8-KOther Events

American Water Works Company, Inc. 8-K Report, Corporate Update (Apr 8, 2020)

Filed April 8, 2020For Securities:AWK

Summary

This Form 8-K filing from American Water Works Company (AWK), dated April 8, 2020, provides an update on the company's response to the novel coronavirus (COVID-19) pandemic and its potential impacts. The company's primary focus areas include the safety of its employees, customers, and communities, alongside executing its business continuity plan. AWK is actively monitoring supply chain risks and its access to capital markets, noting that adverse impacts on capital markets could necessitate alternative, potentially more expensive, funding sources. The filing also updates risk factor disclosures, highlighting the significant influence of state Public Utility Commissions (PUCs) on its regulated businesses. The pandemic's potential to limit PUCs' ability to approve rate increases and other essential regulatory actions is a key concern. Furthermore, AWK is addressing the inherent risks of its operations, including those related to severe weather, natural disasters, and maintaining safe work environments, especially in light of COVID-19 safety protocols. The company also reiterates its significant existing indebtedness and ongoing efforts to manage liquidity through credit facilities and a recent term loan, while acknowledging potential challenges in accessing capital markets on favorable terms.

Key Highlights

  • 1American Water is actively monitoring the impact of the COVID-19 pandemic on its operations, employees, customers, and supply chain.
  • 2The company has implemented safety measures for employees and customers, including work-from-home guidelines, closing payment locations, and social distancing.
  • 3Potential impacts on access to capital markets are being closely watched, with a possibility of needing alternative, potentially more costly, funding sources.
  • 4The company is concerned about the ability of state Public Utility Commissions (PUCs) to approve rate increases and other regulatory actions due to pandemic-related disruptions.
  • 5AWK has secured additional short-term liquidity by drawing $500 million from a newly established $750 million 364-day term loan facility.
  • 6The company is managing its significant existing debt load and has extended the termination date of its revolving credit facility to March 21, 2025.
  • 7Risk factors have been updated to include the potential impacts of the pandemic on regulatory approvals, operational disruptions, capital markets access, and benefit plan asset valuations.

Frequently Asked Questions

American Water's main priorities are the care and safety of its employees, ensuring the safety of its customers and the communities it serves, and executing its business continuity plan.

American Water has drawn $500 million from a new $750 million 364-day term loan facility for short-term liquidity and is utilizing existing cash balances, operational cash flows, and its revolving credit facility. The company is continuously assessing its liquidity needs as market conditions evolve.

The pandemic may significantly limit or curtail the ability of state Public Utility Commissions (PUCs) to approve rate applications and other essential regulatory requests. PUCs may also take emergency actions, such as prohibiting service terminations for non-payment, which could affect the company's operations and financial results.

At the time of filing, American Water does not anticipate any material negative impacts on its supply chain. The company is actively working with its vendors to understand potential impacts.