Summary
NextEra Energy, Inc. (NEE) announced on February 9, 2017, that its subsidiary, NextEra Energy Capital Holdings, Inc., has entered into two bi-lateral term loan agreements totaling $7.5 billion with BNP Paribas and Sumitomo Mitsui Banking Corporation. These facilities are designated as short-term, non-revolving term loans and are intended for general corporate purposes, notably to fund a portion of the acquisition of Oncor Electric Delivery Company LLC. The loan agreements mature on August 6, 2017, with the facilities expiring on February 6, 2018. Interest rates are tied to the Eurodollar Rate plus a margin that can fluctuate based on the duration of outstanding commitments or loans. These financing arrangements, alongside previous equity issuances and planned asset sales, are a key component of NEE's strategy to finance the significant Oncor acquisition.
Key Highlights
- 1NEE's subsidiary secured $7.5 billion in short-term term loan facilities from BNP Paribas and Sumitomo Mitsui Banking Corporation.
- 2The primary stated use of these funds is to finance a portion of the purchase price for the acquisition of Oncor Electric Delivery Company LLC.
- 3The loan obligation termination date is August 6, 2017, and the loan agreements expire on February 6, 2018.
- 4Interest rates are based on the Eurodollar Rate plus a variable margin, adjusted by the length of outstanding loans or commitments.
- 5The financing is part of a broader plan that includes prior equity issuances and anticipated asset sales to fund the Oncor acquisition.
- 6NEE itself guarantees the payment obligations under these loan agreements.
- 7The loan agreements contain standard default and acceleration clauses, including financial covenants related to debt to capitalization ratios and bankruptcy events.