Debt Obligations

12 Months Ended

Dec. 31, 2012

7. Debt Obligations



Long-term debt
$ in millions	December 31, 2012		December 31, 2011

First mortgage bonds maturing in October 2013 - 5.125%	$	-	$	503.6
Pollution control series maturing in January 2028 - 4.7%		36.1		36.1
Pollution control series maturing in January 2034 - 4.8%		179.6		179.6
Pollution control series maturing in September 2036 - 4.8%		96.3		96.2
Pollution control series maturing in November 2040 - variable rates: 0.04% - 0.26% and 0.06% - 0.32% (a)		-		100.0
U.S. Government note maturing in February 2061 - 4.2%		18.3		18.5
Capital lease obligations		0.1		0.4
Total long-term debt at subsidiary		330.4		934.4

Bank term loan-maturing in August 2014 - variable rates: 1.48% - 4.25% and 2.22% - 2.47% (a)		425.0		425.0
Senior unsecured bonds maturing October 2016 - 6.50%		450.0		450.0
Senior unsecured bonds maturing October 2021 - 7.25%		800.0		800.0
Note to DPL Capital Trust II maturing in September 2031 - 8.125%		19.6		19.5
Total long-term debt	$	2,025.0	$	2,628.9



Current portion - long-term debt
$ in millions	December 31, 2012		December 31, 2011

First mortgage bonds maturing in October 2013 - 5.125%	$	484.5	$	-
Pollution control series maturing in November 2040 - variable rates: 0.04% - 0.26% and 0.06% - 0.32% (a)		100.0		-
U.S. Government note maturing in February 2061 - 4.2%		0.1		0.1
Capital lease obligations		0.3		0.3
Total current portion - long-term debt	$	584.9	$	0.4

(a) - range of interest rates for the twelve months ended December 31, 2012 and December 31, 2011, respectively

The presentation above for the Successor is based on the revaluation of the debt at the Merger date. At December 31, 2012, maturities of long-term debt, including capital lease obligations, are summarized as follows:



$ in millions

Due within one year	$	570.4
Due within two years		425.2
Due within three years		0.1
Due within four years		450.1
Due within five years		0.1
Thereafter		1,152.8
		2,598.7
Unamortized discounts and premiums, net		11.2
Total long-term debt	$	2,609.9

Premiums or discounts recognized at the Merger date are amortized over the life of the debt using the effective interest method.

On November 21, 2006, DP&L entered into a $220.0 million unsecured revolving credit agreement. This agreement was terminated by DP&L on August 29, 2011.

On December 4, 2008, the OAQDA issued $100.0 million of collateralized, variable rate Revenue Refunding Bonds Series A and B due November 1, 2040. In turn, DP&L borrowed these funds from the OAQDA and issued corresponding First Mortgage Bonds to support repayment of the funds. The payment of principal and interest on each series of the bonds when due is backed by a standby letter of credit issued by JPMorgan Chase Bank, N.A. This letter of credit facility, which expires in December 2013, is irrevocable and has no subjective acceleration clauses. If the letter of credit expires, this would trigger a mandatory tender of all of the outstanding bonds, therefore, we have reflected these outstanding bonds as a current liability. Management will continue to monitor and evaluate market conditions over the next several months and make a determination to either seek a renewal of this standby letter of credit or to explore alternative financing arrangements. Fees associated with this letter of credit facility were not material during the year ended December 31, 2012, the period November 28, 2011 through December 31, 2011, the period January 1, 2011 through November 27, 2011, or the year ended December 31, 2010.

On April 20, 2010, DP&L entered into a $200.0 million unsecured revolving credit agreement with a syndicated bank group. This agreement is for a three year term expiring on April 20, 2013 and provides DP&L with the ability to increase the size of the facility by an additional $50.0 million. DP&L had no outstanding borrowings under this credit facility at December 31, 2012. Fees associated with this revolving credit facility were not material during the period between April 20, 2010 and December 31, 2012. This facility also contains a $50.0 million letter of credit sublimit. As of December 31, 2012, DP&L had no outstanding letters of credit against the facility.

