8-KMaterial AgreementsFinancial EventsExhibits & Filings

ENTERGY CORP /DE/ 8-K Report, Material Agreement (Dec 13, 2005)

Filed December 13, 2005For Securities:ETR

Summary

This 8-K filing from Entergy Corporation details significant financing activities and corporate actions. Most notably, Entergy Corporation entered into a $1.5 billion, 3-year bank credit facility on December 7, 2005, with Citibank and a syndicate of other banks. This facility provides significant liquidity and can also be used for issuing letters of credit, with terms that include covenants on consolidated debt ratios and potential acceleration of payments upon default. This new credit line suggests proactive financial management to ensure operational flexibility and fund future needs. Furthermore, the filing provides an update on Entergy New Orleans' financial restructuring. The bankruptcy court granted final approval for a debtor-in-possession (DIP) credit facility, with Entergy Corporation acting as the lender. This facility, designed to support business restoration efforts post-disaster, has had its borrowing limit increased to $200 million by the SEC. The terms of the DIP facility provide Entergy Corporation with superpriority administrative claim status and secured liens on Entergy New Orleans' property, offering substantial protection for the company's lending. Additionally, Entergy Gulf States issued $350 million in first mortgage bonds to redeem existing debt and repay intercompany borrowings, demonstrating efforts to optimize its capital structure and manage its debt obligations efficiently.

Key Highlights

  • 1Entergy Corporation secured a $1.5 billion, 3-year credit facility with Citibank and other banks on December 7, 2005, enhancing its liquidity and financial flexibility.
  • 2The new credit facility includes covenants requiring Entergy to maintain a consolidated debt ratio of 65% or less of its total capitalization.
  • 3Entergy New Orleans received final bankruptcy court approval for its Debtor-In-Possession (DIP) credit facility, with Entergy Corporation as the lender, for business restoration efforts.
  • 4The SEC authorized an increase in the DIP Credit Agreement borrowing limit for Entergy New Orleans to $200 million.
  • 5Entergy Corporation's DIP loan to Entergy New Orleans is secured with superpriority administrative claim status and first priority liens on most of Entergy New Orleans' property.
  • 6Entergy Gulf States issued $350 million of first mortgage bonds on December 8, 2005, to refinance existing debt and manage its capital structure.
  • 7The Credit Agreement for the $1.5 Billion Facility is filed as an exhibit, providing detailed terms and conditions for investors to review.

Frequently Asked Questions

The $1.5 billion credit facility serves as a significant source of liquidity for Entergy Corporation, providing the company with access to funds for general corporate purposes, capital expenditures, or to meet other financial obligations over a 3-year term. It also allows for the issuance of letters of credit.

A primary financial covenant requires Entergy Corporation to maintain a consolidated debt ratio of 65% or less of its total capitalization. The agreement also includes provisions for the acceleration of amounts due upon the occurrence of certain events of default, such as failure to pay or breach of covenants.

The DIP Credit Agreement provides Entergy Corporation with significant security for its loan to Entergy New Orleans. The borrowings are entitled to superpriority administrative claim status in bankruptcy and are secured by a first priority lien on most of Entergy New Orleans' property, placing Entergy Corporation in a strong creditor position.

Entergy Gulf States issued $350 million in Floating Rate Series first mortgage bonds to redeem $200 million of its existing mortgage bonds maturing in October 2006 and to repay funds previously borrowed from the Entergy System money pool. This action helps optimize its debt maturity profile and reduce short-term borrowings.