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Long-Term Debt and Financing Obligations (Tables)
12 Months Ended
Dec. 31, 2018
Long-Term Debt and Financing Obligations [Abstract]  
Schedule of Long-Term Debt
Outstanding long-term debt and financing obligations, net of issuance costs, are as follows:
 
December 31,
 
2018
 
2017
 
(In thousands)
Long-Term Debt:
 
 
 
Pollution Control Bonds (1):
 
 
 
7.25% 2009 Series A refunding bonds, due 2040 (7.46% effective interest rate)
$
62,695

 
$
62,657

7.25% 2009 Series B refunding bonds, due 2040 (7.49% effective interest rate)
36,544

 
36,518

4.50% 2012 Series A refunding bonds, due 2042 (4.63% effective interest rate)
58,530

 
58,501

Total Pollution Control Bonds
157,769

 
157,676

Senior Notes (2):
 
 
 
Senior Notes-Public:
 
 
 
3.30% Senior Notes, net of discount, due 2022 (3.43% effective interest rate)
149,269

 
149,101

6.00% Senior Notes, net of discount, due 2035 (6.58% effective interest rate)
394,231

 
394,040

7.50% Senior Notes, net of discount, due 2038 (7.67% effective interest rate)
147,441

 
147,384

5.00% Senior Notes, net of discount, due 2044 (4.93% effective interest rate)
302,845

 
302,901

 
993,786

 
993,426

Senior Notes-Private Placement:
 
 
 
4.22% Senior Notes, net of discount, due 2028 (4.30% effective interest rate)
124,157

 

Total Senior Notes
1,117,943

 
993,426

RGRT Senior Notes (3):
 
 
 
5.04% Senior Notes, Series C, due 2020 (5.16% effective interest rate)
44,928

 
44,886

4.07% Senior Guaranteed Notes, due 2025 (4.18% effective interest rate)
64,579

 

Total RGRT Senior Notes
109,507

 
44,886

Total long-term debt
1,385,219

 
1,195,988

Financing Obligations:
 
 
 
Revolving Credit Facility (4)
49,207

 
173,533

Total long-term debt and financing obligations
1,434,426

 
1,369,521

Current Portion (amount due within one year):
 
 
 
Current maturities of long term debt (1)
(99,239
)
 

Short-term borrowings under the revolving credit facility
(49,207
)
 
(173,533
)
 
$
1,285,980

 
$
1,195,988

_____________________
(1)
Pollution Control Bonds

The Company has three series of tax exempt unsecured PCBs in aggregate principal amount of $159.8 million. The 7.25% 2009 Series A and the 7.25% 2009 Series B PCBs with an aggregate principal amount, together, of $100.6 million have optional redemptions beginning in February 2019 and April 2019, respectively, at which time the Company expects to repay, remarket or replace these bonds. The principal and related unamortized issuance cost on these PCBs were reclassified to current maturities of long-term debt as of December 31, 2018. On February 1, 2019, the Company purchased in lieu of redemption all of the 7.25% 2009 Series A with a principal amount of $63.5 million utilizing funds borrowed under the RCF. The Company is currently holding the bonds and may remarket them or replace them with debt instruments of equivalent value at a future date depending on financing needs and market conditions.

(2)
Senior Notes

The Senior Notes are unsecured obligations of the Company. They were issued pursuant to bond covenants that provide limitations on the Company’s ability to enter into certain transactions. The 6.00% Senior Notes have an aggregate principal amount of $400.0 million and were issued in May 2005. The proceeds, net of a $2.3 million discount, were used to fund the retirement of the Company's first mortgage bonds. The Company amortizes the loss associated with a cash flow hedge recorded in accumulated other comprehensive income to earnings as interest expense over the life of the 6.00% Senior Notes. See Part II, Item 8, Financial Statements and Supplementary Data, Note P of Notes to Financial Statements. This amortization is included in the effective interest rate of the 6.00% Senior Notes.

