8-KMaterial AgreementsFinancial EventsExhibits & Filings

CENTERPOINT ENERGY INC 8-K Report, Material Agreement (Sep 13, 2011)

Filed September 13, 2011For Securities:CNP

Summary

CenterPoint Energy, Inc. (CNP) and its wholly owned subsidiaries, CenterPoint Energy Houston Electric, LLC and CenterPoint Energy Resources Corp., have entered into new credit facilities totaling $2.45 billion, replacing their existing agreements. These new facilities, effective September 9, 2011, consist of three separate revolving credit agreements, each with a five-year term. This strategic move aims to enhance the company's liquidity and financial flexibility by consolidating and modernizing its credit arrangements. The Company's new $1.2 billion facility, along with $300 million and $950 million facilities for CenterPoint Houston and CERC respectively, provide significant borrowing capacity. These agreements include provisions for interest rates based on LIBOR or an Alternate Base Rate, with margins that adjust according to the borrowers' credit ratings. Importantly, the covenants within these agreements are designed to offer some flexibility, particularly for CenterPoint Houston in the event of substantial natural disaster-related restoration costs that may be recovered through securitization.

Key Highlights

  • 1Consolidated $2.45 billion in new revolving credit facilities across the parent company and two key subsidiaries.
  • 2Replaced existing credit facilities with new, longer-term five-year agreements.
  • 3The corporate facility for CenterPoint Energy, Inc. is $1.2 billion.
  • 4CenterPoint Energy Houston Electric, LLC has a new $300 million facility.
  • 5CenterPoint Energy Resources Corp. has a new $950 million facility.
  • 6Interest rates are variable, based on LIBOR or Alternate Base Rate plus specified margins that depend on credit ratings.
  • 7Includes covenants with potential temporary adjustments for CenterPoint Houston in case of significant natural disaster recovery costs, subject to securitization.

Frequently Asked Questions

The primary purpose of these new credit facilities is to replace existing agreements, enhance the company's liquidity, and provide financial flexibility with updated terms and a significant aggregate borrowing capacity of $2.45 billion.

Each of the three new revolving credit facilities has a five-year term. Interest rates are variable, offering borrowers the option to pay either a rate based on LIBOR plus a specified margin or an Alternate Base Rate plus a specified margin. These margins are subject to change based on the borrower's credit ratings.

Yes, the credit facility for CenterPoint Energy Houston Electric, LLC includes a provision that allows for a temporary increase in the permitted debt-to-earnings ratio covenant if the subsidiary incurs substantial costs (likely exceeding $100 million in a 12-month period) due to damage from a natural disaster in its service territory, provided these costs are intended to be recovered through securitization financing.

J.P. Morgan Securities LLC, RBS Securities Inc., and Merrill Lynch, Pierce, Fenner & Smith Incorporated served as global coordinators, joint lead arrangers, and joint bookrunners. JPMorgan Chase Bank, N.A. and Citibank, N.A. act as administrative agents for the respective facilities.