Summary
CenterPoint Energy, Inc. (CNP) has amended its $1.2 billion bank credit facility. The key change allows for a temporary increase in the consolidated indebtedness to EBITDA ratio from 5 times to 5.5 times under specific circumstances. This flexibility is triggered if CNP's electric transmission and distribution subsidiary, CenterPoint Energy Houston Electric, LLC, suffers significant damage from a natural disaster requiring system restoration costs exceeding $100 million in a calendar year. The company intends to recover these costs through securitization financing. The increased leverage covenant is temporary, lasting until the securitization is completed, one year from certification, or the certification is revoked. This amendment provides CNP with crucial financial flexibility to manage potential large-scale restoration expenses without immediately violating its debt covenants.
Key Highlights
- 1Amendment to $1.2 billion bank credit facility effective February 5, 2010.
- 2Temporary increase in the permitted consolidated indebtedness to EBITDA ratio from 5x to 5.5x.
- 3Trigger condition: significant natural disaster damage to CenterPoint Houston requiring system restoration costs over $100 million in a calendar year.
- 4Company's intention to recover costs via securitization financing.
- 5Temporary covenant relief period: until securitization completion, one year post-certification, or certification revocation.
- 6Provides financial flexibility for large-scale restoration events.