8-KMaterial AgreementsFinancial EventsExhibits & Filings

ATMOS ENERGY CORP 8-K Report, Material Agreement (Nov 3, 2008)

Filed November 3, 2008For Securities:ATO

Summary

Atmos Energy Corporation (ATO) has announced the entry into a new $212.5 million Revolving Credit Agreement, a 364-day facility, effective October 29, 2008. This new facility replaces a previously expiring $300 million agreement and is intended to supplement the company's existing $600 million working capital facility. The primary purpose of this credit line is to provide additional working capital, which is crucial for a utility company to manage its day-to-day operations, capital expenditures, and seasonal demands. The terms of the new credit facility are similar to previous agreements, with interest rates tied to the company's credit ratings and based on either a base rate or LIBOR, plus an applicable margin. Commitment fees are also payable on the unused portion of the facility. The agreement includes standard covenants limiting liens, asset sales, and mergers, and importantly, maintains a debt-to-capitalization ratio covenant of less than or equal to 0.70 to 1.00, with specific exclusions for certain liabilities. This filing provides transparency on the company's liquidity and financing arrangements during a period of economic uncertainty.

Key Highlights

  • 1Atmos Energy entered into a new $212.5 million, 364-day revolving credit facility on October 29, 2008.
  • 2This new credit facility is intended to provide additional working capital for the company.
  • 3The agreement replaces a prior $300 million revolving credit facility that expired on October 29, 2008.
  • 4The new facility's terms are substantially similar to its predecessor and the company's existing $600 million 5-year facility.
  • 5Interest rates are variable, dependent on Atmos Energy's credit ratings and based on either a base rate or LIBOR, plus an applicable margin.
  • 6The credit agreement includes customary covenants, such as limitations on liens and asset sales, and a debt-to-capitalization ratio not to exceed 0.70 to 1.00.
  • 7The facility expires on October 27, 2009, with all outstanding amounts due at that time.

Frequently Asked Questions

The primary purpose of the new $212.5 million revolving credit agreement is to provide Atmos Energy Corporation with additional working capital. This is essential for managing operational needs, seasonal fluctuations in business, and other short-term funding requirements.

The new $212.5 million, 364-day facility replaces a previous $300 million, 364-day facility that expired on October 29, 2008. While the amount is reduced, the terms and conditions of the new facility are substantially similar to the prior agreement and the company's existing $600 million 5-year facility.

Interest rates will be based on either a base rate or LIBOR, plus an applicable margin that ranges from 1.25% to 2.50% per annum, depending on the company's credit ratings. Additionally, Atmos Energy must pay quarterly commitment fees on the unused portion of the facility, ranging from 0.250% to 0.750% per annum, also based on credit ratings. At the time of the filing, specific examples showed potential effective interest rates of 6.50% on a base rate and 5.1175% on LIBOR, with a 0.500% commitment fee.

The credit facility includes standard covenants common in such agreements, such as limitations on the company's ability to incur additional liens, undertake substantial asset sales, or engage in mergers. A key financial covenant requires the company's debt-to-capitalization ratio to remain at or below 0.70 to 1.00 at the end of each fiscal quarter, with specific exclusions for pension liabilities and certain hybrid securities.