Debt

Cleco

Cleco’s total indebtedness as of December 31, 2011, and 2010 was as follows.



	AT DECEMBER 31,
(THOUSANDS)	2011			2010
Bonds
Cleco Power’s senior notes, 5.375%, due 2013	$	75,000		$	75,000
Cleco Power’s senior notes, 4.95%, due 2015	50,000			50,000
Cleco Power’s senior notes, 6.65%, due 2018	250,000			250,000
Cleco Power’s senior notes, 6.50%, due 2035	295,000			295,000
Cleco Power’s senior notes, 6.00%, due 2040	250,000			250,000
Cleco Power's senior notes, 5.12%, due 2041	100,000			—
Cleco Power’s pollution control revenue bonds, 5.875%, due 2029, callable after September 1, 2009	61,260			61,260
Cleco Power’s solid waste disposal facility bonds, 4.70%, due 2036, callable after November 1, 2016	60,000			60,000
Cleco Power’s solid waste disposal facility bonds, 5.25%, due 2037, mandatory tender on March 1, 2013	60,000			60,000
Cleco Power's solid waste disposal facility bonds, 6.00%, due 2038,reacquired on October 1, 2011	—			32,000
Cleco Power’s GO Zone bonds, 7.00%, due 2038, reacquired on December 1, 2011	—			100,000
Cleco Katrina/Rita’s storm recovery bonds, 4.41%, due 2020	75,707			87,975
Cleco Katrina/Rita’s storm recovery bonds, 5.61%, due 2023	67,600			67,600
Total bonds	1,344,567			1,388,835
Other long-term debt
Cleco Corporation’s credit facility draws	10,000			15,000
Barge lease obligations, ending December 31, 2013	17,538			19,200
Gross amount of long-term debt	1,372,105			1,423,035
Less: long-term debt due within one year	24,258			12,269
Less: lease obligations due within one year	1,841			1,662
Unamortized premium and discount, net	(8,950		)	(9,395		)
Total long-term debt, net	$	1,337,056		$	1,399,709

The amounts payable under long-term debt agreements for each year through 2016 and thereafter are as follows.



(THOUSANDS)
Amounts payable under long-term debt agreements
2012	$	24,258
2013	$	88,969
2014	$	14,876
2015	$	65,824
2016	$	26,815
Thereafter	$	1,133,825

At December 31, 2011, Cleco had no short-term debt outstanding compared to $150.0 million outstanding at December 31, 2010. The short-term debt outstanding at December 31, 2010, was a bank term loan Cleco Corporation entered into in February 2010. The bank term loan had an interest rate of LIBOR plus 2.75% and was set to mature in February 2011. In January 2011, Cleco extended the bank term loan to mature August 19, 2011 and lowered the interest rate to LIBOR plus 2.50% or ABR plus 1.50%. On April 29, 2011, Cleco repaid the $150.0 million bank term loan. As part of the repayment, Cleco paid $0.6 million for accrued interest on the term loan.

At December 31, 2011, Cleco’s long-term debt outstanding was $1.36 billion, of which $24.3 million was due within one year, compared to $1.41 billion outstanding at December 31, 2010, of which $12.3 million was due within one year. The long-term debt due within one year at December 31, 2011, represents $13.1 million of principal payments for the Cleco Katrina/Rita storm recovery bonds and $11.2 million of 5.875% Rapides pollution control revenue bonds that Cleco Power redeemed prior to maturity on January 25, 2012.

The amounts payable under the capital lease agreements for each year through 2016 and thereafter are as follows.



(THOUSANDS)
Amounts payable under capital lease agreements
2012	$	1,841
2013	$	2,017
2014	$	2,221
2015	$	2,446
2016	$	2,703
Thereafter	$	6,310

Cleco Power

Cleco Power’s total indebtedness as of December 31, 2011, and 2010, was as follows.



	AT DECEMBER 31,
(THOUSANDS)	2011			2010
Bonds
Senior notes, 5.375%, due 2013	$	75,000		$	75,000
Senior notes, 4.95%, due 2015	50,000			50,000
Senior notes, 6.65%, due 2018	250,000			250,000
Senior notes, 6.50%, due 2035	295,000			295,000
Senior notes, 6.00%, due 2040	250,000			250,000
Senior notes, 5.12%, due 2041	100,000			—
Pollution control revenue bonds, 5.875%, due 2029, callable after September 1, 2009	61,260			61,260
Solid waste disposal facility bonds, 4.70%, due 2036,callable after November 1, 2016	60,000			60,000
Solid waste disposal facility bonds, 5.25%, due 2037, mandatory tender on March 1, 2013	60,000			60,000
Solid waste disposal facility bonds, 6.00%, due 2038, reacquired on October 1, 2011	—			32,000
GO Zone bonds, 7.00%, due 2038, reacquired on December 1, 2011	—			100,000
Cleco Katrina/Rita’s storm recovery bonds, 4.41%, due 2020	75,707			87,975
Cleco Katrina/Rita’s storm recovery bonds, 5.61%, due 2023	67,600			67,600
Total bonds	1,344,567			1,388,835
Other long-term debt
Barge lease obligations, ending December 31, 2013	17,538			19,200
Gross amount of long-term debt	1,362,105			1,408,035
Less: long-term debt due within one year	24,258			12,269
Less: lease obligations due within one year	1,841			1,662
Unamortized premium and discount, net	(8,950		)	(9,395		)
Total long-term debt, net	$	1,327,056		$	1,384,709

