8-KFinancial EventsExhibits & Filings

CONSOLIDATED EDISON INC 8-K Report, Financial Obligation (Jun 26, 2006)

Filed June 26, 2006For Securities:ED

Summary

This Form 8-K filing by Consolidated Edison, Inc. (Con Edison) and its subsidiaries announces the execution of an Amended and Restated Credit Agreement, dated June 22, 2006. This new agreement consolidates and amends previous credit facilities, establishing a total revolving credit commitment of up to $2.25 billion. The primary purpose of this enhanced credit facility is to support the companies' commercial paper programs and provide general corporate purposes. This strategic move suggests Con Edison is proactively managing its liquidity and financial flexibility to meet its operational and financing needs. Investors should note the specific allocations of the credit facility among Con Edison, Consolidated Edison Company of New York, Inc., and Orange and Rockland Utilities, Inc. The agreement includes provisions for potential increases in the credit commitment and outlines key covenants, including a debt-to-total capital ratio not exceeding 0.65:1. The termination date for the banks' commitments is June 22, 2011, with potential for extensions. The filing also details events of default, which could trigger the acceleration of repayment, and consequences of a change of control, underscoring the importance of financial stability and adherence to covenants for the company and its lenders.

Key Highlights

  • 1Consolidated Edison, Inc. and its subsidiaries entered into an Amended and Restated Credit Agreement on June 22, 2006.
  • 2The new credit facility provides an aggregate revolving credit commitment of up to $2.25 billion.
  • 3The funds are primarily intended to support the companies' commercial paper programs and for general corporate purposes.
  • 4Specific availability under the credit agreement is allocated among Con Edison ($1 billion), Consolidated Edison Company of New York, Inc. ($1.5 billion, with potential to increase), and Orange and Rockland Utilities, Inc. ($200 million).
  • 5The agreement allows for an increase in the aggregate principal amount of up to $500 million, subject to certain conditions.
  • 6Key covenants include a consolidated debt to consolidated total capital ratio not to exceed 0.65 to 1.
  • 7The banks' commitments terminate on June 22, 2011, with provisions for one-year extensions, subject to various conditions and regulatory approvals for certain subsidiaries.

Frequently Asked Questions

The primary purpose of this agreement is to provide Consolidated Edison, Inc. and its subsidiaries with enhanced financial flexibility by establishing a significant revolving credit facility. This facility is intended to support their commercial paper programs and fund general corporate purposes, ensuring they have adequate liquidity for their operations and financial obligations.

The total aggregate revolving credit commitment is up to $2.25 billion. This amount is allocated as follows: $1 billion for Consolidated Edison, Inc., $1.5 billion for Consolidated Edison Company of New York, Inc. (which can potentially be increased to the full $2.25 billion with regulatory approval), and $200 million for Orange and Rockland Utilities, Inc. The agreement also allows for an additional $500 million increase under certain conditions.

A significant financial covenant is that the ratio of consolidated debt to consolidated total capital for each company must not exceed 0.65 to 1 at any time. Additionally, the companies are restricted from creating or assuming liens or other encumbrances on their assets beyond certain specified thresholds. These covenants are crucial for maintaining the borrowing capacity and financial health of the companies.

If an Event of Default occurs and continues, the banks have the right to terminate their commitments to that specific company. They can also declare all outstanding loans, accrued interest, and other amounts owed by that company under the Credit Agreement immediately due and payable. Events of Default include missed payments, breaches of covenants, materially incorrect representations, cross-defaults to other significant financial obligations, and other customary events.