to maintain a consolidated indebtedness to total capitalization ratio of 70% or less. The company was in compliance as of March 23, 2020.
Note: This filing does not provide revenue, profit, cash flow, or margin data for a specific reporting period.
Material Changes and Agreements
- Asset Sale Amendment: The termination date for the sale of NWN Gas Storage's membership interests in Gill Ranch Gas Storage, LLC was extended from March 31, 2020, to May 15, 2020.
- Debt Incurrence: The company incurred $307 million in new debt ($150 million term loan + $157 million revolver borrowings) specifically to bolster liquidity in response to economic uncertainty.
Outlook, Risks, and Management Commentary
Management is actively monitoring the COVID-19 outbreak and has implemented safety protocols, including remote work directives, travel limitations, and enhanced hygiene measures. While no material supply chain effects have been identified to date, the company acknowledges the inability to predict the duration or economic impact of the outbreak.
The borrowings described are precautionary measures to ensure sufficient cash on hand under various financial scenarios. The company expects to have ample liquidity to support funding needs through cash on hand, operations, and available credit capacity.
Risks: The filing includes standard forward-looking statement disclaimers regarding the uncertainty of the pandemic's impact on operations, financial results, and the global economy.
Key Facts for Investor Verification
- Verify the impact of the $307 million in new debt on the company's consolidated indebtedness to total capitalization ratio in subsequent filings.
- Monitor the status of the Gill Ranch Gas Storage sale, now subject to termination after May 15, 2020.
- Assess the utilization of the remaining $178 million available under the NW Natural Credit Facility.
- Review future quarterly reports for any material financial effects of the COVID-19 pandemic on operations and supply chains.