8-KMaterial AgreementsFinancial EventsExhibits & Filings

CENTERPOINT ENERGY INC 8-K Report, Material Agreement (Mar 8, 2016)

Filed March 8, 2016For Securities:CNP

Summary

CenterPoint Energy, Inc. (CNP) and its wholly-owned subsidiaries, CenterPoint Houston Electric, LLC and CenterPoint Energy Resources Corp., have entered into new revolving credit facilities totaling $2.5 billion, replacing their previous credit lines. This strategic move enhances the company's financial flexibility and borrowing capacity. The new facilities consist of a $1.6 billion credit facility for the parent company, a $300 million facility for CenterPoint Houston, and a $600 million facility for CenterPoint Resources. All three are five-year senior unsecured revolving credit facilities with interest rates tied to LIBOR or Alternate Base Rate, plus specified margins that vary with the company's credit ratings. These updated credit lines are crucial for supporting ongoing operations, capital expenditures, and potential disaster recovery efforts.

Key Highlights

  • 1Total aggregate principal amount of new revolving credit facilities is $2.5 billion.
  • 2The new facilities replace prior credit agreements for CNP, CenterPoint Houston, and CERC.
  • 3CenterPoint Energy, Inc. secured a $1.6 billion, five-year senior unsecured revolving credit facility.
  • 4CenterPoint Energy Houston Electric, LLC has a new $300 million, five-year senior unsecured revolving credit facility.
  • 5CenterPoint Energy Resources Corp. obtained a $600 million, five-year senior unsecured revolving credit facility.
  • 6Interest rates are based on LIBOR or Alternate Base Rate, plus a margin that fluctuates with credit ratings.
  • 7Covenants include debt-to-capitalization ratios with provisions for temporary increases following natural disasters impacting CenterPoint Houston.

Frequently Asked Questions

The new credit facilities are designed to provide CenterPoint Energy and its subsidiaries with enhanced financial flexibility and borrowing capacity to support general corporate purposes, capital expenditures, and potential restoration costs following natural disasters.

The credit facilities include debt-to-capitalization ratio covenants. Importantly, for CenterPoint Houston, there's a provision allowing for a temporary increase in the permitted ratio if the company incurs significant system restoration costs (over $100 million) due to a natural disaster and plans to recover these costs through securitization. This provides flexibility during extraordinary events.

Borrowings under the facilities can bear interest at the borrower's option, either at LIBOR plus a specified margin or at the Alternate Base Rate plus a specified margin. These margins are determined by the respective borrower's credit rating at the time of borrowing, meaning lower credit ratings could lead to higher interest costs.

J.P. Morgan Securities LLC, Mizuho Bank, Ltd., and Wells Fargo Securities, LLC acted as global coordinators, joint lead arrangers, and joint bookrunners for these facilities. Various other major banks also participated as joint lead arrangers and in other capacities.