Short-Term and Long-Term Debt

6 Months Ended

Jun. 30, 2019

Short-Term and Long-Term Debt [Text Block]

SHORT-TERM AND LONG-TERM DEBT

The following tables present the Company’s short-term and long-term debt as of June 30, 2019, and December 31, 2018:



June 30, 2019	Principal		Unamortized Debt Issuance Costs	Total
Millions
Short-Term Debt		$28.1	$(0.4)		$27.7
Long-Term Debt	1,514.9		(9.0)	1,505.9
Total Debt		$1,543.0	$(9.4)		$1,533.6



December 31, 2018	Principal		Unamortized Debt Issuance Costs	Total
Millions
Short-Term Debt		$57.9	$(0.4)		$57.5
Long-Term Debt	1,437.3		(8.8)	1,428.5
Total Debt		$1,495.2	$(9.2)		$1,486.0

On January 10, 2019, ALLETE entered into an amended and restated $400 million credit agreement, as amended (Credit Agreement). The Credit Agreement is unsecured, has a variable interest rate and will expire in January 2024. At ALLETE’s request and subject to certain conditions, the Credit Agreement may be increased by up to $150 million and ALLETE may make two requests to extend the maturity date, each for a one-year extension. Advances may be used by ALLETE for general corporate purposes, to provide liquidity in support of ALLETE’s commercial paper program and to issue up to $100 million in letters of credit.

We had $56.3 million outstanding in standby letters of credit and no outstanding draws under our lines of credit as of June 30, 2019 ($18.4 million in standby letters of credit and no outstanding draws as of December 31, 2018).

On March 1, 2019, ALLETE issued and sold the following First Mortgage Bonds (the Bonds):



Maturity Date	Principal Amount	Interest Rate
March 1, 2029	$70 Million	4.08%
March 1, 2049	$30 Million	4.47%

ALLETE has the option to prepay all or a portion of the Bonds at its discretion, subject to a make-whole provision. The Bonds are subject to additional terms and conditions which are customary for these types of transactions. ALLETE intends to use the proceeds from the sale of the Bonds to fund utility capital investment and for general corporate purposes. The Bonds were sold in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, to institutional accredited investors.

NOTE 6. SHORT-TERM AND LONG-TERM DEBT (Continued)

Financial Covenants. Our long-term debt arrangements contain customary covenants. In addition, our lines of credit and letters of credit supporting certain long-term debt arrangements contain financial covenants. Our compliance with financial covenants is not dependent on debt ratings. The most restrictive financial covenant requires ALLETE to maintain a ratio of indebtedness to total capitalization (as the amounts are calculated in accordance with the respective long-term debt arrangements) of less than or equal to 0.65 to 1.00, measured quarterly. As of June 30, 2019, our ratio was approximately 0.42 to 1.00. Failure to meet this covenant would give rise to an event of default if not cured after notice from the lender, in which event ALLETE may need to pursue alternative sources of funding. Some of ALLETE’s debt arrangements contain “cross-default” provisions that would result in an event of default if there is a failure under other financing arrangements to meet payment terms or to observe other covenants that would result in an acceleration of payments due. ALLETE has no significant restrictions on its ability to pay dividends from retained earnings or net income. As of June 30, 2019, ALLETE was in compliance with its financial covenants.