8-KFinancial Events

CENTERPOINT ENERGY INC 8-K Report, Financial Obligation (Nov 14, 2005)

Filed November 14, 2005For Securities:CNP

Summary

This 8-K filing from CenterPoint Energy, Inc. (CNP) details a significant financial maneuver by its indirect wholly owned subsidiary, CenterPoint Energy Houston Electric, LLC ("CenterPoint Houston"). On November 14, 2005, CenterPoint Houston successfully borrowed $1.31 billion under its existing credit facility. This new borrowing was specifically utilized to extinguish a $1.31 billion term loan that matured on the same day. The refinancing offers substantial benefits, including a conversion to a term loan maturing in November 2007 and, most notably, a significant reduction in interest costs. The new loan carries an interest rate of LIBOR plus 75 basis points, representing a substantial 900-basis point decrease compared to the previous term loan. This move is secured by CenterPoint Houston's general mortgage bonds, indicating a strategic approach to managing debt and improving its cost of capital.

Key Highlights

  • 1CenterPoint Houston, a subsidiary of CNP, borrowed $1.31 billion on November 14, 2005.
  • 2The borrowing under the credit facility was used to repay a maturing $1.31 billion term loan.
  • 3The new borrowing has been structured as a term loan maturing in November 2007.
  • 4The new loan is secured by CenterPoint Houston's general mortgage bonds.
  • 5Interest rate on the new loan is LIBOR plus 75 basis points.
  • 6This represents a 900-basis point reduction in interest expense compared to the previous loan.

Frequently Asked Questions

The $1.31 billion borrowing by CenterPoint Houston was specifically to repay a $1.31 billion term loan that matured on November 14, 2005.

The new loan matures in November 2007, is secured by CenterPoint Houston's general mortgage bonds, and carries an interest rate of the London interbank offered rate (LIBOR) plus 75 basis points.

The new loan offers a significant cost savings, with an interest rate that is 900 basis points lower than the term loan it replaced.

Citibank, N.A. serves as the Administrative Agent, while Deutsche Bank Securities, Inc. is the Syndication Agent. ABN AMRO Bank N.V. and JPMorgan Chase Bank, N.A., along with Wachovia Bank, National Association, are acting as Co-Documentation Agents.