8-KLeadership ChangesFinancial Events

SEMPRA 8-K Report, Financial Obligation (May 5, 2006)

Filed May 5, 2006For Securities:SRESREA

Summary

This Form 8-K filing from Sempra Energy (SRE) on May 5, 2006, reports on two key financial developments. Firstly, Sempra Commodities, a subsidiary, secured a $500 million, three-year revolving credit facility, guaranteed by the parent company. This facility provides flexibility for Sempra Commodities' operations and is subject to a leverage covenant for Sempra Energy. Secondly, the report details a $2 billion, five-year credit facility for Rockies Express Pipeline LLC, in which Sempra Energy holds a one-third interest. This facility is also guaranteed by Sempra Energy and is contingent on maintaining certain ownership stakes in the pipeline. The interest rates are tied to market conditions and credit ratings. Additionally, the filing announces a significant executive appointment, with Joseph A. Householder named Senior Vice President, Controller, and Chief Tax Counsel, succeeding the retiring principal accounting officer.

Key Highlights

  • 1Sempra Commodities obtained a $500 million, three-year revolving credit facility maturing in 2009, guaranteed by Sempra Energy.
  • 2The credit facility for Sempra Commodities allows for borrowings and the issuance of letters of credit and bank guarantees.
  • 3Sempra Energy is required to maintain a total indebtedness to total capitalization ratio of no more than 65% under the Sempra Commodities credit facility.
  • 4Rockies Express Pipeline LLC, a joint venture where Sempra Energy holds a one-third stake, secured a $2 billion, five-year credit facility.
  • 5Sempra Energy and Kinder Morgan Energy Partners severally guarantee the Rockies Express Pipeline credit facility based on their ownership percentages.
  • 6The Rockies Express credit facility requires Sempra Energy to maintain at least a 25% ownership in Rockies Express.
  • 7Joseph A. Householder was appointed Senior Vice President, Controller, and Chief Tax Counsel, effective May 4, 2006.

Frequently Asked Questions

The $500 million, three-year revolving credit facility provides Sempra Commodities with financial flexibility for its operations, allowing for borrowings and the issuance of letters of credit and bank guarantees. The facility is guaranteed by Sempra Energy.

Sempra Energy, as a one-third owner, severally guarantees the $2 billion, five-year credit facility for Rockies Express Pipeline LLC. This guarantee is in proportion to its ownership. Sempra Energy must also maintain at least a 25% ownership stake in Rockies Express and comply with financial covenants similar to its own senior unsecured credit facilities, including a maximum debt-to-capitalization ratio of 65%.

Joseph A. Householder, age 50, has been appointed Senior Vice President, Controller, and Chief Tax Counsel. He succeeds Frank H. Ault as the principal accounting officer, who is retiring. Mr. Householder brings significant experience, having previously been a partner at PricewaterhouseCoopers and held executive roles at Unocal Corporation.

Yes, under both the Sempra Commodities credit facility and the Rockies Express Pipeline credit facility, Sempra Energy must maintain a ratio of total indebtedness to total capitalization of no more than 65% at the end of each quarter. This covenant is a key condition for the availability of funds under these facilities.