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Duke Energy CORP 8-K Report, Material Agreement (Mar 19, 2020)

Filed March 19, 2020For Securities:DUKDUKBDUK-PA

Summary

Duke Energy Corporation (DUK) filed an 8-K on March 19, 2020, detailing significant actions taken to bolster its liquidity. The company entered into a new $1.5 billion 364-day term loan credit agreement and immediately borrowed the full amount. This new facility also includes an option to increase borrowings by an additional $500 million under certain conditions, potentially raising the total new funding to $2.0 billion. These new borrowings, alongside previously drawn funds and available credit, are intended to reduce outstanding commercial paper and support general corporate purposes. The filing also provides a snapshot of Duke Energy's liquidity position as of March 19, 2020, indicating substantial cash on hand, significant availability under its master credit facility, and additional liquidity from equity forward agreements. These measures suggest a proactive approach by Duke Energy to ensure financial flexibility during a period of economic uncertainty.

Key Highlights

  • 1Entered into a new $1.5 billion 364-day term loan credit agreement on March 19, 2020.
  • 2Immediately borrowed the full $1.5 billion under the new term loan agreement.
  • 3The new credit agreement allows for a potential increase of up to $500 million in borrowing capacity.
  • 4Borrowed the remaining $500 million of availability under an existing $1.0 billion revolving credit facility on March 17, 2020.
  • 5Total new borrowings and drawn amounts under these facilities aggregate $2.0 billion.
  • 6Funds raised will be used to reduce commercial paper and for general corporate purposes.
  • 7As of March 19, 2020, Duke Energy reported $1.9 billion in cash on hand and $4.4 billion available under its master credit facility.

Frequently Asked Questions

Duke Energy entered into the $1.5 billion term loan to bolster its liquidity. The funds, along with other available credit and cash, are intended to reduce outstanding commercial paper and cover general corporate expenses. This move demonstrates proactive financial management to ensure operational flexibility.

The company secured $1.5 billion through a new 364-day term loan and also drew the remaining $500 million from an existing revolving credit facility. This brings the total recent borrowings to $2.0 billion, with potential for an additional $500 million under the new loan.

As of March 19, 2020, Duke Energy had approximately $1.9 billion in cash on hand and $4.4 billion available under its master credit facility. Additionally, there was approximately $2.5 billion in liquidity available from equity forward agreements, indicating a strong overall liquidity position.

The equity forward agreements, related to a stock offering in November 2019, provide Duke Energy with additional liquidity. The company has the option to settle these agreements, which could provide up to $2.5 billion, by December 31, 2020.