Debt Obligations

6 Months Ended

Jun. 30, 2017

Long-term Debt

The following table summarizes DPL's outstanding long-term debt.



	Interest		June 30,			December 31,
$ in millions	Rate	Maturity	2017			2016
Term loan - rates from 4.01% - 4.30% (a) and 4.00% - 4.01% (b)		2022	$	442.8		$	445.0
Tax-exempt First Mortgage Bonds	4.8%	2036	91.9			100.0
Tax-exempt First Mortgage Bonds - rates from 1.52% - 1.71% (a) and 1.29% - 1.42% (b)		2020	200.0			200.0
U.S. Government note	4.2%	2061	17.9			18.0
Capital leases			0.3			0.4
Unamortized deferred financing costs			(10.0		)	(10.7		)
Unamortized long-term debt discounts and premiums, net			(5.1		)	(5.5		)
Total long-term debt at consolidated subsidiary			737.8			747.2

Bank term loan - rates from 3.02% - 3.98% (a) and 2.67% - 3.02% (b)		2020	112.5			125.0
Senior unsecured notes	6.75%	2019	200.0			200.0
Senior unsecured notes	7.25%	2021	780.0			780.0
Note to DPL Capital Trust II (c)	8.125%	2031	15.6			15.6
Unamortized deferred financing costs			(7.7		)	(8.8		)
Unamortized long-term debt discounts and premiums, net			(0.6		)	(0.6		)
Total long-term debt			1,837.6			1,858.4
Less: current portion			(50.9		)	(29.7		)
Long-term debt, net of current portion			$	1,786.7		$	1,828.7


(a)	Range of interest rates for the six months ended June 30, 2017.


(b)	Range of interest rates for the year ended December 31, 2016.


(c)	Note payable to related party.

Deferred financing costs are amortized over the remaining life of the debt using the effective interest method. Premiums or discounts on long-term debt are amortized over the remaining life of the debt using the effective interest method.

Significant transactions

On May 26, 2017, DP&L commenced a tender offer to purchase any and all of the outstanding 4.8% tax-exempt First Mortgage Bonds at par value (plus accrued and unpaid interest). By June 23, 2017, or the expiration date of the tender, $8.1 million of the outstanding bonds were tendered. On June 26, 2017, DP&L accepted all of the tendered bonds, redeemed and retired them. On July 7, 2017, DP&L notified the Ohio Air Quality Development Authority and the Trustee of the same First Mortgage Bonds, which DP&L was going to call at par value (plus accrued and unpaid interest) $21.9 million of these bonds. As a result, this amount was included in the current portion of long-term debt as of June 30, 2017. On August 7, 2017, DP&L settled this call and subsequently redeemed and retired the bonds. At close of business on August 7,2017 and after considering both the $8.1 million tender and the $21.9 million call, DP&L’s tax-exempt First Mortgage Bonds had an outstanding principal balance of $70.0 million.

Long-term debt covenants and restrictions

DP&L’s unsecured revolving credit agreement and Bond Purchase and Covenants Agreement have two financial covenants. The first measures Total Debt to Total Capitalization and 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 and 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 February 21, 2017, DP&L and its lenders amended DP&L’s revolving credit agreement and Bond Purchase and Covenant Agreement. These amendments modified the definition of Consolidated Net Worth (which is used for measuring the Total Debt to Total Capitalization ratio under each of the agreements), to exclude, through March 31, 2018, non-cash charges related directly to impairments of coal generation assets in DP&L's fiscal quarter ending December 31, 2016 and thereafter. With this amendment, DP&L’s Total Debt to Total Capitalization ratio for the period ending June 30, 2017 is 0.52 to 1.00. The amendment also changed, for each agreement, the dates after generation separation during which compliance with the Total Capitalization ratio detailed above shall be suspended if long-term indebtedness, as determined by the PUCO, is less than or equal to $750.0 million. This time period was originally January 1, 2017 to December 31, 2017, but is now the twelve months immediately subsequent to the separation of the generation assets from DP&L.

The cost of borrowing under DP&L's unsecured revolving credit agreement and Bond Purchase and Covenants Agreement adjust under certain credit rating scenarios.

DPL’s revolving credit agreement and 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.

The cost of borrowing under DPL's revolving credit agreement and term loan adjust under certain credit rating scenarios. DPL’s revolving credit agreement, term loan, and senior unsecured notes due 2019 restrict dividend payments from DPL to AES.

As of June 30, 2017, DP&L and DPL were in compliance with all debt covenants, including the financial covenants described above.

Substantially all property, plant & equipment of DP&L is subject to the lien of the mortgage securing DP&L’s First and Refunding Mortgage. In July 2017, assets related to the Miami Fort station and the Zimmer station were released from the lien of DP&L's First and Refunding Mortgage in connection with the pending sale. See Note 13 – Assets and Liabilities Held For Sale for additional information.

THE DAYTON POWER AND LIGHT COMPANY [Member]

Debt Instrument [Line Items]

Debt Obligations

Long-term Debt

The following table summarizes DP&L's outstanding long-term debt.



	Interest		June 30,			December 31,
$ in millions	Rate	Maturity	2017			2016
Term loan - rates from 4.01% - 4.30% (a) and 4.00% - 4.01% (b)		2022	$	442.8		$	445.0
Tax-exempt First Mortgage Bonds	4.8%	2036	91.9			100.0
Tax-exempt First Mortgage Bonds - rates from 1.52% - 1.71% (a) and 1.29% - 1.42% (b)		2020	200.0			200.0
U.S. Government note	4.2%	2061	17.9			18.0
Capital leases			0.3			0.4
Unamortized deferred financing costs			(11.0		)	(11.8		)
Unamortized long-term debt discounts			(2.0		)	(2.2		)
Total long-term debt			739.9			749.4
Less: current portion			(26.4		)	(4.7		)
Long-term debt, net of current portion			$	713.5		$	744.7

(a)Range of interest rates for the six months ended June 30, 2017.

(b)Range of interest rates for the year ended December 31, 2016.

Significant transactions

Debt covenants and restrictions

DP&L’s unsecured revolving credit agreement and Bond Purchase and Covenants Agreement have two financial covenants. The first measures Total Debt to Total Capitalization and 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 and 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.

As of June 30, 2017, DP&L was in compliance with all debt covenants, including the financial covenants described above.

The cost of borrowing under DP&L's unsecured revolving credit agreement and Bond Purchase and Covenants Agreement adjusts under certain credit rating scenarios.