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DEBT AND CREDIT FACILITIES
12 Months Ended
Dec. 31, 2018
DEBT AND CREDIT FACILITIES  
DEBT AND CREDIT FACILITIES

NOTE 9  DEBT AND CREDIT FACILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average

 

 

 

 

Weighted Average

 

 

 

 

 

 

Interest Rate for the

 

 

 

 

Interest Rate for the

 

 

 

 

 

 

Year Ended

 

 

 

 

Year Ended

 

 

(millions of dollars)

    

2018

    

December 31, 2018

    

    

2017

    

December 31, 2017

    

 

TC PipeLines, LP

 

 

 

 

 

 

 

 

 

 

 

Senior Credit Facility due 2021

 

40

 

3.14

%

 

185

 

2.41

%

 

2013 Term Loan Facility due 2022

 

500

 

3.23

%

 

500

 

2.33

%

 

2015 Term Loan Facility due 2020

 

 —

 

 —

 

 

170

 

2.22

%

 

4.65% Unsecured Senior Notes due 2021

 

350

 

4.65

%

(a)

350

 

4.65

%

(a)

4.375% Unsecured Senior Notes due 2025

 

350

 

4.375

%

(a)

350

 

4.375

%

(a)

3.90 % Unsecured Senior Notes due 2027

 

500

 

3.90

%

(a)

500

 

3.90

%

(a)

GTN

 

 

 

 

 

 

 

 

 

 

 

5.29% Unsecured Senior Notes due 2020

 

100

 

5.29

%

(a)

100

 

5.29

%

(a)

5.69% Unsecured Senior Notes due 2035

 

150

 

5.69

%

(a)

150

 

5.69

%

(a)

Unsecured Term Loan Facility due 2019

 

35

 

2.93

%

 

55

 

2.02

%

 

PNGTS

 

 

 

 

 

 

 

 

 

 

 

Revolving Credit Facility due 2023

 

19

 

3.55

%

 

 —

 

 —

 

 

5.90% Senior Secured Notes due 2018

 

 —

 

 —

 

 

30

 

5.90

%

(a)

Tuscarora

 

 

 

 

 

 

 

 

 

 

 

Unsecured Term Loan due 2020

 

24

 

3.10

%

 

25

 

2.27

%

 

North Baja

 

 

 

 

 

 

 

 

 

 

 

Unsecured Term Loan due 2021

 

50

 

3.54

%

 

 —

 

 —

 

 

 

 

2,118

 

 

 

 

2,415

 

 

 

 

Less:unamortized debt issuance costs and debt discount

 

10

 

 

 

 

12

 

 

 

 

Less: current portion

 

36

 

 

 

 

51

(b)

 

 

 

 

 

2,072

 

 

 

 

2,352

 

 

 

 

 

(a)

Fixed interest rate.

(b)

Includes the PNGTS portion due at December 31, 2017 amounting to $5.8 million that was paid on January 2, 2018.

TC PipeLines, LP

On November 10, 2016, the Partnership’s Senior Credit Facility was amended to extend the maturity period through November 10, 2021. The Facility consists of a $500 million senior revolving credit facility with a banking syndicate, under which $40 million was outstanding at December 31, 2018 (December 31, 2017 - $185 million), leaving $460 million available for future borrowing.

At the Partnership’s option, the interest rate on the outstanding borrowings under the Senior Credit Facility may be the lenders’ base rate or the London Interbank Offered Rate (LIBOR) plus, in either case, an applicable margin that is based on the Partnership’s long‑term unsecured credit ratings. The Senior Credit Facility permits the Partnership to specify the portion of the borrowings to be covered by specific interest rate options and, for LIBOR‑based borrowings, to specify the interest rate period. The Partnership is required to pay a commitment fee based on its credit rating and on the unused principal amount of the commitments under the Senior Credit Facility. The Senior Credit Facility has a feature whereby at any time, so long as no event of default has occurred and is continuing, the Partnership may request an increase in the Senior Credit Facility of up to $500 million, but no lender has an obligation to increase their respective share of the facility.

The LIBOR-based interest rate on the Senior Credit Facility was 3.77 percent at December 31, 2018 (December 31, 2017 – 2.62 percent).

On July 1, 2013, the Partnership entered into a term loan agreement with a syndicate of lenders for a $500 million term loan credit facility (2013 Term Loan Facility). On July 2, 2013, the Partnership borrowed $500 million under the 2013 Term Loan Facility, to pay a portion of the purchase price of a  dropdown transaction with TransCanada in 2013, maturing originally on July 1, 2018. On September 29, 2017, the Partnership’s 2013 Term Loan Facility was amended to extend the maturity period through October 2, 2022. The 2013 Term Loan Facility bears interest based, at the Partnership’s election, on the LIBOR or the base rate plus, in either case, an applicable margin. The base rate equals the highest of (i) SunTrust Bank’s prime rate, (ii) 0.50 percent above the U.S. federal funds rate and (iii) 1.00 percent above one-month LIBOR. The applicable margin for the term loan is based on the Partnership’s senior debt rating and ranges between 1.125 percent and 2.00 percent for LIBOR borrowings and 0.125 percent and 1.00 percent for base rate borrowings.

