Debt Obligations

12 Months Ended

Dec. 31, 2013

Note 7 – Debt Obligations



Long-term debt
$ in millions	December 31, 2013		December 31, 2012

First mortgage bonds due in September 2016 - 1.875%	$	444.3	$	-
Pollution control series due in January 2028 - 4.7%		36.0		36.1
Pollution control series due in January 2034 - 4.8%		179.6		179.6
Pollution control series due in September 2036 - 4.8%		96.4		96.3
Pollution control series due in November 2040 - variable rates: 0.05% - 0.24% and 0.04% - 0.26% (a)		100.0		-
U.S. Government note due in February 2061 - 4.2%		18.3		18.3
Capital lease obligations		-		0.1
Total long-term debt at subsidiary		874.6		330.4

Bank term loan due in August 2014 (repaid in May 2013) - variable rates: 2.46% and 1.48% - 4.25% (a)		-		425.0
Bank term loan due in May 2018 - variable rates: 2.42% - 2.45% (a)		180.0		-
Senior unsecured bonds due in October 2016 - 6.50%		430.0		450.0
Senior unsecured bonds due in October 2021 - 7.25%		780.0		800.0
Note to DPL Capital Trust II due in September 2031 - 8.125%		19.6		19.6
Total long-term debt	$	2,284.2	$	2,025.0

(a) - range of interest rates for the twelve months ended December 31, 2013 and December 31, 2012, respectively



Current portion - long-term debt
$ in millions	December 31, 2013		December 31, 2012

First mortgage bonds due in October 2013 - 5.125%	$	-	$	484.5
Pollution control series due in November 2040 - variable rates: 0.05% - 0.24% and 0.04% - 0.26% (a)		-		100.0
Bank term loan due in May 2018 - variable rates: 2.42% - 2.45% (a)		10.0		-
U.S. Government note due in February 2061 - 4.2%		0.1		0.1
Capital lease obligations		0.1		0.3
Total current portion - long-term debt	$	10.2	$	584.9

(a) - range of interest rates for the twelve months ended December 31, 2013 and December 31, 2012, respectively

The presentation above for the Successor is based on the revaluation of the debt at the Merger date. At December 31, 2013, maturities of long-term debt, including capital lease obligations, are summarized as follows:



Due within the twelve months ending December 31,
$ in millions
2014	$	10.2
2015		40.1
2016		915.1
2017		40.1
2018		60.1
Thereafter		1,232.8
		2,298.4
Unamortized discounts and premiums, net		(4.0)
Total long-term debt	$	2,294.4

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

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. DP&L amended these standby letters of credit on May 31, 2013 and extended the stated maturities to June 2018. These amended facilities are irrevocable, have no subjective acceleration clauses and remain subject to terms and conditions that are substantially similar to those of the pre-existing facilities. Fees associated with this letter of credit facility were not material during the years ended December 31, 2013 and 2012, the period November 28, 2011 through December 31, 2011 and the period January 1, 2011 through November 27, 2011.

On April 20, 2010, DP&L entered into a $200.0 million unsecured revolving credit agreement with a syndicated bank group. This agreement was for a three year term expiring on April 20, 2013, was extended through May 31, 2013 pursuant to an amendment dated April 11, 2013 and provided 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 at the termination of the agreement in May 2013. Fees associated with this revolving credit facility were not material during the years ended December 31, 2013 and 2012, the period November 28, 2011 through December 31, 2011, the period January 1, 2011 through November 27, 2011. This facility also contained a $50.0 million letter of credit sublimit. DP&L had no outstanding letters of credit against the facility at December 31, 2012 or at the termination of the agreement in May 2013.

On August 24, 2011, DP&L entered into a $200.0 million unsecured revolving credit agreement with a syndicated bank group. This agreement, originally for a three year term expiring on April 20, 2013, was extended through May 31, 2013 pursuant to an amendment dated April 11, 2013 and provided 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 at the termination of the agreement in May 2013. Fees associated with this revolving credit facility were not material during the years ended December 31, 2013 and 2012 or the five months ended December 31, 2011. This facility also contained a $50.0 million letter of credit sublimit. DP&L had no outstanding letters of credit against the facility at December 31, 2012 or at the termination of the agreement in May 2013.

On May 10, 2013, DP&L terminated both of the unsecured revolving credit agreements mentioned above and concurrently closed a new $300.0 million unsecured revolving credit agreement with a syndicated bank group. This new $300.0 million facility has a five year term expiring on May 10, 2018, a $100.0 million letter of credit sublimit and a feature which provides DP&L the ability to increase the size of the facility by an additional $100.0 million. The other terms and conditions of this new revolving credit facility are substantially similar to those of the pre-existing DP&L revolving credit facilities. DP&L had no outstanding borrowings under this facility at December 31, 2013. At December 31, 2013, there was a letter of credit in the amount of $0.4 million outstanding, with the remaining $299.6 million available to DP&L. Fees associated with this revolving credit facility were not material during the twelve months ended December 31, 2013.

