8-KMaterial AgreementsFinancial EventsExhibits & Filings

CENTERPOINT ENERGY INC 8-K Report, Material Agreement (Mar 11, 2005)

Filed March 11, 2005For Securities:CNP

Summary

CenterPoint Energy, Inc. (CNP) has filed an 8-K report detailing significant changes to its credit facilities. On March 7, 2005, the company replaced its existing $750 million revolving credit facility with a larger $1 billion, five-year revolving credit facility. This new facility, with JPMorgan Chase Bank as the Administrative Agent, allows for borrowings based on LIBOR plus a spread, with adjustments for credit ratings and an additional utilization fee. Key financial covenants, including debt to EBITDA and EBITDA to interest ratios, are in place. Furthermore, a wholly-owned subsidiary, CenterPoint Energy Houston Electric, LLC, has also established two substantial credit facilities. A $200 million, five-year revolving credit facility and a $1.31 billion credit facility designed primarily to refinance an upcoming term loan. Both of these subsidiary facilities incorporate similar pricing structures tied to LIBOR and credit ratings, along with specific covenants such as a debt to total capitalization limit of 68%. Notably, both subsidiary facilities have provisions allowing for borrowings even in the event of a material adverse change or expected adverse litigation, subject to certain conditions. As of the filing date, the company had outstanding borrowings under these new facilities.

Key Highlights

  • 1CenterPoint Energy (CNP) significantly expanded its credit capacity by replacing a $750 million facility with a new $1 billion, five-year revolving credit facility.
  • 2The new corporate credit facility is with a syndicate of major banks led by JPMorgan Chase Bank, N.A. as Administrative Agent.
  • 3Borrowing costs under the new corporate facility are tied to LIBOR plus a spread (100 basis points initially) that adjusts based on credit ratings, with an additional utilization fee for higher usage.
  • 4A subsidiary, CenterPoint Energy Houston Electric, LLC, established a $200 million five-year revolving credit facility and a $1.31 billion facility.
  • 5The $1.31 billion subsidiary facility is earmarked for refinancing an existing $1.31 billion term loan maturing in November 2005.
  • 6Both subsidiary credit facilities include covenants such as a debt to total capitalization not exceeding 68% and specific provisions for borrowing even during a material adverse change.
  • 7As of March 11, 2005, CNP had $235 million borrowed under its new revolving credit facility, and CenterPoint Houston had $30 million borrowed under its $200 million facility.

Frequently Asked Questions

CenterPoint Energy, Inc. established a $1 billion revolving credit facility, and its subsidiary, CenterPoint Energy Houston Electric, LLC, established a $200 million revolving credit facility and a $1.31 billion facility. In total, this represents approximately $2.51 billion in new or refinanced credit capacity.

Borrowings under the corporate facility will be at LIBOR plus 100 basis points, and under the subsidiary facilities, it will be LIBOR plus 75 basis points. These rates are subject to adjustment based on the company's and subsidiary's credit ratings, and an additional 12.5 basis point utilization fee applies if more than 50% of the respective facility is drawn.

The corporate facility includes covenants related to debt to EBITDA and EBITDA to interest. The subsidiary facilities have covenants including a debt to total capitalization of no more than 68% and an EBITDA to interest covenant. Specific conditions around "material adverse change" and litigation are also outlined, with some flexibility for the subsidiary.

This $1.31 billion credit facility is primarily intended to refinance CenterPoint Energy Houston Electric's existing $1.31 billion term loan that matures in November 2005, in the event that proceeds from transition bond issuances are not available for repayment.