As of December 31, 2018, the variable interest rate exposure related to 2013 Term Loan Facility was hedged by fixed interest rate swap arrangements and our effective interest rate was 3.26 percent (2017 - 2.31 percent). Prior to hedging activities, the LIBOR-based interest rate was 3.60 percent at December 31, 2018 (December 31, 2017 – 2.62 percent).

In December 2018, the Partnership fully repaid its 2015 Term Loan Facility using proceeds primarily from Bison’s early contract termination with two of its customers (Refer to Notes 6 and 17)  and available cash.

The Senior Credit Facility and the 2013 Term Loan Facility require the Partnership to maintain a certain leverage ratio (debt to adjusted cash flow [net income plus cash distributions received, extraordinary losses, interest expense, expense for taxes paid or accrued, and depreciation and amortization expense less equity earnings and extraordinary gains]) no greater than 5.00 to 1.00 for each fiscal quarter, except for the fiscal quarter and the two following fiscal quarters in which one or more acquisitions has been executed, in which case the leverage ratio is to be no greater than 5.50 to 1.00. The leverage ratio was 3.12 to 1.00 as of December 31, 2018.

The Senior Credit Facility and the 2013 Term Loan Facility contain additional covenants that include restrictions on entering into mergers, consolidations and sales of assets, granting liens, material amendments to the Partnership Agreement, incurrence of additional debt by the Partnership’s subsidiaries and distributions to unitholders. Upon any breach of these covenants, amounts outstanding under the Senior Credit Facility and the 2013 Term Loan Facility may become immediately due and payable.

On May 25, 2017, the Partnership closed a $500 million public offering of senior unsecured notes bearing an interest rate of 3.90 percent maturing May 25, 2027. The net proceeds of $497 million were used to fund a portion of the 2017 Acquisition (Refer to Note 8). The indenture for the notes contains customary investment grade covenants.

PNGTS

On April 5, 2018, PNGTS entered into a revolving credit agreement under which PNGTS has the ability to borrow up to $125 million with a variable interest rate based on LIBOR. The credit agreement matures on April 5, 2023 and requires PNGTS to maintain a leverage ratio not greater than 5.00 to 1.00. The leverage ratio was 0.35 to 1.00 as of December 31, 2018. The facility is utilized primarily to fund the costs of the PXP expansion project and to finance PNGTS’ other funding needs. As of December 31, 2018, $19 million was drawn on the Revolving Credit Facility and the LIBOR-based interest rate was 3.60 percent.

GTN

On June 1, 2015, GTN entered into a $75 million unsecured variable rate term loan facility (GTN Unsecured Term Loan Facility), which requires yearly principal payments until its maturity on June 1, 2019. The variable interest is based on LIBOR plus an applicable margin. The LIBOR-based interest rate on the GTN Unsecured Term Loan Facility was 3.30 percent at December 31, 2018 (December 31, 2017 – 2.31 percent). GTN’s Unsecured Senior Notes, along with the GTN Unsecured Term Facility contain a covenant that limits total debt to no greater than 70 percent of GTN’s total capitalization.  GTN’s total debt to total capitalization ratio at December 31, 2018 is 42.8 percent.

Tuscarora

On August 21, 2017, Tuscarora refinanced all of its outstanding debt by amending its existing Unsecured Term Loan Facility (Tuscarora Unsecured Term Loan Facility) and issuing a new $25 million variable rate term loan that will require yearly principal payments and will mature on August 21, 2020. The Tuscarora Unsecured Term Loan contains a covenant that requires Tuscarora to maintain a debt service coverage ratio (cash available from operations divided by a sum of interest expense and principal payments) of greater than or equal to 3.00 to 1.00. As of December 31, 2018, the ratio was 10.29 to 1.00.

The LIBOR-based interest rate on the Tuscarora Unsecured Term Loan Facility was 3.47 percent at December 31, 2018 (December 31, 2017 —2.49 percent).

North Baja

On December 19, 2018, North Baja entered into a $50 million unsecured variable rate term loan facility, which matures on December 19, 2021. The net proceeds were used for general partnership purposes. The variable interest rate is based on LIBOR plus an applicable margin. The LIBOR-based interest rate on this term loan facility was 3.54 percent at December 31, 2018. North Baja’s Term Loan Facility contains a covenant that limits total debt to no greater than 70 percent of North Baja’s total capitalization.  North Baja’s total debt to total capitalization ratio at December 31, 2018 is 37.7 percent.

Partnership (TC PipeLines, LP and its subsidiaries)

At December 31, 2018, the Partnership was in compliance with its financial covenants, in addition to the other covenants which include restrictions on entering into mergers, consolidations and sales of assets, granting liens, material amendments to the Partnership Agreement, incurring additional debt and distributions to unitholders.

The principal repayments required by the Partnership on its consolidated debt are as follows:

 

 

 

(millions of dollars)

    

 

2019

 

36

2020

 

123

2021

 

440

2022

 

500

2023

 

19

Thereafter

 

1,000

 

 

2,118