8-KMaterial AgreementsFinancial Events

XCEL ENERGY INC 8-K Report, Material Agreement (Dec 7, 2017)

Filed December 7, 2017For Securities:XELXELLL

Summary

Xcel Energy Inc. (XEL) has entered into a 364-Day Term Loan Agreement, establishing a $500 million revolving credit facility. The company drew $250 million immediately upon closing on December 5, 2017, with the option to draw the remaining $250 million before March 31, 2018. This facility is intended to provide short-term liquidity and is an unsecured, 364-day loan maturing on December 4, 2018, with a potential one-year extension subject to lender consent. The primary purpose of this debt facility is to offer temporary incremental short-term debt capacity. Xcel Energy's stated plan is to issue long-term debt in 2018 to repay this term loan and other outstanding commercial paper. This indicates a strategic move to manage its capital structure and refinance short-term obligations with longer-term financing. The agreement includes a key financial covenant related to the consolidated funded debt to total capitalization ratio, which must remain at or below 65%.

Key Highlights

  • 1Xcel Energy secured a $500 million 364-Day Term Loan Facility.
  • 2The company immediately drew $250 million and has the option to borrow the remaining $250 million by March 31, 2018.
  • 3The facility is unsecured and matures in 364 days (December 4, 2018), with a potential for a one-year extension.
  • 4Proceeds will be used for general corporate purposes, including refinancing outstanding commercial paper and other indebtedness.
  • 5Xcel Energy plans to issue long-term debt in 2018 to repay this short-term facility.
  • 6A key financial covenant restricts the consolidated funded debt to total capitalization ratio to a maximum of 65%.
  • 7The agreement contains covenants that restrict mergers, asset sales, and the incurrence of liens.

Frequently Asked Questions

The primary purpose of the 364-Day Term Loan Facility is to provide Xcel Energy with temporary incremental short-term debt capacity. The company plans to use these funds for general corporate purposes, including refinancing existing commercial paper and other short-term debt, with the intention of replacing it with long-term debt issued in 2018.

The loan facility has a term of 364 days, maturing on December 4, 2018. There is an option for lenders to extend the maturity by an additional 364-day period, ending December 3, 2019, subject to their consent. The facility is unsecured.

The most significant financial covenant requires Xcel Energy to maintain a consolidated funded debt to total capitalization ratio at or below 65 percent. This is a standard leverage covenant to ensure the company's debt levels remain manageable relative to its equity.

No, Xcel Energy explicitly states that this is a temporary measure for short-term liquidity. The company plans to issue long-term debt in 2018 specifically to repay this term loan and other outstanding commercial paper, indicating a strategy to optimize its debt maturity profile.