8-KOther EventsExhibits & Filings

ENTERGY CORP /DE/ 8-K Report, Corporate Update (May 19, 2022)

Filed May 19, 2022For Securities:ETR

Summary

Entergy Corporation (ETR) announced on May 19, 2022, the successful closing of a securitization transaction for its subsidiary, Entergy Louisiana, LLC (ELL). This transaction involved the issuance of $3.19 billion in bonds by the Louisiana Local Government Environmental Facilities and Community Development Authority to finance costs incurred by ELL from various natural disasters, including Hurricanes Laura, Delta, Zeta, Winter Storm Uri, and Hurricane Ida. The net proceeds from these bonds were channeled through the Louisiana Utilities Restoration Corporation (LURC) and a specially authorized trust to purchase preferred membership interests in Entergy Finance Company, LLC (EFC), a subsidiary of Entergy. This securitization is designed to enhance ELL's financial strength and stability. EFC will make annual distributions, referred to as Dividends, on these preferred interests at a stated rate of 7% per annum. The trust will then distribute these Dividends, with 99% going to ELL to support its operations and financial health, and 1% to LURC for the benefit of customers, after accounting for trust expenses. This initiative is a key step in recovering from significant storm-related expenses and reinforcing the financial footing of Entergy Louisiana.

Key Highlights

  • 1Entergy Louisiana (ELL) successfully closed a securitization transaction, issuing $3.19 billion in bonds.
  • 2Proceeds are intended to recover costs related to Hurricane Laura, Hurricane Delta, Hurricane Zeta, Winter Storm Uri, and Hurricane Ida.
  • 3The securitization structure involves a Louisiana-based authority issuing bonds, with proceeds used to purchase preferred interests in Entergy Finance Company, LLC (EFC).
  • 4EFC will issue preferred membership interests to a trust sponsored by the Louisiana Utilities Restoration Corporation (LURC).
  • 5These preferred interests carry a stated annual Dividend rate of 7%.
  • 6The trust will distribute 99% of annual Dividends to ELL and 1% to LURC (for customer benefit), net of trust expenses.
  • 7The transaction aims to strengthen ELL's financial stability and support its recovery efforts.

Frequently Asked Questions

The primary purpose of this securitization is to finance approximately $3.19 billion of Entergy Louisiana's (ELL) costs incurred as a result of significant weather events, including Hurricane Laura, Hurricane Delta, Hurricane Zeta, Winter Storm Uri, and Hurricane Ida. The transaction aims to improve ELL's financial strength and stability.

The net proceeds from the $3.19 billion in bonds issued were used by a trust to purchase preferred membership interests in Entergy Finance Company, LLC (EFC). These proceeds are designated for corporate purposes that support ELL's financial strength and stability.

This transaction provides a dedicated funding mechanism for ELL's storm costs, enhancing its financial stability. EFC will pay an annual Dividend of 7% on the preferred interests, with 99% of these funds flowing back to ELL, effectively reducing its financial burden and supporting its operations. This is expected to positively impact ELL's credit profile and financial resilience.

The Dividends paid by EFC on the preferred interests are distributed by the trust. 99% of the Dividends, after trust expenses, go to Entergy Louisiana (ELL) to support its financial health. The remaining 1% is distributed to the Louisiana Utilities Restoration Corporation (LURC) for the benefit of customers.