

Note 6 — Debt

Cleco

Cleco’s total indebtedness as of December 31, 2013 and 2012 was as follows.



	AT DEC. 31,
(THOUSANDS)	2013			2012
Bonds
Cleco Power’s senior notes, 5.375%, due 2013	$	—		$	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, 4.33%, due 2027	50,000			50,000
Cleco Power’s senior notes, 6.50%, due 2035	295,000			295,000
Cleco Power’s senior notes, 5.942%, due 2040	250,000			250,000
Cleco Power’s senior notes, 5.988%, due 2041	100,000			100,000
Cleco Power’s Series B GO Zone bonds, 4.25%, due 2038	50,000			—
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
Cleco Power’s Series A GO Zone bonds, due 2038, maturity tender on May 3, 2015	50,000			—
Cleco Katrina/Rita’s storm recovery bonds, 4.41%, due 2020	48,630			62,598
Cleco Katrina/Rita’s storm recovery bonds, 5.61%, due 2023	67,600			67,600
Total bonds	1,271,230			1,320,198
Other long-term debt
Cleco Corporation’s credit facility draws	5,000			25,000
Cleco Power’s bank term loan, due 2015	35,000			—
Cleco Power’s credit facility draws	20,000			—
Barge lease obligations, ending 2017	9,179			11,350
Gross amount of long-term debt	1,340,409			1,356,548
Less: long-term debt due within one year	14,876			88,969
Less: lease obligations classified as long-term debt due within one year	2,305			2,171
Unamortized discount	(7,728		)	(8,150		)
Total long-term debt, net	$	1,315,500		$	1,257,258

The principal amounts payable under long-term debt agreements for each year through 2018 and thereafter are as follows.



(THOUSANDS)
Amounts payable under long-term debt agreements
2014	$	14,876
2015	$	100,825
2016	$	16,814
2017	$	17,896
2018	$	294,194
Thereafter	$	886,625

At December 31, 2013 and 2012, Cleco had no short-term debt outstanding.

At December 31, 2013, Cleco’s long-term debt outstanding was $1.33 billion, of which $17.2 million was due within one year, compared to $1.35 billion outstanding at December 31, 2012, of which $91.1 million was due within one year. The long-term debt due within one year at December 31, 2013, represents $14.9 million of principal payments for the Cleco Katrina/Rita storm recovery bonds and $2.3 million of capital lease payments.

For Cleco, long-term debt decreased $15.7 million from December 31, 2012, primarily due to a $75.0 million repayment of senior notes, $60.0 million of solid waste disposal bonds reacquired in March 2013, a $20.0 million decrease in Cleco’s credit facility draws, $13.9 million of scheduled Cleco Katrina/Rita storm recovery bond principal payments made in March and September 2013, and a $2.2 million decrease in capital lease obligations. These decreases were partially offset by the issuance of $50.0 million 2008 Series A GO Zone bonds and $50.0 million 2008 Series B GO Zone bonds in May 2013, $35.0 million outstanding on a bank term loan entered into in March 2013, a $20.0 million increase in Cleco Power’s credit facility draws, and debt discount amortizations of $0.4 million.

The principal amounts payable under the capital lease agreements for each year through 2017 are as follows.



(THOUSANDS)
Amounts payable under capital lease agreements
2014	$	2,305
2015	$	2,448
2016	$	2,607
2017	$	1,819

Cleco Power

Cleco Power’s total indebtedness as of December 31, 2013 and 2012, was as follows.