On February 23, 2011, DPL redeemed $122.0 million principal amount of DPL Capital Trust II 8.125% capital securities in a privately negotiated transaction. As part of this transaction, DPL paid a $12.2 million, or 10%, premium. Debt issuance costs and unamortized debt discount totaling $3.1 million were also recognized in February 2011 associated with this transaction.

On March 1, 2011, DP&L completed the purchase of $18.7 million of electric transmission and distribution assets from the federal government that are located at the Wright-Patterson Air Force Base (WPAFB). DP&L financed the acquisition of these assets with a note payable to the federal government that is payable monthly over 50 years and bears interest at 4.2% per annum.

On August 24, 2011, DP&L entered into a $200.0 million unsecured revolving credit agreement with a syndicated bank group. This agreement is for a four year term expiring on August 24, 2015 and provides DP&L with the ability to increase the size of the facility by an additional $50.0 million. DP&L had no outstanding borrowings under this credit facility at December 31, 2012 or 2011. Fees associated with this revolving credit facility were not material during the year ended December 31, 2012 or the five months ended December 31, 2011. This facility also contains a $50.0 million letter of credit sublimit. As of December 31, 2012, DP&L had no outstanding letters of credit against the facility.

On August 24, 2011, DPL entered into a $125.0 million unsecured revolving credit agreement with a syndicated bank group. This agreement is for a three year term expiring on August 24, 2014. The size of the facility was reduced from $125.0 million to $75.0 million as part of an amendment dated October 19, 2012 that was negotiated between DPL and the syndicated bank group. DPL had no outstanding borrowings under this credit facility at December 31, 2012. Fees associated with this revolving credit facility were not material during the twelve months ended December 31, 2012. This facility may also be used to issue letters of credit up to the $75.0 million limit. As of December 31, 2012, DPL had no outstanding letters of credit against this facility.

On August 24, 2011, DPL entered into a $425.0 million unsecured term loan agreement with a syndicated bank group. This agreement is for a three year term expiring on August 24, 2014. DPL has borrowed the entire $425.0 million available under the facility at December 31, 2012. Fees associated with this term loan were not material during the year ended December 31, 2012 or the five months ended December 31, 2011.

On September 1, 2011 DPL retired $297.4 million of 6.875% senior unsecured notes that had matured.

DPL’s unsecured revolving credit agreement and DPL’s unsecured term loan each have two financial covenants, one of which was changed as part of amendments, dated October 19, 2012, to the facilities negotiated between DPL and the syndicated bank groups. The first financial covenant, originally a Total Debt to Capitalization ratio, was changed, effective September 30, 2012, to a Total Debt to EBITDA ratio. The Total Debt to EBITDA ratio is calculated, at the end of each fiscal quarter, by dividing total debt at the end of the current quarter by consolidated EBITDA for the four prior fiscal quarters. At December 31, 2012, we met this covenant.

The second financial covenant is a consolidated Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) to Interest Expense ratio. The EBITDA to Interest Expense ratio is calculated, at the end of each fiscal quarter, by dividing for the four prior fiscal quarters by the consolidated interest charges for the same period. At December 31, 2012, we met this covenant.

The amendments, dated October 19, 2012, to the facilities negotiated between DPL and the syndicated bank groups, restrict dividend payments from DPL to AES and adjust the cost of borrowing under the facilities.

In connection with the closing of the Merger (see Note 2), DPL assumed $1.25 billion of debt that Dolphin Subsidiary II, Inc., a subsidiary of AES, issued on October 3, 2011 to finance a portion of the Merger. The $1.25 billion was issued in two tranches. The first tranche was $450.0 million of five year senior unsecured notes issued at 6.50% maturing on October 15, 2016. The second tranche was $800.0 million of ten year senior unsecured notes issued at 7.25% maturing on October 15, 2021.

Substantially all property, plant and equipment of DP&L is subject to the lien of the mortgage securing DP&L’s First and Refunding Mortgage, dated October 1, 1935, with the Bank of New York Mellon as Trustee.

