8-KMaterial AgreementsFinancial EventsExhibits & Filings

ATMOS ENERGY CORP 8-K Report, Material Agreement (Mar 6, 2023)

Filed March 6, 2023For Securities:ATO

Summary

Atmos Energy Corporation (ATO) announced on March 3, 2023, the execution of a $2.02 billion senior unsecured term loan facility. This new financing is specifically earmarked to repay outstanding senior notes maturing on March 9, 2023, thereby ensuring the company meets its immediate debt obligations without disruption. The facility offers flexibility in interest rate selection, allowing the company to choose between an alternate base rate or the Term SOFR rate, with an initial effective rate of 5.955600% based on the latter. The term loan matures on December 31, 2023, and includes provisions for mandatory prepayment upon the proceeds from certain utility recovery securitization transactions in Texas and Kansas, as well as voluntary prepayments. Key covenants include limitations on liens and asset sales, and a maximum debt to capitalization ratio of 0.70 to 1.00, with specific exclusions for pension liabilities and a portion of hybrid securities. The agreement also outlines standard default provisions and remedies.

Key Highlights

  • 1Atmos Energy secured a $2.02 billion senior unsecured term loan facility on March 3, 2023.
  • 2The primary purpose of the new loan is to repay maturing senior notes due on March 9, 2023.
  • 3The facility offers interest rate options: Alternate Base Rate or Term SOFR rate (initially at 5.955600% per annum).
  • 4The term loan matures on December 31, 2023.
  • 5Mandatory prepayment is required from proceeds of specific utility recovery securitization transactions in Texas and Kansas.
  • 6The loan agreement includes a debt to capitalization ratio covenant, capped at 0.70 to 1.00, with specific exclusions.
  • 7Standard covenants regarding liens, asset sales, and mergers are in place.

Frequently Asked Questions

The primary purpose of the $2.02 billion term loan facility is to repay Atmos Energy's outstanding senior notes that mature on March 9, 2023. This ensures the company has the necessary funds to meet its immediate debt obligations.

The company can elect to pay interest based on either the Alternate Base Rate or the Term SOFR rate plus a margin. Initially, the facility is accruing interest based on the Term SOFR rate for a three-month period, resulting in an effective total interest rate of 5.955600% per annum.

The term loan facility matures on December 31, 2023. While the company can voluntarily prepay the loan, it is required to make mandatory prepayments upon receiving proceeds from certain utility recovery securitization transactions authorized by Texas and Kansas regulatory authorities.

The term loan facility includes customary covenants, such as limitations on liens and substantial asset sales. A key financial covenant is that the Company's debt to capitalization ratio must remain less than or equal to 0.70 to 1.00 at the end of each fiscal quarter, with specific exclusions for pension liabilities and a portion of hybrid securities.