8-KMaterial AgreementsFinancial EventsExhibits & Filings

ATMOS ENERGY CORP 8-K Report, Material Agreement (Oct 2, 2012)

Filed October 2, 2012For Securities:ATO

Summary

Atmos Energy Corporation (ATO) filed an 8-K on October 2, 2012, reporting the entry into a $260 million Term Loan Credit Agreement on September 27, 2012. This new facility was primarily used to pay down commercial paper issued in August 2012, which in turn funded the early redemption of $250 million in senior notes maturing in January 2013. This proactive refinancing demonstrates the company's management of its debt obligations and liquidity. The credit facility has a term of one month, with an expiration date of February 1, 2013. The initial interest rate is based on a one-month LIBOR plus a margin of 0.875%, resulting in an effective rate of 1.095% at the time of the agreement. Standard covenants are in place, including limitations on liens, asset sales, and mergers, along with a debt to capitalization ratio covenant not to exceed 0.70 to 1.00, with specific exclusions for pension liabilities and hybrid securities.

Key Highlights

  • 1Entered into a $260 million Term Loan Credit Agreement on September 27, 2012.
  • 2The primary purpose of the credit facility is to refinance commercial paper and redeem senior notes.
  • 3The facility allowed for the early redemption of $250 million of senior notes maturing in January 2013.
  • 4The credit facility has a short-term nature, expiring on February 1, 2013.
  • 5The initial interest rate is set at one-month LIBOR plus a 0.875% margin, totaling 1.095% per annum.
  • 6The agreement includes customary covenants such as limitations on liens, asset sales, mergers, and a debt-to-capitalization ratio limit of 0.70 to 1.00.

Frequently Asked Questions

Atmos Energy entered into the $260 million Term Loan Credit Agreement primarily to pay down commercial paper issued in August 2012, which was used to fund the early redemption of $250 million of senior notes that were originally scheduled to mature in January 2013.

The credit facility is short-term and will expire on February 1, 2013, at which point all outstanding amounts will be due. The initial interest rate is based on the one-month LIBOR rate (0.22% at the time of the agreement) plus a margin of 0.875%, resulting in an effective total interest rate of 1.095% per annum.

The credit facility includes typical covenants that limit liens, substantial asset sales, and mergers. Additionally, it requires the Company's debt to capitalization ratio to be less than or equal to 0.70 to 1.00 at the end of each fiscal quarter. Certain items, such as pension liabilities and specific hybrid securities, are excluded from this calculation.

Yes, the agreement outlines default provisions. In the event of a default, including cross-defaults on other specified indebtedness, the Administrative Agent (JPMorgan Chase) may, with the consent of a minimum number of lenders, or will, upon the direction of such lenders, declare the outstanding amount immediately payable and enforce all rights and interests under the credit facility documents, including rights of set-off.