Debt Obligations

3 Months Ended

Mar. 31, 2018

Long-term Debt

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



	Interest		March 31,			December 31,
$ in millions	Rate	Maturity	2018			2017
Term loan - rates from 3.57% - 4.82% (a) and 4.01% - 4.60% (b)		2022	$	439.4		$	440.6
Tax-exempt First Mortgage Bonds - rates from 2.50% - 2.58% (a) and 1.52% - 1.92% (b)		2020	140.0			200.0
U.S. Government note	4.2%	2061	17.8			17.8
Unamortized deferred financing costs			(7.8		)	(9.8		)
Unamortized long-term debt discounts and premiums, net			(1.7		)	(2.0		)
Total long-term debt at consolidated subsidiary			587.7			646.6

Bank term loan - rates from 3.82% - 3.90% (a) and 3.02% - 4.10% (b)		2020	—			70.0
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
Capital leases			—			0.2
Unamortized deferred financing costs			(6.2		)	(6.8		)
Unamortized long-term debt discounts and premiums, net			(0.5		)	(0.5		)
Total long-term debt			1,576.6			1,705.1
Less: current portion			(105.6		)	(4.7		)
Long-term debt, net of current portion			$	1,471.0		$	1,700.4


(a)	Range of interest rates for the three months ended March 31, 2018.


(b)	Range of interest rates for the year ended December 31, 2017.


(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.

Line of credit

At March 31, 2018, DPL had no outstanding borrowings on its line of credit. In addition, DP&L had $20.0 million in outstanding borrowings on its line of credit.

Significant transactions

On March 30, 2018, DPL issued a Notice of Partial Redemption to the Trustee (U.S. Bank) on the DPL 6.75% Senior Notes due 2019. DPL notified the trustee that it was calling $101.0 million of the $200.0 million outstanding principal amount of these notes. These bonds, which were classified as current at March 31, 2018, were redeemed at par plus accrued interest and a make-whole premium of $5.1 million on April 30, 2018 with cash on hand.

On March 30, 2018, DP&L commenced a redemption of $60.0 million of outstanding tax exempt First Mortgage Bonds due 2020 at par value (plus accrued and unpaid interest). On March 30, 2018, DP&L notified the Trustee of the same First Mortgage Bonds that DP&L was going to call at par value (plus accrued and unpaid interest) $60.0 million of these bonds. As of March 31, 2018, $60.0 million of these bonds were defeased.

On March 27, 2018, DPL made a $70.0 million prepayment to eliminate the outstanding balance of its term loan in full. As of March 31, 2018, the term loan was fully paid off.

On January 3, 2018, DP&L and its lenders amended DP&L's Term Loan B credit agreement. The amendment (a) modified the definition of "applicable rate", from 2.25% per annum to 1.00% per annum - in the case of the Base Rate, and from 3.25% per annum to 2.00% per annum - in the case of the Eurodollar Rate, and (b) modified a "call protection" provision which as modified stated that in the event the loan was repriced or any portion of the loans were prepaid, repaid, refinanced, substituted, or replaced on or prior July 3, 2018, such prepayment, acceleration, repayment, refinancing, substitution or replacement would be made at 101% of the principal amount so prepaid, repaid, refinanced, substituted or replaced. After July 3, 2018, any such transaction would occur at 100% of the principal amount of the then outstanding loans.

Long-term debt covenants and restrictions

DP&L’s unsecured revolving credit agreement and Bond Purchase and Covenants Agreement (financing document entered into in connection with the sale of $200.0 million of variable rate tax-exempt First Mortgage Bonds, dated as of August 1, 2015) 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 measures EBITDA to Interest Expense. The EBITDA to Interest Expense ratio is calculated, at the end of each fiscal quarter, by dividing consolidated EBITDA for the four prior fiscal quarters by the consolidated interest charges for the same period.

DPL’s revolving credit agreement has 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.

DP&L does not have any meaningful restrictions in its debt financing documents prohibiting dividends to its parent, DPL. DPL’s secured revolving credit agreement and senior unsecured notes due 2019 restrict dividend payments from DPL to AES, such that DPL cannot make dividend payments unless at the time of, and/or as a result of the distribution, (i) DPL’s leverage ratio does not exceed 0.67 to 1.00 and DPL’s interest coverage ratio is not less than 2.50 to 1.00 or, if such ratios are not within the parameters, (ii) DPL’s senior long-term debt rating from two of the three major credit rating agencies is at least investment grade. As of March 31, 2018, DPL’s leverage ratio was at 1.47 to 1.00. As a result, as of March 31, 2018, DPL was prohibited under each of these agreements from making a distribution to its shareholder or making a loan to any of its affiliates (other than its subsidiaries). DPL is also restricted from making dividend and tax sharing payments from DPL to AES per its 2017 ESP. This order restricts dividend payments from DPL to AES during the term of the 2017 ESP and restricts tax sharing payments from DPL to AES during the term of the DMR.

DP&L's Total Consolidated EBITDA to Consolidated Interest Charges shall not be less than 2.50 to 1.00. In addition, DP&L’s Total Debt to Total Capitalization ratio shall not be greater than 0.65 to 1.00. Except that, after Generation Separation and the twelve-month period following (October 1, 2017 to September 30, 2018) the ratio shall be a) increased to 0.75 to 1.00 or b) suspended if DP&L’s long-term indebtedness is less than or equal to $750.0 million. Additionally, the ratio shall be suspended any time after separation during which DP&L maintains a rating of BBB- (or in the case of Moody’s Investors Service, Inc. Baa3) or higher with a stable outlook from at least one of Fitch Investors Service Inc., Standard & Poor’s Ratings Services or Moody’s Investors Service, Inc. The Total Debt to Capitalization covenant is calculated as the sum of DP&L’s current and long-term portion of debt, divided by the total of DP&L’s net worth and total debt.

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

As of March 31, 2018, 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.

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		March 31,			December 31,
$ in millions	Rate	Maturity	2018			2017
Term loan - rates from 3.57% - 4.82% (a) and 4.01% - 4.60% (b)		2022	$	439.4		$	440.6
Tax-exempt First Mortgage Bonds - rates from 2.50% - 2.58% (a) and 1.52% - 1.92% (b)		2020	140.0			200.0
U.S. Government note	4.2%	2061	17.8			17.8
Unamortized deferred financing costs			(7.8		)	(9.8		)
Unamortized long-term debt discounts			(1.7		)	(2.0		)
Total long-term debt			587.7			646.6
Less: current portion			(4.6		)	(4.6		)
Long-term debt, net of current portion			$	583.1		$	642.0


(a)	Range of interest rates for the three months ended March 31, 2018.


(b)	Range of interest rates for the year ended December 31, 2017.

Line of credit

At March 31, 2018, DP&L had $20.0 million in outstanding borrowings on its line of credit.

Significant transactions

Long-term debt covenants and restrictions

As of March 31, 2018, DP&L was in compliance with all debt covenants, including the financial covenants described above.

DP&L does not have any meaningful restrictions in its debt financing documents prohibiting dividends to its parent, DPL.

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