DP&L [Member]

Debt Obligations

6. Debt Obligations

Long-term debt is as follows:



Long-term debt
$ in millions	December 31, 2012		December 31, 2011

First mortgage bonds maturing in October 2013 - 5.125%	$	-	$	470.0
Pollution control series maturing in January 2028 - 4.7%		35.3		35.3
Pollution control series maturing in January 2034 - 4.8%		179.1		179.1
Pollution control series maturing in September 2036 - 4.8%		100.0		100.0
Pollution control series maturing in November 2040 - variable rates: 0.04% - 0.26% and 0.06% - 0.32% (a)		-		100.0
U.S. Government note maturing in February 2061 - 4.2%		18.3		18.5

Capital lease obligations		0.1		0.4
Unamortized debt discount		(0.1)		(0.3)
Total long-term debt	$	332.7	$	903.0



Current portion - long-term debt
$ in millions	December 31, 2012		December 31, 2011

First mortgage bonds maturing in October 2013 - 5.125%	$	470.0	$	-
Pollution control series maturing in November 2040 - variable rates: 0.04% - 0.26% and 0.06% - 0.32% (a)		100.0		-
U.S. Government note maturing in February 2061 - 4.2%		0.1		0.1
Capital lease obligations		0.3		0.3
Total current portion - long-term debt	$	570.4	$	0.4

(a) - range of interest rates for the twelve months ended December 31, 2012 and December 31, 2011, respectively

At December 31, 2012, maturities of long-term debt, including capital lease obligations, are summarized as follows:



$ in millions

Due within one year	$	570.4
Due within two years		0.2
Due within three years		0.1
Due within four years		0.1
Due within five years		0.1
Thereafter		332.3
		903.2
Unamortized discount		(0.1)
Total long-term debt	$	903.1

On November 21, 2006, DP&L entered into a $220.0 million unsecured revolving credit agreement. This agreement was terminated by DP&L on August 29, 2011.

On December 4, 2008, the OAQDA issued $100.0 million of collateralized, variable rate Revenue Refunding Bonds Series A and B due November 1, 2040. In turn, DP&L borrowed these funds from the OAQDA and issued corresponding First Mortgage Bonds to support repayment of the funds. The payment of principal and interest on each series of the bonds when due is backed by a standby letter of credit issued by JPMorgan Chase Bank, N.A. This letter of credit facility, which expires in December 2013, is irrevocable and has no subjective acceleration clauses. Since this letter of credit facility expires in December 2013, at which point the bondholders could tender the bonds, we have reflected these outstanding bonds as a current liability. Management will continue to monitor and evaluate market conditions over the next several months and make a determination to either seek a renewal of this standby letter of credit or to explore alternative financing arrangements. Fees associated with this letter of credit facility were not material during the years ended December 31, 2012 and 2011.

On April 20, 2010, DP&L entered into a $200.0 million unsecured revolving credit agreement with a syndicated bank group. This agreement is for a three year term expiring on April 20, 2013 and provides DP&L with the ability to increase the size of the facility by an additional $50.0 million. DP&L had no outstanding borrowings under this credit facility at December 31, 2012 or 2011. Fees associated with this revolving credit facility were not material during the twelve months ended December 31, 2012 or the period between April 20, 2010 and December 31, 2011. This facility also contains a $50.0 million letter of credit sublimit. As of December 31, 2012 and 2011, DP&L had no outstanding letters of credit against the facility.

On March 1, 2011, DP&L completed the purchase of $18.7 million electric transmission and distribution assets from the federal government that are located at the Wright-Patterson Air Force Base (WPAFB). DP&L financed the acquisition of these assets with a note payable to the federal government that is payable monthly over 50 years and bears interest at 4.2% per annum.

On August 24, 2011, DP&L entered into a $200.0 million unsecured revolving credit agreement with a syndicated bank group. This agreement is for a four year term expiring on August 24, 2015 and provides DP&L with the ability to increase the size of the facility by an additional $50.0 million. DP&L had no outstanding borrowings under this credit facility at December 31, 2012 or 2011. Fees associated with this revolving credit facility were not material during the year ended December 31, 2012 or the five months ended December 31, 2011. This facility also contains a $50.0 million letter of credit sublimit. As of December 31, 2012 and 2011, DP&L had no outstanding letters of credit against the facility.