	AT DEC. 31,
(THOUSANDS)	2013			2012
Bonds
Senior notes, 5.375%, due 2013	$	—		$	75,000
Senior notes, 4.95%, due 2015	50,000			50,000
Senior notes, 6.65%, due 2018	250,000			250,000
Senior notes, 4.33%, due 2027	50,000			50,000
Senior notes, 6.50%, due 2035	295,000			295,000
Senior notes, 5.942%, due 2040	250,000			250,000
Senior notes, 5.988%, due 2041	100,000			100,000
Series B GO Zone bonds, 4.25%, due 2038	50,000			—
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
Series A GO Zone bonds, due 2038, maturity tender on May 3, 2015	50,000			—
Cleco Katrina/Rita’s storm recovery bonds, 4.41%, due 2020	48,630			62,598
Cleco Katrina/Rita’s storm recovery bonds, 5.61%, due 2023	67,600			67,600
Total bonds	1,271,230			1,320,198
Other long-term debt
Bank term loan, due 2015	35,000			—
Credit facility draws	20,000			—
Barge lease obligations, ending 2017	9,179			11,350
Gross amount of long-term debt	1,335,409			1,331,548
Less: long-term debt due within one year	14,876			88,969
Less: lease obligations classified as long-term debt due within one year	2,305			2,171
Unamortized discount	(7,728		)	(8,150		)
Total long-term debt, net	$	1,310,500		$	1,232,258

The principal amounts payable under long-term debt agreements for each year through 2018 and thereafter are as follows.



(THOUSANDS)
Amounts payable under long-term debt agreements
2014	$	14,876
2015	$	100,825
2016	$	16,814
2017	$	17,896
2018	$	289,194
Thereafter	$	886,625

At December 31, 2013 and 2012, Cleco Power had no outstanding short-term debt.

At December 31, 2013, Cleco Power’s long-term debt outstanding was $1.33 billion, of which $17.2 million was due within one year, compared to $1.32 billion outstanding at December 31, 2012, of which $91.1 million was due within one year. The long-term debt due within one year at December 31, 2013, represents $14.9 million of principal payments for the Cleco Katrina/Rita storm recovery bonds and $2.3 million of capital lease payments.

For Cleco Power, long-term debt increased $4.3 million from December 31, 2012, primarily due to the issuance of $50.0 million 2008 Series A GO Zone bonds and $50.0 million 2008 Series B GO Zone bonds in May 2013, $35.0 million outstanding on a bank term loan entered into in March 2013, a $20.0 million increase in credit facility draws, and debt discount amortizations of $0.4 million. These increases were partially offset by $75.0 million repayment of senior notes, $60.0 million solid waste disposal bonds reacquired in March 2013, $13.9 million of scheduled Cleco Katrina/Rita storm recovery bond principal payments made in March and September 2013, and a $2.2 million decrease in capital lease obligations.

The principal amounts payable under the capital lease agreements for each year through 2017 are as follows.



(THOUSANDS)
Amounts payable under capital lease agreements
2014	$	2,305
2015	$	2,448
2016	$	2,607
2017	$	1,819

Cleco Power’s $60.0 million solid waste disposal facility bonds due 2037, which were issued by the Rapides Finance Authority for the benefit of Cleco Power in November 2007, were required to be mandatorily tendered by the bondholders for purchase on March 1, 2013, pursuant to the terms of the indenture. The bonds were issued in connection with a loan agreement between the Rapides Finance Authority and Cleco Power. On March 1, 2013, Cleco Power purchased all $60.0 million outstanding bonds at face value plus $1.6 million of accrued interest, using draws under Cleco Power’s revolving credit facility. In connection with the purchase, the interest rate of the bonds will reset each week based on the Securities Industry and Financial Markets Association index. The initial interest rate of the bonds at March 1, 2013, was 0.11% 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 Rapides Finance Authority. 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.

On March 20, 2013, Cleco Power entered into a bank term loan agreement in the amount of $60.0 million. Proceeds of the loan agreement were used to repay draws under Cleco Power’s revolving credit facility. Cleco Power made a $25.0 million payment on the loan on May 8, 2013, reducing the balance outstanding to $35.0 million. The interest rate under the agreement at December 31, 2013, was 0.92%. The rate resets monthly at one-month LIBOR, plus 0.75%. The loan matures on May 29, 2015.

