8-KFinancial Events

NEXTERA ENERGY INC 8-K Report, Financial Obligation (Mar 31, 2008)

Filed March 31, 2008For Securities:NEENEE-PNNEE-PSNEE-PTNEE-PWNEE-PVNEE-PU

Summary

This 8-K filing by NextEra Energy Inc. (formerly FPL Group, Inc.) details a significant financing event for its wholly-owned subsidiary, FPL Group Capital Inc. On March 25 and 27, 2008, FPL Group Capital entered into term loan agreements totaling $500 million, with the funds being borrowed on March 28, 2008. These loans are earmarked for general corporate purposes. Investors should note the maturity dates and interest rate structure. $100 million of the principal is due in April 2009, with the remaining $400 million due in March 2011. The loans bear a variable interest rate. Importantly, FPL Group, Inc. (the parent company) provides a guarantee for these obligations, and is subject to covenants, including maintaining a minimum ratio of funded debt to total capitalization, underscoring the parent company's commitment and financial oversight of its subsidiary's debt.

Key Highlights

  • 1FPL Group Capital Inc. (subsidiary of NEE) secured $500 million in term loans.
  • 2The loans were finalized and drawn down on March 25-28, 2008.
  • 3Proceeds are designated for general corporate purposes.
  • 4Loan repayment is structured with $100 million due in April 2009 and $400 million due in March 2011.
  • 5Interest rates on the loans are variable.
  • 6FPL Group, Inc. (NEE) provides a guarantee for the subsidiary's debt.
  • 7The parent company must maintain specific financial ratios, including a minimum funded debt to total capitalization ratio.

Frequently Asked Questions

This 8-K filing announces the creation of a direct financial obligation by FPL Group Capital Inc., a subsidiary of NextEra Energy Inc. (formerly FPL Group, Inc.). Specifically, it details the company entering into and drawing down on new term loan agreements totaling $500 million.

The total amount borrowed under the four separate term loan agreements is $500 million. $100 million of the principal is due in April 2009, and the remaining $400 million is due in March 2011.

Yes, FPL Group, Inc. (now NextEra Energy, Inc.) guarantees the payment of these FPL Group Capital term loans pursuant to a 1998 guarantee agreement. This means the parent company is directly responsible for repayment if the subsidiary defaults.

Yes, FPL Group, Inc. is required to maintain a minimum ratio of funded debt to total capitalization under the terms of the loan agreements. This covenant is designed to ensure the parent company maintains a healthy balance sheet.