DP&L’s prior unsecured revolving credit agreements and DP&L’s standby letters of credit had one financial covenant which measured Total Debt to Total Capitalization. The Total Debt to Total Capitalization ratio is calculated, at the end of each fiscal quarter, by dividing total debt at the end of the quarter by total capitalization at the end of the quarter. DP&L’s new unsecured revolving credit agreement and DP&L’s amended standby letters of credit maintain the Total Debt to Total Capitalization financial covenant and add the EBITDA to Interest Expense ratio as a second financial covenant. The EBITDA to Interest Expense ratio is calculated, at the end of each fiscal quarter, by dividing EBITDA for the four prior fiscal quarters by the consolidated interest charges for the same period.

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 September 19, 2013, DP&L closed a $445.0 million issuance of senior secured first mortgage bonds. These new bonds mature on September 15, 2016, and are secured by DP&L’s First & Refunding Mortgage. Substantially all property, plant and equipment of DP&L is subject to the lien of the First and Refunding Mortgage. On October 1, 2013, DP&L used the net proceeds of these new bonds, along with cash on hand, to redeem, at par value, the $470.0 million of first mortgage bonds that matured on October 1, 2013.

On August 24, 2011, DPL entered into a $125.0 million unsecured revolving credit agreement with a syndicated bank group. This agreement was 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, 2013 or at the termination of the agreement in May 2013. Fees associated with this revolving credit facility were not material during the years ended December 31, 2013 and 2012. This facility also could have been used to issue letters of credit up to the $75.0 million limit. DPL had no outstanding letters of credit against the facility at December 31, 2012 or at the termination of the agreement in May 2013.

On August 24, 2011, DPL entered into a $425.0 million unsecured term loan agreement with a syndicated bank group. This agreement was for a three year term expiring on August 24, 2014. Concurrent with the inception of the new term loan discussed below, this term loan was terminated on May 10, 2013. DPL had borrowed the entire $425.0 million available under the facility at December 31, 2013. Fees associated with this term loan were not material during the years ended December 31, 2013, 2012 and 2011.

On May 10, 2013, DPL entered into a new $200.0 million unsecured term loan agreement. This new term loan has a five year term expiring on May 10, 2018; however, if DPL has not either: (a) prepaid the full $200.0 million term loan balance; or (b) refinanced its senior unsecured bonds due October 2016 before July 15, 2016, then the maturity of this new DPL term loan shall be July 15, 2016. This term loan amortizes at 5% of the original balance per quarter from September 2014 to maturity. The other terms and conditions of this new revolving credit facility are substantially similar to those of the pre-existing DPL term loan. Fees associated with this new term loan were not material during the year ended December 31, 2013.

On May 10, 2013, DPL entered into a new $100.0 million unsecured revolving credit facility and concurrently terminated the existing $75.0 million facility. This new $100.0 million facility has a $100.0 million letter of credit sublimit and a feature which provides DPL the ability to increase the size of the facility by an additional $50.0 million. This new facility has a five year term expiring on May 10, 2018; however, if DPL has not refinanced its senior unsecured bonds due October 2016 before July 15, 2016, then the maturity of this new DPL credit facility shall be July 15, 2016. The other terms and conditions of this new revolving credit facility are substantially similar to those of the pre-existing DPL revolving credit facility. DPL had no outstanding letters of credit under this credit facility at December 31, 2013. Fees associated with this revolving credit facility were not material during the year ended December 31, 2013.

Concurrent with the inception of the new revolving credit facility and term loan, DPL terminated the $425.0 million term loan agreement, and used $175.0 million of cash on hand, $50.0 million from the new DPL credit facility and $200.0 million from a one-time draw on the new term loan, to prepay the outstanding $425.0 million term loan balance. The $50.0 million draw on the DPL revolving credit facility was repaid on July 10, 2013 and DPL prepaid $10 million of the outstanding balance on this new term loan in December 2013 reducing the outstanding balance as of December 31, 2013 to $190.0 million.

DPL’s prior unsecured revolving credit agreement and unsecured term loan had and DPL’s new unsecured revolving credit agreement and unsecured term loan have, two financial covenants. The first financial covenant, a 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. The second financial covenant is an EBITDA to Interest Expense ratio that is calculated, at the end of each fiscal quarter, by dividing EBITDA for the four prior fiscal quarters by the consolidated interest charges for the same period.

DPL’s prior and new (executed on May 10, 2013), unsecured revolving credit agreement and unsecured term loan restrict dividend payments from DPL to AES and adjust the cost of borrowing under the facilities under certain credit rating scenarios.

