8-KMaterial AgreementsFinancial Events

ENTERGY CORP /DE/ 8-K Report, Material Agreement (Jun 1, 2005)

Filed June 1, 2005For Securities:ETR

Summary

Entergy Corporation (ETR) has announced the entry into a new $2 billion, 5-year bank credit facility effective May 25, 2005. This new facility, which includes provisions for letters of credit, replaces two previously existing credit agreements: a $500 million, 5-year facility and a $965 million, 3-year facility. Entergy incurred no termination penalties for cancelling the older agreements. As of the filing date, Entergy had approximately $755 million in outstanding borrowings under the new $2 billion facility, with $67.5 million utilized for letters of credit, leaving $1,177.5 million available. The new credit agreement mandates Entergy to maintain a consolidated debt ratio of 65% or less of its total capitalization and includes standard clauses for acceleration of debt upon default. This move indicates a strategic financial maneuver by Entergy to consolidate and enhance its borrowing capacity.

Key Highlights

  • 1Entergy Corporation entered into a new $2 billion, 5-year bank credit facility on May 25, 2005.
  • 2The new facility replaces a $500 million, 5-year credit facility and a $965 million, 3-year credit facility.
  • 3No termination penalties were incurred for terminating the previous credit facilities.
  • 4As of June 1, 2005, $755 million was borrowed under the new $2 billion facility.
  • 5The new facility has a letter of credit capacity of $67.5 million, leaving $1,177.5 million available.
  • 6The credit agreement requires Entergy to maintain a consolidated debt ratio of 65% or less of its total capitalization.
  • 7The facility fees and interest rates are subject to fluctuation based on the senior debt ratings of Entergy's wholly-owned utility subsidiaries.

Frequently Asked Questions

The primary purpose of this filing is to report Entergy Corporation's entry into a new material definitive agreement (a $2 billion credit facility) and the termination of two prior material definitive agreements (existing credit facilities).

Entergy terminated the older, smaller credit facilities to replace them with a larger, more consolidated $2 billion facility. This likely provides greater financial flexibility and potentially more favorable terms.

A significant financial covenant requires Entergy to maintain a consolidated debt ratio of 65% or less of its total capitalization. The agreement also includes provisions for debt acceleration upon certain events of default.

As of June 1, 2005, Entergy had $755 million outstanding under the new $2 billion facility and $95 million outstanding under the Hypo Term Loans, totaling $850 million in reported borrowings across these facilities. The table provided shows $755 million outstanding under the new $2 Billion Facility and $95 million under the Hypo Term Loans.