8-KMaterial AgreementsFinancial EventsExhibits & Filings

DTE ENERGY CO 8-K Report, Material Agreement (Dec 22, 2005)

Filed December 22, 2005For Securities:DTEDTKDTBDTGDTW

Summary

DTE Energy Co. has entered into a new $150 million letter of credit and reimbursement agreement, effective December 16, 2005. This agreement, with The Bank of Nova Scotia (Scotia Capital) as Administrative Agent, provides DTE Energy with access to liquidity through the issuance of letters of credit up to the specified limit. The facility is set to expire on December 15, 2006, with provisions for automatic one-year extensions, subject to certain conditions being met, indicating a degree of operational continuity and management's intent to maintain this credit line. An important feature of this agreement is its flexibility, allowing for the conversion of drawn amounts on letters of credit into a two-year term loan. This feature provides DTE Energy with an option to manage its short-term liquidity needs and potentially convert them into longer-term financing if strategically advantageous. Borrowings under this agreement will be subject to a variable interest rate, which will be determined in accordance with the agreement's terms. This filing underscores DTE Energy's proactive approach to managing its financial resources and maintaining access to capital.

Key Highlights

  • 1DTE Energy entered into a $150 million letter of credit and reimbursement agreement on December 16, 2005.
  • 2The agreement provides access to letters of credit up to $150 million.
  • 3The Bank of Nova Scotia (Scotia Capital) serves as the Administrative Agent for the agreement.
  • 4The facility has an initial expiration date of December 15, 2006.
  • 5The agreement includes provisions for automatic one-year extensions, contingent on specific conditions.
  • 6Drawn amounts on letters of credit can be converted into a two-year term loan.
  • 7Borrowings will accrue interest at a variable rate as defined in the agreement.

Frequently Asked Questions

The primary purpose is to provide DTE Energy with financial flexibility and liquidity by establishing a $150 million facility for the issuance of letters of credit. This can be used for various business needs, such as securing performance obligations or providing credit support.

The agreement has an initial expiration date of December 15, 2006. However, it includes provisions for automatic one-year extensions, provided that certain conditions are met, suggesting a potential for longer-term availability.

If DTE Energy draws on a letter of credit issued under this agreement, those amounts can be converted into a two-year term loan. This provides DTE Energy with an option to manage its short-term liquidity needs as a more extended form of financing.

Borrowings under this agreement will be subject to a variable rate of interest. The specific rate will be established in accordance with the terms outlined in the letter of credit and reimbursement agreement.