In connection with the closing of the Merger, discussed in Note 2, DPL assumed $1,250.0 million of debt that Dolphin Subsidiary II, Inc., a subsidiary of AES, issued on October 3, 2011 to partially finance the Merger. The $1,250.0 million was issued in two tranches. The first tranche was $450.0 million of five year senior unsecured notes issued with a 6.50% coupon maturing on October 15, 2016. The second tranche was $800.0 million of ten year senior unsecured notes issued with a 7.25% coupon maturing on October 15, 2021. In December 2013, DPL executed an Open Market Repurchase Program and successfully bought back $20 million of the first tranche of five year senior unsecured notes issued with a 6.50% coupon and $20 million of the second tranche of ten year senior unsecured notes issued with a 7.25% coupon. DPL paid a $1.9 million and a $0.5 million premium, respectively, to repurchase these bonds. Subsequent to repurchasing these bonds DPL immediately retired them.

DP&L [Member]

Debt Obligations

Note 6 – Debt Obligations

Long-term debt is as follows:



Long-term debt
$ in millions	December 31, 2013		December 31, 2012

First mortgage bonds due in September 2016 - 1.875%	$	445.0	$	-
Pollution control series due in January 2028 - 4.7%		35.3		35.3
Pollution control series due in January 2034 - 4.8%		179.1		179.1
Pollution control series due in September 2036 - 4.8%		100.0		100.0
Pollution control series due in November 2040 - variable rates: 0.05% - 0.24% and 0.04% - 0.26% (a)		100.0		-
U.S. Government note due in February 2061 - 4.2%		18.2		18.3

Capital lease obligations		-		0.1
Unamortized debt discount		(0.7)		(0.1)
Total long-term debt	$	876.9	$	332.7

(a) - range of interest rates for the twelve months ended December 31, 2013 and December 31, 2012, respectively



Current portion - long-term debt
$ in millions	December 31, 2013		December 31, 2012

First mortgage bonds due in October 2013 - 1.875%	$	-	$	470.0
Pollution control series due in November 2040 - variable rates: 0.05% - 0.24% and 0.04% - 0.26% (a)		-		100.0
U.S. Government note due in February 2061 - 4.2%		0.1		0.1
Capital lease obligations		0.1		0.3
Total current portion - long-term debt	$	0.2	$	570.4

(a) - range of interest rates for the twelve months ended December 31, 2013 and December 31, 2012, respectively

At December 31, 2013, maturities of long-term debt, including capital lease obligations, are summarized as follows:



Due within the twelve months ending December 31,
$ in millions
2014	$	0.2
2015		0.1
2016		445.1
2017		0.1
2018		0.1
Thereafter		432.2
		877.8
Unamortized discount		(0.7)
Total long-term debt	$	877.1

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 two standby letters of credit issued by JPMorgan Chase Bank, N.A. DP&L amended these standby letters of credit on May 31, 2013 and extended the stated maturities to June 2018. These amended facilities are irrevocable, have no subjective acceleration clauses and remain subject to terms and conditions that are substantially similar to those of the pre-existing facilities. Fees associated with this letter of credit facility were not material during the years ended December 31, 2013, 2012 and 2011.

On April 20, 2010, DP&L entered into a $200.0 million unsecured revolving credit agreement with a syndicated bank group. The agreement provided DP&L with the ability to increase the size of the facility by an additional $50.0 million. This agreement, originally for a three year term expiring on April 20, 2013, was extended through May 31, 2013 pursuant to an amendment dated April 11, 2013. DP&L had no outstanding borrowings under this credit facility at December 31, 2012 or at the termination of the agreement in May 2013. Fees associated with this revolving credit facility were not material during the years ended December 31, 2013, 2012 and 2011. This facility also contained a $50.0 million letter of credit sublimit. DP&L had no outstanding letters of credit against the facility at December 31, 2012 or at the termination of the agreement in May 2013.

On August 24, 2011, DP&L entered into a $200.0 million unsecured revolving credit agreement with a syndicated bank group. This agreement was for a four year term expiring on August 24, 2015 and provided 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 at the termination of the agreement in May 2013. Fees associated with this revolving credit facility were not material during the years ended December 31, 2013 and 2012 or the five months ended December 31, 2011. This facility also contains a $50.0 million letter of credit sublimit. DP&L had no outstanding letters of credit against the facility at December 31, 2012 or at the termination of the agreement in May 2013.

On September 19, 2013, DP&L closed a $445.0 million issuance of senior secured first mortgage bonds. These new bonds mature on September 15, 2016, and are secured by DP&L’s First & Refunding Mortgage. On October 1, 2013, DP&L used the net proceeds of these new bonds, along with cash on hand, to redeem, at par value, the $470.0 million of first mortgage bonds that matured on October 1, 2013.

Substantially all property, plant and equipment of DP&L is subject to the lien of the First and Refunding Mortgage.