The amounts payable under long-term debt agreements for each year through 2016 and thereafter are as follows.



(THOUSANDS)
Amounts payable under long-term debt agreements
2012	$	24,258
2013	$	88,969
2014	$	14,876
2015	$	65,824
2016	$	16,815
Thereafter	$	1,133,825

At December 31, 2011, and 2010, Cleco Power had no outstanding short-term debt.

At December 31, 2011, Cleco Power’s long-term debt outstanding was $1.35 billion, of which $24.3 million was due within one year, compared to $1.40 billion outstanding at December 31, 2010, of which $12.3 million was due within one year. The long-term debt due within one year at December 31, 2011, represents $13.1 million of principal payments for the Cleco Katrina/Rita storm recovery bonds and $11.2 million of 5.875% Rapides pollution control revenue bonds that Cleco Power redeemed at par prior to maturity on January 25, 2012. In December 2011, Cleco Power issued the notice of redemption and as part of the redemption, Cleco Power paid $0.3 million of accrued interest on the redeemed notes.

In August 2011, Cleco Power entered into a treasury rate lock contract in order to mitigate the interest rate exposure on coupon payments related to a forecasted debt issuance. The notional amount of the treasury rate lock was $150.0 million, with a pricing date of November 14, 2011, or the date of issuance of the debt, whichever was earlier. The treasury rate lock met the criteria of a cash flow hedge under the authoritative guidance as it relates to derivatives and hedging. The 3.77% rate lock was based on the 30-year treasury note yield as of August 12, 2011.

On November 14, 2011, Cleco Power settled the $150.0 million treasury rate lock contract and extended the treasury rate lock contract at a notional amount of $100.0 million, with a pricing date of December 21, 2011, or the date of issuance of the debt, whichever was earlier. The 3.89% rate lock was based on the 30-year treasury note yield as of November 14, 2011, and two-thirds of the fair market value of the previous treasury rate lock. This treasury rate lock extension did not qualify for hedge accounting due to ineffectiveness resulting from the embedded loss related to the previous treasury rate lock. On December 16, 2011, Cleco Power issued $100.0 million senior unsecured private placement notes at an interest rate of 5.12%. The maturity date of the notes is December 16, 2041. The proceeds were used for general corporate purposes and for the repurchase of debt. On December 2, 2011, the pricing date of the notes, Cleco Power settled the treasury rate lock extension. At December 31, 2011, Cleco Power recorded $22.3 million in other comprehensive income and deferred $4.4 million in losses and ineffectiveness as a regulatory asset related to the settlement of the two treasury rate locks. As a result of management’s assessment that it is probable that the losses and ineffectiveness will be recovered through the rate-making process, Cleco Power will amortize the regulatory asset over the 30-year term of the related debt. The amount recorded in other comprehensive income, will also be amortized as interest expense over the 30-year term of the related debt issuance.

Also, on November 14, 2011, Cleco Power entered into a forward starting swap contract in order to mitigate the interest rate exposure on coupon payments related to a forecasted debt issuance. The notional amount of the forward starting swap is $50.0 million, with a pricing date of May 14, 2013, or the date of issuance of the debt, whichever is earlier. The forward starting swap meets the criteria of a cash flow hedge under the authoritative guidance as it relates to derivatives and hedging. The 3.05% swap was based on the 30-year treasury note yield as of November 14, 2011.