The 7.50% Senior Notes have an aggregate principal amount of $150.0 million and were issued in June 2008. The proceeds, net of a $1.3 million discount, were used to repay outstanding short-term borrowings of $44.0 million, fund capital expenditures and for other general corporate purposes.

The 3.30% Senior Notes have an aggregate principal amount of $150.0 million were issued in December 2012. The proceeds, net of a $0.3 million discount, were used to repay outstanding short-term borrowings, fund construction expenditures and for working capital and general corporate purposes.

In December 2014, the Company issued 5.00% Senior Notes with an aggregate principal amount of $150.0 million. The proceeds, net of a $0.5 million discount, were used to fund construction expenditures and for working capital and general corporate purposes. In March 2016, the Company issued additional 5.00% Senior Notes with an aggregate principal amount of $150.0 million. The proceeds from this issuance, after deducting the underwriters' commission, were $158.1 million. These proceeds included accrued interest of $2.4 million and a $7.1 million premium before expenses. The net proceeds from the sale of these senior notes were used to repay outstanding short-term borrowings under the RCF. After the March 2016 issuance, the Company's 5.00% Senior Notes due 2044 had a total principal amount outstanding of $300.0 million.

On June 28, 2018, the Company entered into a note purchase agreement with several institutional purchasers under which the Company issued and sold $125 million aggregate principal amount of 4.22% Senior Notes due August 15, 2028. The net proceeds from the issuance of these senior notes were used to repay outstanding short-term borrowings under the RCF for working capital and general corporate purposes. The Company will pay interest on the notes semi-annually on February 15 and August 15 of each year until maturity, beginning on February 15, 2019. The Company may redeem the notes, in whole or in part, at any time at a redemption price equal to 100% of the principal amount to be redeemed together with the interest on such principal amount accrued to the date of redemption, plus a make-whole amount based on the prevailing market interest rates. The note purchase agreement requires compliance with certain covenants, including a total debt to capitalization ratio. The Company was in compliance with these requirements throughout 2018. The issuance and sale of these senior notes was made in reliance on a private placement exemption from the registration provisions of the Securities Act of 1933, as amended ("Securities Act").

(3)
RGRT Senior Notes

In 2010, the Company and RGRT, a Texas grantor trust through which the Company finances its portion of fuel for Palo Verde, entered into a note purchase agreement with various institutional purchasers. Under the terms of the agreement, RGRT issued and sold to the purchasers $110 million aggregate principal amount of Senior Notes ("RGRT Notes"). In August 2015 and 2017, $15.0 million and $50.0 million of the RGRT Notes, respectively, matured and were paid with borrowings from the RCF. The Company guarantees the payment of principal and interest on the RGRT Notes. In the Company’s financial statements, the assets and liabilities of RGRT are reported as assets and liabilities of the Company. In August 2020, the remaining $45.0 million of these RGRT Notes mature.

The sale of the RGRT Notes was made by RGRT in reliance on a private placement exemption from registration under the Securities Act. The proceeds of $109.4 million, net of issuance costs, from the sale of the RGRT Notes was used by RGRT to repay amounts borrowed under the RCF and enabled future nuclear fuel financing requirements of RGRT to be met with a combination of the RGRT Notes and amounts borrowed from the RCF.

On June 28, 2018, the RGRT and the Company entered into a note purchase agreement with several institutional purchasers under which the RGRT issued and sold $65 million aggregate principal amount of 4.07% Senior Guaranteed Notes due August 15, 2025 ("RGRT Senior Notes"). The net proceeds from the RGRT Senior Notes were used to repay outstanding short-term borrowings under the RCF to finance nuclear fuel purchases. The Company guaranteed the payment of principal and interest on the RGRT Senior Notes. RGRT’s assets, liabilities and operations are consolidated in the Company’s financial statements and the RGRT Senior Notes are included as long-term debt on the balance sheet. The issuance and sale of the RGRT Senior Notes was made in reliance on a private placement exemption from the registration provisions of the Securities Act.

