Summary
On July 17, 2013, American Electric Power Company, Inc. (AEP) and its subsidiaries, Appalachian Power Company (APCo), AEP Generation Resources Inc. (AGR), Kentucky Power Company (KPCo), and Ohio Power Company (OPCo), entered into a new $1,000,000,000 Term Credit Agreement. This new agreement replaces a previous credit facility that was terminated on the same date. The primary purpose of this new credit agreement is to provide additional liquidity to facilitate the corporate separation process involving Ohio Power Company (OPCo). Under this new agreement, OPCo, APCo, AGR, and KPCo are named as borrowers. The agreement allows for potential future assignments of borrowings, particularly from OPCo to AGR upon the transfer of OPCo's generation assets, and subsequently to APCo and KPCo, subject to regulatory approval. Key financial covenants require AEP and the borrowers to maintain a debt-to-total capitalization ratio not exceeding 67.5%, with specific definitions for calculation. Failure to meet these covenants or other debt obligations exceeding $50 million could trigger an event of default.
Key Highlights
- 1AEP and its subsidiaries entered into a new $1,000,000,000 Term Credit Agreement on July 17, 2013.
- 2The new credit agreement replaces a previously terminated $1,000,000,000 credit facility dated February 13, 2013.
- 3The primary objective of the new agreement is to provide additional liquidity for the corporate separation process of Ohio Power Company (OPCo).
- 4The agreement names APCo, AGR, KPCo, and OPCo as borrowers, with AEP guaranteeing AGR.
- 5The agreement includes provisions for the assignment of borrowings from OPCo to AGR, and potentially to APCo and KPCo, subject to regulatory approvals and asset transfers.
- 6Key covenants require borrowers to maintain a debt-to-total capitalization ratio not exceeding 67.5%.
- 7Failure to comply with covenants or other significant debt obligations ($50 million+) could result in an event of default.