The $32.0 million solid waste disposal facility bonds due in 2038, which were issued by the Rapides Finance Authority for the benefit of Cleco Power in October 2008, were required to be mandatorily tendered by the bondholders for purchase on October 1, 2011, pursuant to the terms of the indenture. The bonds were issued by the Rapides Finance Authority in connection with a loan agreement between the Rapides Finance Authority and Cleco Power. On October 3, 2011, Cleco Power purchased all $32.0 million outstanding bonds at face value plus $1.0 million of accrued interest. In connection with the purchase, the interest rate of the bonds will reset each week based on the SIFMA (Securities Industry and Financial Markets Association) index. The initial interest rate of the bonds at October 3, 2011, was 0.16% per annum. Interest expense will continue to be recorded with a corresponding amount recorded as interest income, excluding amortization of debt issuance costs. Although the bonds remain outstanding, Cleco Power has the right to redeem and cancel the debt at any time without approval of the issuer. In accordance with the authoritative guidance, the bonds are considered extinguished and Cleco Power is holding the debt as treasury bonds, resulting in a net presentation on Cleco and Cleco Power’s Consolidated Balance Sheets. Cleco Power has the option to remarket the bonds for new terms and new interest rates, both to be determined by market conditions.

The $100.0 million GO Zone bonds due in 2038, which were issued by the Louisiana Public Facilities Authority for the benefit of Cleco Power, were required to be mandatorily tendered by the holders for purchase on December 1, 2011, pursuant to the terms of the indenture. The bonds were issued by the Louisiana Public Facilities Authority in connection with a loan agreement between the Louisiana Public Facilities Authority and Cleco Power. On December 1, 2011, Cleco Power purchased all $100.0 million outstanding bonds at face value plus $3.5 million of accrued interest. In connection with the purchase, the interest rate of the bonds resets each week based on the SIFMA index. The initial interest rate of the bonds at December 1, 2011, was 0.12% per annum. Interest expense is recorded with a corresponding amount recorded as interest income, excluding amortization of debt issuance costs. Although the bonds remain outstanding, Cleco Power has the right to redeem and cancel the debt at any time without approval of the issuer. In accordance with the authoritative guidance, the bonds are considered extinguished and Cleco Power is holding the debt as treasury bonds, resulting in a net presentation on Cleco and Cleco Power’s Consolidated Balance Sheets. Cleco Power has the option to remarket the bonds for new terms and new interest rates, both to be determined by market conditions.

The amounts payable under the capital lease agreements for each year through 2016 and thereafter are as follows.



(THOUSANDS)
Amounts payable under capital lease agreements
2012	$	1,841
2013	$	2,017
2014	$	2,221
2015	$	2,446
2016	$	2,703
Thereafter	$	6,310

Credit Facilities

At December 31, 2011, Cleco had two separate revolving credit facilities, one for Cleco Corporation and one for Cleco Power, with a maximum aggregate capacity of $550.0 million.

In November 2010, Cleco Corporation entered into a $200.0 million four-year revolving credit facility. The credit facility was set to mature on November 23, 2014, and provided for working capital and other needs. Cleco Corporation’s borrowing costs under this facility were equal to LIBOR plus 2.05%, plus facility fees of 0.45%. On October 7, 2011, Cleco Corporation amended its credit facility agreement. Under the amended agreement, Cleco Corporation’s maximum capacity was increased from $200.0 million to $250.0 million, the maturity date was extended to October 7, 2016, and the borrowing costs were lowered to equal LIBOR plus 1.50% or ABR plus 0.50%, plus facility fees of 0.25%. At December 31, 2011, Cleco Corporation had $10.0 million in borrowings outstanding under its existing credit facility, leaving an available borrowing capacity of $240.0 million. Under covenants contained in Cleco Corporation’s credit facility, Cleco is required to maintain total indebtedness equal to or less than 65% of total capitalization. At December 31, 2011, approximately $661.5 million of Cleco’s retained earnings was unrestricted. If Cleco Power defaults under the Cleco Power facility, then Cleco Corporation would be considered in default under the Cleco Corporation facility. At December 31, 2011, Cleco Corporation was in compliance with the covenants in its credit facility.

In November 2010, Cleco Power entered into a $300.0 million four-year revolving credit facility. The credit facility was set to mature on November 23, 2014, and provided for working capital and other needs. Cleco Power’s borrowing costs under this facility were equal to LIBOR plus 1.90%, plus facility fees of 0.35%. On October 7, 2011, Cleco Power amended its credit facility agreement. Under the amended agreement, the maturity date was extended to October 7, 2016, and the borrowing costs were lowered to equal LIBOR plus 1.275% or ABR plus 0.275%, plus facility fees of 0.225% and the borrowing capacity remained $300.0 million. At December 31, 2011, Cleco Power had no borrowings outstanding under its existing credit facility. Under covenants contained in Cleco Power’s credit facility, Cleco Power is required to maintain total indebtedness equal to or less than 65% of total capitalization. At December 31, 2011, approximately $519.7 million of Cleco Power’s retained earnings was unrestricted. At December 31, 2011, Cleco Power was in compliance with the covenants in its credit facility.