Debt Obligations

12 Months Ended

Dec. 31, 2014

Note 6 – Debt Obligations


Long-term debt
$ in millions	December 31, 2014		December 31, 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 - variable rates: 0.04% - 0.15% and 0.04% - 0.26% (a)		100.0		100.0
U.S. Government note due in February 2061 - 4.2%		18.1		18.3
Unamortized debt discount		(2.8)		(3.1)
Total long-term debt at subsidiary		874.7		874.6

Bank term loan due in May 2018 - variable rates: 2.41% - 2.42% (a)		140.0		180.0
Senior unsecured bonds due in October 2016 - 6.50%		130.0		430.0
Senior unsecured bonds due in October 2019 - 6.75%		200.0		-
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%		15.6		20.6
Unamortized debt discount		(0.7)		(1.0)
Total long-term debt	$	2,139.6	$	2,284.2

(a) - range of interest rates for the twelve months ended December 31, 2014 and December 31, 2013, respectively


Current portion - long-term debt
$ in millions	December 31, 2014		December 31, 2013

Bank term loan due in May 2018 - variable rates: 2.41% - 2.42% (a)	$	20.0	$	10.0
U.S. Government note due in February 2061 - 4.2%		0.1		0.1
Capital lease obligations		-		0.1
Total current portion - long-term debt	$	20.1	$	10.2

(a) - range of interest rates for the twelve months ended December 31, 2014 and December 31, 2013, respectively

At December 31, 2014, maturities of long-term debt are summarized as follows:


Due within the twelve months ending December 31,
$ in millions
2015	$	20.1
2016		615.1
2017		40.1
2018		60.1
2019		200.1
Thereafter		1,227.7
		2,163.2
Unamortized discounts and premiums, net		(3.5)
Total long-term debt	$	2,159.7

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 June 2018, is irrevocable and has no subjective acceleration clauses. Fees associated with this letter of credit facility were not material during the years ended December 31, 2014, 2013 and 2012.

On May 10, 2013, DP&L entered into 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 which provides DP&L the ability to increase the size of the facility by an additional $100.0 million. At December 31, 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 years ended December 31, 2014 or 2013.

DP&L’s unsecured revolving credit agreement and DP&L’s amended standby letters of credit have two financial covenants, the first being Total Debt to Total Capitalization and the second being 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 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 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 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. As of December 31, 2014 there was $160 million outstanding on this Term Loan. Fees associated with this new term loan were not material during the years ended December 31, 2014 or 2013.

On May 10, 2013, DPL entered into a $100.0 million unsecured revolving credit facility. This 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 DPL credit facility shall be July 15, 2016. As of December 31, 2014 there was one letter of credit issued in the amount of $2.3 million, with the remaining $97.7 million available to DPL. Fees associated with this revolving credit facility were not material during the years ended December 31, 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 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 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 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. 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, 2014, DPL increased the maximum amount of the tender to $300.0 million and on October 20th the tender expired. DPL settled the $300.0 million on October 6th through (a) net proceeds from a $200.0 million Senior Unsecured note issuance (maturing October 2019 and priced at 6.75%); (b) a draw on the DPL revolving line of credit and (c) cash on hand.

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.

DP&L [Member]

Debt Obligations

Note 5 – Debt Obligations

Long-term debt is as follows:


Long-term debt
$ in millions	December 31, 2014		December 31, 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 - variable rates: 0.04% - 0.15% and 0.04% - 0.26% (a)		100.0		100.0
U.S. Government note due in February 2061 - 4.2%		18.1		18.2

Capital lease obligations		-		-
Unamortized debt discount		(0.5)		(0.7)
Total long-term debt	$	877.0	$	876.9

(a) - range of interest rates for the twelve months ended December 31, 2014 and December 31, 2013, respectively


Current portion - long-term debt
$ in millions	December 31, 2014		December 31, 2013

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

(a) - range of interest rates for the twelve months ended December 31, 2014 and December 31, 2013, respectively

At December 31, 2014, maturities of long-term debt are summarized as follows:


Due within the twelve months ending December 31,
$ in millions
2015	$	0.1
2016		445.1
2017		0.1
2018		0.1
2019		0.1
Thereafter		432.1
		877.6
Unamortized discount		(0.5)
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 facilities are irrevocable and have no subjective acceleration clauses. Fees associated with this letter of credit facility were not material during the years ended December 31, 2014, 2013 or 2012.

On May 10, 2013, DP&L entered into a $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. At December 31, 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 years ended December 31, 2014 or 2013.

DP&L’s unsecured revolving credit agreements and standby letters of credit have two financial covenants, the first measures Total Debt to Total Capitalization, the 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 measures EBITDA to Interest Expense. 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.

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