8-KMaterial AgreementsFinancial EventsExhibits & Filings

ENTERGY CORP /DE/ 8-K Report, Material Agreement (Dec 20, 2004)

Filed December 20, 2004For Securities:ETR

Summary

Entergy Corporation (ETR) has announced the execution of a new $500 million, 5-year bank credit facility, effective December 14, 2004. This new facility, with Citibank as the administrative agent, replaces an existing $485 million, 364-day credit line, which Entergy has terminated without incurring any penalties. The new facility provides Entergy with enhanced financial flexibility and a longer-term borrowing option. The agreement includes covenants requiring Entergy to maintain a consolidated debt ratio of 65% or less of its total capitalization and an interest coverage ratio of not less than 2 to 1. The facility fee and interest rates are subject to fluctuation based on the senior debt ratings of certain of Entergy's wholly-owned domestic utility subsidiaries, indicating a potential link between financial flexibility and the company's creditworthiness.

Key Highlights

  • 1Entergy entered into a new $500 million, 5-year bank credit facility on December 14, 2004.
  • 2The new facility replaces a previously existing $485 million, 364-day credit facility.
  • 3Citibank, N.A. is serving as the administrative agent for the new credit facility.
  • 4The company terminated the 364-day facility without incurring any termination penalties.
  • 5Key financial covenants include maintaining a consolidated debt ratio of 65% or less and an interest coverage ratio of at least 2 to 1.
  • 6Facility fees and interest rates are variable and depend on the senior debt ratings of certain Entergy subsidiaries.
  • 7As of the report date, Entergy had approximately $40 million in outstanding borrowings under the new 5-year facility.

Frequently Asked Questions

This 8-K filing announces Entergy Corporation's entry into a new $500 million, 5-year bank credit facility and the termination of its previous $485 million, 364-day credit facility. It details the terms of the new agreement, including financial covenants and the administrative agent.

Entergy terminated the shorter-term 364-day facility to replace it with the longer-term 5-year facility, indicating a strategic move to secure longer-term borrowing capacity and potentially reduce refinancing risk.

Entergy is required to maintain a consolidated debt ratio of 65% or less of its total capitalization and an interest coverage ratio of not less than 2 to 1. These covenants are designed to ensure the company's financial stability and ability to service its debt.

The facility fee is currently set at 0.125% of the line amount. Both the facility fee and interest rates can fluctuate, depending on the senior debt ratings of certain domestic utility companies that are wholly-owned subsidiaries of Entergy. This suggests that Entergy's credit profile directly impacts its borrowing costs.