Debt Obligations

9 Months Ended

Sep. 30, 2014

5. Debt Obligations

Long-term debt



	September 30,		December 31,
$ in millions	2014		2013

First mortgage bonds due in September 2016 - 1.875%	$	445.0	$	445.0
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% - 0.15% and 0.05% - 0.24% (a)		100.0		100.0
U.S. Government note due in February 2061 - 4.2%		18.1		18.3
Unamortized debt discount		(0.5)		(0.7)
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)		150.0		180.0
Senior unsecured bonds due in October 2016 - 6.5%		330.0		430.0
Senior unsecured bonds due in October 2021 - 7.25%		780.0		780.0
Note to DPL Capital Trust II due in September 2031 - 8.125% (b)		19.7		19.6
Total non-current portion of long-term debt	$	2,154.3	$	2,284.2

Current portion of long-term debt



	September 30,		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)	$	10.0	$	10.0
Senior unsecured bonds due in October 2016 - 6.5%		100.0		-
U.S. Government note due in February 2061 - 4.2%		0.1		0.1
Capital lease obligations		-		0.1
Total current portion of long-term debt	$	110.1	$	10.2

(a)Range of interest rates for the nine months ended September 30, 2014 and the twelve months ended December 31, 2013, respectively.

(b)Note payable to related party. See Note 1: Related Party Transactions for additional information.

At September 30, 2014, maturities of long-term debt are as follows:



Due within the twelve months ending September 30,
($ in millions)
2015	$	110.1
2016		385.1
2017		470.1
2018		70.1
2019		0.1
Thereafter		1,232.7
Total maturities		2,268.2

Unamortized premiums and discounts		(3.8)
Total long-term debt	$	2,264.4

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

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. At September 30, 2014, there were two letters of credit in the amount of $0.7 million outstanding, with the remaining $299.3 million available to DP&L. Fees associated with this letter of credit facility were not material during the three and nine months ended September 30, 2014.

DP&L’s unsecured revolving credit agreement and DP&L’s amended standby letters of credit have two financial covenants, the first 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 second financial covenant ratio compares EBITDA to Interest Expense ratio. 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 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 that 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. At September 30, 2014, there was one letter of credit in the amount of $2.3 million outstanding, with the remaining $97.7 million available to DPL. Fees associated with this facility were not material during the three months or nine months ended September 30, 2014 or 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.

On September 6, 2014, DPL announced its intent to purchase a maximum of $280.0 million of aggregate principal of the Senior Unsecured bonds maturing October 2016 through a tender offer. On October 6, DPL partially funded the tender by closing on a new bond issuance of $200.0 million of Senior Unsecured notes maturing October 2019, which were priced at 6.75% and increased the maximum amount of the tender to $300.0 million. The remainder of the tender was funded with cash on hand and the use of the DPL revolving line of credit. The tender offer expired on October 20, 2014. The net balance paid with cash or current borrowings of $100.0 million has been reclassified as current as of September 30, 2014.

In October 2014, DPL repaid $5.0 million of the note due to Capital Trust II, which used the funds to repurchase securities in the open market at a slight premium. Subsequent to repurchasing these securities Capital Trust II 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



	September 30,		December 31,
$ in millions	2014		2013

First mortgage bonds due in September 2016 - 1.875%		445.0		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 - rates from: 0.04% - 0.15% and 0.05% - 0.24% (a)		100.0		100.0
U.S. Government note due in February 2061 - 4.2%		18.1		18.2
Unamortized debt discount		(0.5)		(0.7)
Total non-current portion of long-term debt	$	877.0	$	876.9

Current portion of long-term debt



	September 30,		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
Total current portion of long-term debt	$	0.1	$	0.2

(a) Range of interest rates for the nine months ended September 30, 2014 and the twelve months ended December 31, 2013, respectively.

At September 30, 2014, maturities of long-term debt are as follows:



Due within the twelve months ending September 30,
$ in millions
2015	$	0.1
2016		445.1
2017		0.1
2018		0.1
2019		0.1
Thereafter		432.1
		877.6

Unamortized discounts		(0.5)
Total long-term debt	$	877.1

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. At September 30, 2014, there were two letters of credit in the amount of $0.7 million outstanding, with the remaining $299.3 million available to DP&L. Fees associated with this revolving credit facility were not material during the three and nine months ended September 30, 2014 or 2013.

DP&L’s unsecured revolving credit agreements and DP&L’s standby letter of credit have two financial covenants, the first 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 second financial covenant compares EBITDA to Interest Expense. 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 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.