8-KMaterial AgreementsFinancial EventsExhibits & Filings

DTE ENERGY CO 8-K Report, Material Agreement (Oct 21, 2004)

Filed October 21, 2004For Securities:DTEDTKDTBDTGDTW

Summary

On October 15, 2004, DTE Energy Co. and its subsidiaries, Detroit Edison and MichCon, entered into new five-year unsecured revolving credit agreements, replacing and reducing existing credit facilities. The parent company, DTE Energy, secured a $525 million credit facility with Citibank, while Detroit Edison entered into a $206.25 million agreement with Barclays, and MichCon secured a $243.75 million agreement with Bank One. These new agreements collectively increase DTE Energy's total aggregate availability to $1 billion ($700 million for DTE Energy directly, $275 million for Detroit Edison, and $325 million for MichCon). Importantly, these facilities mature in October 2009 and contain covenants requiring maintenance of a debt-to-capitalization ratio not exceeding 0.65:1 and an interest coverage ratio (EBITDA to interest) of at least 2:1, indicating a focus on maintaining financial health and creditworthiness.

Key Highlights

  • 1DTE Energy and its subsidiaries entered into new five-year credit agreements, maturing October 2009.
  • 2DTE Energy secured a $525 million unsecured revolving credit facility with Citibank.
  • 3Detroit Edison entered into a $206.25 million unsecured revolving credit facility with Barclays.
  • 4MichCon secured a $243.75 million unsecured revolving credit facility with Bank One.
  • 5Total aggregate credit availability for the DTE Energy group under the new combined facilities is $1 billion ($700 million for DTE Energy, $275 million for Detroit Edison, and $325 million for MichCon).
  • 6The new facilities replace and reduce previously existing three-year credit facilities.
  • 7Key financial covenants include maintaining a debt-to-capitalization ratio of no more than 0.65:1 and an EBITDA-to-interest ratio of at least 2:1.

Frequently Asked Questions

The primary purpose of these new credit agreements is to provide DTE Energy and its subsidiaries with access to a substantial amount of unsecured revolving credit for a five-year term, supporting their general corporate purposes and commercial paper borrowings, while also replacing and reducing older, shorter-term credit facilities.

The new credit agreements significantly enhance DTE Energy's overall liquidity. The parent company's aggregate availability is $700 million, and combined with its subsidiaries, the total available credit reaches $1 billion. This provides a strong financial backstop and flexibility.

DTE Energy and its subsidiaries must maintain a debt-to-capitalization ratio of no more than 0.65 to 1 and an earnings before interest, taxes, depreciation, and amortization (EBITDA) to interest ratio of no less than 2 to 1. These covenants are designed to ensure the company's ongoing financial health and ability to service its debt.

As of October 15, 2004, the filing date, DTE Energy, Detroit Edison, and MichCon did not have any outstanding borrowings under their respective new five-year credit agreements.