On May 3, 2013, Cleco Power remarketed $50.0 million of its 2008 Series A GO Zone bonds which had previously been purchased by Cleco Power and were being held as treasury bonds. The interest rate at December 31, 2013, was 0.93% which is based on 65% of one month LIBOR, plus 0.82%. The rate resets monthly. The 2008 Series A GO Zone bonds will be subject to remarketing on May 3, 2015. Of the $50.0 million bonds, $25.0 million of the proceeds were used to fund the partial repayment of the $60.0 million solid waste disposal bonds described above and $25.0 million of the proceeds were used to partially fund the maturity of Cleco Power’s $75.0 million 5.375% senior notes on May 1, 2013.

On May 8, 2013, Cleco Power remarketed $50.0 million of its 2008 Series B GO Zone bonds which had previously been purchased by Cleco Power and were being held as treasury bonds, at a fixed interest rate of 4.25%. The 2008 Series B GO Zone bonds mature on December 1, 2038. The proceeds were used to partially fund the maturity of Cleco Power's $75.0 million 5.375% senior notes on May 1, 2013.

Interest Rate Derivatives

Forward Starting Interest Rate Swap

In November 2011, Cleco Power entered into a pay fixed/receive variable forward starting interest rate swap contract in order to mitigate the interest rate exposure on coupon payments related to a forecasted debt issuance. The forward starting interest rate swap had a spot 30-year all-in swap rate of 3.05%, notional amount of $50.0 million, with the pricing date of May 14, 2013, or the issuance of the notes, whichever was earlier. The forward starting interest rate swap met the criteria of a cash flow hedge under the authoritative guidance as it related to derivatives and hedging and was carried on the balance sheet at its fair value.

During the first quarter of 2013, Cleco determined that the forward starting interest rate swap ceased to be highly effective in offsetting changes in the cash flows of the forecasted coupon payments and discontinued hedge accounting prospectively. In May 2013, upon pricing of the 2008 Series B GO Zone bonds, Cleco Power settled the forward starting interest rate swap at a loss of $3.3 million. Of this amount, Cleco Power deferred $2.9 million as a regulatory asset and recognized $0.4 million in other comprehensive income. In May 2013, Cleco Power began amortizing these losses over the 25-year term of the related debt.

Credit Facilities

At December 31, 2013, 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 October 2013, Cleco Corporation entered into a new, amended and restated $250.0 million revolving credit facility. The credit facility is set to mature on October 16, 2018 and provides for working capital and other needs. In connection with the new credit facility, $1.0 million of unamortized debt expense related to Cleco Corporation’s previous credit facility was written off. At December 31, 2013, the all-in interest rate under the new facility was equal to LIBOR plus 1.275% or ABR, plus facility fees of 0.225%. Due to the credit ratings upgrade on January 30, 2014, the all-in interest rate under the new facility is equal to LIBOR plus 1.075% or ABR, plus facility fees of 0.175%. At December 31, 2013, Cleco Corporation had $5.0 million borrowings outstanding under its existing credit facility at an all-in interest rate of 1.445%, leaving an available borrowing capacity of $245.0 million. The $5.0 million borrowings outstanding at December 31, 2013 were repaid on January 31, 2014. 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, 2013, approximately $862.2 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, 2013, Cleco Corporation was in compliance with the covenants in its credit facility.

In October 2013, Cleco Power entered into a new, amended and restated $300.0 million revolving credit facility. The credit facility is set to mature on October 16, 2018 and provides for working capital and other needs. Cleco Power’s all-in interest rate under this facility is equal to LIBOR plus 1.075%, or ABR, plus facility fees of 0.175%. At December 31, 2013, Cleco Power had $20.0 million borrowings outstanding under its existing credit facility at an all-in interest rate of 1.245% and a $1.0 million letter of credit issued under its credit facility, leaving an available borrowing capacity of $279.0 million. Of the $20.0 million borrowings outstanding at December 31, 2013, $10.0 million was repaid on January 27, 2014. 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, 2013, approximately $666.3 million of Cleco Power’s member’s equity was unrestricted. At December 31, 2013, Cleco Power was in compliance with the covenants in its credit facility