Summary
This Form 8-K filing by Atmos Energy Corporation (ATO) on April 5, 2005, details a material definitive agreement concerning its wholly-owned subsidiary, Atmos Energy Marketing, LLC (AEM). AEM entered into an Uncommitted Second Amended and Restated Credit Agreement, establishing a new $250 million credit facility that replaces a previous one set to expire. This facility is primarily intended to provide working capital for AEM's natural gas marketing business through discretionary loans and letters of credit.
Key Highlights
- 1Atmos Energy Corporation's subsidiary, AEM, secured a new $250 million uncommitted credit facility on March 30, 2005.
- 2The new credit facility replaces a prior $250 million facility that expired on March 31, 2005.
- 3The facility is intended to provide working capital for AEM's natural gas marketing operations.
- 4Borrowings under the facility will carry floating interest rates, with revolving loans priced at a base rate plus 0.50% margin, and offshore rate loans at an offshore rate plus a margin ranging from 1.375% to 1.75%.
- 5Fees for letters of credit range from 1.125% to 2.00% annually, depending on AEM's net worth.
- 6The credit facility has an expiration date of June 30, 2006.
- 7The agreement includes standard covenants limiting liens and additional indebtedness, as well as financial covenants related to liability ratios, cumulative losses, net working capital, and tangible net worth.
Frequently Asked Questions
The primary purpose of the new $250 million credit facility for Atmos Energy Marketing, LLC (AEM) is to provide working capital for its natural gas marketing business through discretionary loans and the issuance of letters of credit.
The Uncommitted Second Amended and Restated Credit Agreement has an expiration date of June 30, 2006. All outstanding amounts will be due and payable on this date.
Borrowings will bear floating interest rates. Revolving loans will be priced at a base rate plus a 0.50% margin (estimated at 6.25% based on the current prime rate). Offshore rate loans will be priced at an offshore rate (based on LIBOR) plus a margin ranging from 1.375% to 1.75% (estimated at 4.37% based on current LIBOR).
AEM must comply with covenants including maintaining a maximum total liabilities to tangible net worth ratio of 5.00 to 1, managing cumulative losses within specified ranges ($4 million to $10 million), maintaining minimum net working capital ($20 million to $50 million), and minimum tangible net worth ($21 million to $51 million), depending on borrowing levels.