RGRT pays interest on the senior notes above on February 15 and August 15 of each year until maturity, beginning on February 15, 2019. RGRT may redeem the senior notes, in whole or in part, at any time at a redemption price equal to 100% of the principal amount to be redeemed together with the interest on such principal amount accrued to the date of redemption, plus a make-whole amount based on the prevailing market interest rates. The note purchase agreement requires compliance with certain covenants, including a total debt to capitalization ratio. The Company and RGRT were in compliance with these requirements throughout 2018.

(4)
Revolving Credit Facility

On January 14, 2014, the Company and RGRT entered into a second amended and restated credit agreement related to the RCF with JP Morgan Chase Bank, N.A., as administrative agent and issuing bank, and Union Bank, N.A., as syndication agent, and various lending banks party thereto. As of December 31, 2016, the Company had available $300 million and the ability to increase the RCF by up to $100 million with a term ending January 2019. On January 9, 2017, the Company exercised its option to extend the maturity of the RCF by one year to January 14, 2020 and to increase the size of the facility by $50 million to $350 million.

On September 13, 2018, the Company and The Bank of New York Mellon Trust Company, N.A., as trustee of the RGRT, entered into a third amended and restated credit agreement ("RCF Agreement") with MUFG Union Bank, N.A., as administrative agent and as syndication agent, various issuing banks and lending banks party thereto. Under the terms of the RCF Agreement, the Company has available a $350 million RCF with a $50 million subfacility for the issuance of letters of credit, and the Company extended the term of the Company's existing $350 million revolving credit agreement from January 14, 2020 to September 13, 2023 ("Maturity Date"). The Company may increase the RCF by up to $50 million (to a total of $400 million) during the term of the RCF Agreement, upon the satisfaction of certain conditions more fully set forth in the RCF Agreement, including obtaining commitments from lenders or third party financial institutions. In addition, the Company may extend the Maturity Date up to two times, in each case for an additional one-year period, upon the satisfaction of certain conditions more fully set forth in the RCF Agreement, including requisite lender approval.

The RCF Agreement provides that amounts borrowed by the Company may be used for, among other things, working capital
and general corporate purposes. Any amounts borrowed by the RGRT may be used, among other things, to finance the acquisition and cost to process nuclear fuel. Amounts borrowed by the RGRT are guaranteed by the Company and the balance borrowed under the RCF Agreement is recorded as short-term borrowings on the balance sheet. The RCF Agreement is unsecured. The RCF Agreement requires compliance with certain covenants, including a total debt to capitalization ratio. The Company is in compliance with these requirements throughout 2018. In August 2017, $50.0 million aggregate principal amount of Series B 4.47% Senior Notes of the RGRT matured and was paid with borrowings from the RCF. On February 1, 2019, the Company purchased in lieu of redemption all of the 7.25% 2009 Series A PCBs with a principal amount of $63.5 million utilizing funds borrowed under the RCF. The Company is currently holding the bonds and may remarket them or replace them with debt instruments of equivalent value at a future date depending on the Company's financing needs and market conditions. As of December 31, 2018, the total amount borrowed by the RGRT was $26.2 million for nuclear fuel under the RCF. As of December 31, 2018, $23.0 million of borrowings were outstanding under this facility for working capital and general corporate purposes. The weighted average interest rate on the RCF was 3.8% as of December 31, 2018.
Schedule of Maturities of Long-term Debt
As of December 31, 2018, the principal amount of scheduled maturities for the next five years of long-term debt are as follows (in thousands): 
2019 (1)
$
100,600

2020
45,000

2021

2022
150,000

2023


_____________________
(1)
The 7.25% 2009 Series A and the 7.25% 2009 Series B PCBs with an aggregate principal amount, together, of $100.6 million have optional redemptions beginning in February 2019 and April 2019, respectively, at which time the Company expects to repay, remarket or replace these bonds.