8-KMaterial AgreementsFinancial EventsExhibits & Filings

ATMOS ENERGY CORP 8-K Report, Material Agreement (Sep 27, 2016)

Filed September 27, 2016For Securities:ATO

Summary

Atmos Energy Corporation (ATO) has entered into a new $200 million Term Loan Agreement, primarily to refinance existing debt and provide funds for working capital and capital expenditures. This move is designed to strengthen the company's financial flexibility and support its ongoing operational and growth initiatives. The loan features variable interest rates tied to the company's credit ratings, offering either a base rate or LIBOR-based options with applicable margins. This structure allows for potentially lower borrowing costs if credit ratings improve. The Term Loan matures in September 2019 and includes standard covenants to maintain a debt-to-capitalization ratio below 0.70 to 1.00, with specific exclusions for pension liabilities and a portion of hybrid securities. The agreement also outlines clear terms for default scenarios, including acceleration of debt repayment. This financing is a routine but important component of managing the company's capital structure and ensuring adequate resources for its regulated utility operations.

Key Highlights

  • 1Atmos Energy entered into a new $200 million Term Loan Agreement on September 22, 2016.
  • 2The primary uses of the Term Loan are to refinance existing indebtedness and for general corporate purposes, including working capital and capital expenditures.
  • 3Interest rates are variable, based on the Company's credit ratings and a choice between a base rate or LIBOR, with applicable margins.
  • 4The Term Loan has a maturity date of September 22, 2019, at which point all outstanding amounts are due.
  • 5Key financial covenants include maintaining a debt-to-capitalization ratio of less than or equal to 0.70 to 1.00.
  • 6Commitment fees ranging from 0.060% to 0.175% per annum are payable on the unused portion of the loan, dependent on credit ratings.
  • 7Default provisions are outlined, including potential acceleration of debt repayment upon certain events, such as cross-defaults or insolvency.

Frequently Asked Questions

The primary purposes of the Term Loan are to refinance existing indebtedness of Atmos Energy Corporation and to provide funds for working capital, capital expenditures, and other general corporate purposes. This helps the company manage its debt obligations and ensure sufficient liquidity for its operations and growth investments.

The interest rate is variable and depends on Atmos Energy's credit ratings at the time of borrowing. The company can elect to base the rate on either a specified base rate (linked to BB&T's prime rate, Federal Funds Rate, and LIBOR) or the LIBOR rate. An applicable margin, ranging from 0.000% to 1.150% per annum, will be added based on the company's credit ratings. For example, at the time of the filing, a base rate borrowing would be approximately 3.500% and a LIBOR borrowing approximately 1.420%.

A significant covenant requires Atmos Energy to maintain a debt-to-capitalization ratio of less than or equal to 0.70 to 1.00 as of the last day of each fiscal quarter. Certain items, such as pension and post-retirement benefit liability adjustments and a portion of hybrid securities (up to 15% of total capitalization), are excluded from the debt calculation, providing some flexibility.

The Term Loan matures on September 22, 2019. At that time, all outstanding principal amounts, accrued interest, and unpaid fees under the Term Loan will be due and payable in full.