Debt Obligations

3 Months Ended

Mar. 31, 2014

5. Debt Obligations

Long-term debt



	March 31,		December 31,
$ in millions	2014		2013

Pollution control series due in January 2028 - 4.7%	$	36.0	$	36.0
Pollution control series due in January 2034 - 4.8%		179.6		179.6
Pollution control series due in September 2036 - 4.8%		96.4		96.4
Pollution control series due in November 2040 - rates from: 0.04% - 0.08% and 0.05% - 0.24% (a)		100.0		100.0
First mortgage bonds due in September 2016 - 1.9%		444.4		444.3
U.S. Government note due in February 2061 - 4.2%		18.2		18.3
Total long-term debt at subsidiary		874.6		874.6

Bank term loan due in May 2018 - rates from: 2.41% - 2.42% and 2.42% - 2.45% (a)		170.0		180.0
Senior unsecured bonds due in October 2016 - 6.5%		430.0		430.0
Senior unsecured bonds due in October 2021 - 7.3%		780.0		780.0
Note to DPL Capital Trust II due in September 2031 - 8.125%		19.6		19.6
Total non-current portion of long-term debt	$	2,274.2	$	2,284.2

Current portion of long-term debt



	March 31,		December 31,
$ in millions	2014		2013

Bank term loan due in May 2018 - rates from: 2.41% - 2.42% and 2.42% - 2.45% (a)	$	20.0	$	10.0
U.S. Government note due in February 2061 - 4.2%		0.1		0.1
Capital lease obligations		0.1		0.1
Total current portion of long-term debt	$	20.2	$	10.2

(a)Range of interest rates for the three months ended March 31, 2014 and the twelve months ended December 31, 2013, respectively.

At March 31, 2014, maturities of long-term debt, including capital lease obligations, are as follows:



Due within the twelve months ending March 31,: ($ in millions)
2015	$	20.2
2016		40.1
2017		915.1
2018		40.1
2019		50.1
Thereafter		1,232.7
Total maturities		2,298.3

Unamortized premiums and discounts		(3.9)
Total long-term debt	$	2,294.4

Premiums or discounts recognized at the Merger date are amortized over the remaining 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 bonds subject to the First and Refunding Mortgage 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 three months ended March 31, 2014 and 2013.

On May 10, 2013, DP&L closed a $300.0 million unsecured revolving credit agreement with a syndicated bank group. This $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 that provides DP&L the ability to increase the size of the facility by an additional $100.0 million. DP&L had no outstanding borrowings under this facility at March 31, 2014 or December 31, 2013. At March 31, 2014, 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 letter of credit facility were not material during the three months ended March 31, 2014 and 2013.

DP&L’s unsecured revolving credit agreement and DP&L’s amended standby letters of credit have a financial covenant that measures 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. The two agreements also have an 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 an unsecured 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 bonds mature on September 15, 2016, and are secured by DP&L’s First & Refunding Mortgage.

On May 10, 2013, DPL entered into a $200.0 million unsecured term loan agreement. This 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. Fees associated with this term loan were not material during the three months ended March 31, 2014 and 2013.

On May 10, 2013, DPL entered into a $100.0 million unsecured revolving credit facility. This $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 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 facility shall be July 15, 2016. DPL had no outstanding borrowings or letters of credit under this facility at March 31, 2014 or December 31, 2013. Fees associated with this facility were not material during the three months ended March 31, 2014 and 2013.

DPL’s 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, an 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.

DPL’s 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, 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 of debt 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 and successfully bought back $20 million of the first tranche and $20 million of the second tranche. 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.

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

DP&L [Member]

Debt Obligations

5. Debt Obligations

Long-term debt



	March 31,		December 31,
$ in millions	2014		2013

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 - rates from: 0.04% - 0.08% and 0.05% - 0.24% (a)		100.0		100.0
First mortgage bonds due in September 2016 - 1.875%		445.0		445.0
U.S. Government note due in February 2061 - 4.2%		18.2		18.2
Unamortized debt discount		(0.7)		(0.7)
Total non-current portion of long-term debt	$	876.9	$	876.9

Current portion of long-term debt



	March 31,		December 31,
$ in millions	2014		2013

U.S. Government note due in February 2061 - 4.2%		0.1	$	0.1
Capital lease obligations		0.1		0.1
Total current portion of long-term debt	$	0.2	$	0.2

(a) Range of interest rates for the three months ended March 31, 2014 and the twelve months ended December 31, 2013, respectively.

At March 31, 2014, maturities of long-term debt, including capital lease obligations, are as follows:



Due within the twelve months ending March 31,:
$ in millions
2015	$	0.2
2016		0.1
2017		445.1
2018		0.1
2019		0.1
Thereafter		432.2
		877.8

Unamortized discounts		(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 bonds subject to the First and Refunding Mortgage 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 these standby letter of credit facilities were not material during the three months ended March 31, 2014 and 2013.

On May 10, 2013, DP&L closed a $300.0 million unsecured revolving credit agreement with a syndicated bank group. This $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 that provides DP&L the ability to increase the size of the facility by an additional $100.0 million. DP&L had no outstanding borrowings under this facility at September 30, 2013. At September 30, 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 three months ended March 31, 2014.

On September 19, 2013, DP&L closed a $445.0 million issuance of senior secured first mortgage bonds. These bonds mature on September 15, 2016, and are secured by DP&L’s First & Refunding Mortgage.

DP&L’s unsecured revolving credit agreements and DP&L’s standby letter 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. DP&L financed the acquisition of these assets with an unsecured note payable to the federal government that is payable monthly over 50 years and bears interest at 4.2% per annum.

On March 31, 2014, DP&L borrowed $15.0 million from DPL at an interest rate of LIBOR plus 2.0%. This note was due on or before April 30, 2014 and was repaid on April 30, 2014.