8-KFinancial EventsExhibits & Filings

ENTERGY CORP /DE/ 8-K Report, Financial Obligation (Mar 14, 2012)

Filed March 14, 2012For Securities:ETR

Summary

On March 9, 2012, Entergy Corporation (ETR) and several of its subsidiaries, including Entergy Arkansas, Inc., Entergy Gulf States Louisiana, L.L.C., Entergy Louisiana LLC, and Entergy Texas, Inc., announced the establishment of new, five-year unsecured revolving credit and letter of credit facilities. These new facilities replace existing credit agreements and are designed to provide significant liquidity and flexibility for the companies. The parent company, Entergy Corporation, secured a $3.5 billion facility, which can be increased to $4 billion, with $1.605 billion already drawn and $8 million in letters of credit outstanding as of the reporting date. The subsidiaries also entered into substantial credit agreements, totaling $650 million across Entergy Arkansas ($150 million), Entergy Gulf States Louisiana ($150 million), Entergy Louisiana ($200 million), and Entergy Texas ($150 million). These facilities are crucial for ongoing operations, capital expenditures, and general corporate purposes, underscoring the company's commitment to maintaining robust financial health.

Key Highlights

  • 1Entergy Corporation established a new $3.5 billion unsecured revolving credit and letter of credit facility, extendable to $4 billion, maturing on March 9, 2017.
  • 2As of March 9, 2012, $1.605 billion was drawn and $8 million in letters of credit were issued under Entergy Corporation's new facility.
  • 3Entergy's subsidiaries, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, and Entergy Texas, also secured new credit facilities totaling $650 million.
  • 4Each subsidiary's credit facility is for five years, maturing on March 9, 2017, with provisions for one-year extensions up to two times.
  • 5The new credit agreements contain customary covenants, including restrictions on asset pledges and sales (excluding the ITC Transaction), and a requirement to maintain a consolidated debt ratio of 65% or less of total capitalization.
  • 6Interest rates and commitment fees on these facilities are variable and depend on Entergy's senior unsecured debt rating.
  • 7The establishment of these new credit facilities led to the termination of prior credit agreements for Entergy Corporation and its subsidiaries.

Frequently Asked Questions

The primary purpose of these new credit agreements is to provide Entergy Corporation and its key subsidiaries with significant unsecured revolving credit and letter of credit facilities. These facilities are intended to ensure liquidity for general corporate purposes, capital expenditures, and operational needs, offering financial flexibility over the next five years.

Key financial covenants include restrictions on pledging assets and certain asset sales, notably excluding the disposition of Entergy's transmission business to ITC Holdings Corp. Additionally, Entergy and its subsidiaries are required to maintain a consolidated debt ratio of 65% or less of their total capitalization.

The facilities have variable interest rates and commitment fees. These rates and fees fluctuate based on Entergy's senior unsecured debt rating, meaning that a stronger credit rating would likely result in lower borrowing costs and commitment fees.

The establishment of these new credit facilities on March 9, 2012, resulted in the termination of Entergy Corporation's and its subsidiaries' previously existing credit facilities. This indicates a refinancing or renewal of their credit arrangements.