Debt Obligations

9 Months Ended

Sep. 30, 2011

Debt Obligations

5. Debt Obligations

Long-term Debt		At			At
		September 30,			December 31,
$ in millions		2011			2010
DP&L
First mortgage bonds maturing in October 2013 - 5.125%	$	470.0		$	470.0
Pollution control series maturing in January 2028 - 4.70%		35.3			35.3
Pollution control series maturing in January 2034 - 4.80%		179.1			179.1
Pollution control series maturing in September 2036 - 4.80%		100.0			100.0
Pollution control series maturing in November 2040 -
variable rates: 0.06% - 0.29% and 0.16% - 0.36% (a)		100.0			100.0
U.S. Government note maturing in February 2061 - 4.20%		18.5			-
		902.9			884.4
Obligation for capital lease		0.5			0.1
Unamortized debt discount		(0.4	)		(0.5	)
Total long-term debt - DP&L	$	903.0		$	884.0
DPL
Bank Term Loan - variable rates: 1.48% - 1.49% (b)		300.0			-
Note to DPL Capital Trust II maturing in September 2031 - 8.125%		20.6			142.6
Total long-term debt - DPL	$	1,223.6		$	1,026.6
Current portion - Long-term Debt		At			At
		September 30,			December 31,
$ in millions		2011			2010
DP&L
U.S. Government note maturing in February 2061 - 4.20%	$	0.1		$	-
Obligation for capital lease		0.3			0.1
Total current portion - long-term debt - DP&L	$	0.4		$	0.1
DPL
Senior notes maturing in September 2011 - 6.875%		-			297.4
Total current portion - long-term debt - DPL	$	0.4		$	297.5

(a)	Range of interest rates for the nine months ended September 30, 2011 and the twelve months ended December 31, 2010, respectively.
(b)	Range of interest rates since the loan was drawn in August 2011.

At September 30, 2011, maturities of long-term debt, including capital lease obligations and excluding the unamortized debt discount, are summarized as follows:

$ in millions		DPL		DP&L
Due within one year	$	0.4	$	0.4
Due within two years		0.4		0.4
Due within three years		770.3		470.3
Due within four years		0.1		0.1
Due within five years		0.1		0.1
Thereafter		453.1		432.5
	$	1,224.4	$	903.8

In connection with the closing of the Proposed Merger (see Note 16 of Notes to Condensed Consolidated Financial Statements), DPL expects to assume $1.25 billion of debt that Dolphin Subsidiary II, Inc., a subsidiary of AES, issued on October 3, 2011 to finance a portion of the acquisition. The $1.25 billion was issued in two tranches. The first tranche was $450 million of five year senior unsecured notes issued at 6.50% maturing on October 15, 2016. The second tranche was $800 million of ten year senior unsecured notes issued at 7.25% maturing on October 15, 2021. As a result of this expected additional indebtedness, in April 2011, DPL and DP&L were downgraded by one of the major credit rating agencies. All three of the major credit rating agencies reduced their outlook from stable to negative and indicated they may reduce DPL's ratings to below investment grade upon assumption by DPL of the additional debt in connection with the Proposed Merger discussed in Note 16 of Notes to Condensed Consolidated Financial Statements.

On November 21, 2006, DP&L entered into a $220 million unsecured revolving credit agreement. This agreement was terminated by DP&L on August 29, 2011.

On December 4, 2008, the OAQDA issued $100 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 LOC issued by JPMorgan Chase Bank, N.A. This LOC facility, which expires in December 2013, is irrevocable and has no subjective acceleration clauses. The fees associated with this facility have increased as a result of the changes to our credit ratings that occurred in April 2011. Fees associated with this credit facility were not material during the three and nine months ended September 30, 2011, respectively. DP&L and JPMorgan have entered into a Limited Consent and Waiver which provides for a waiver of any event of default under the LOC Agreement that would otherwise result from the closing of the Proposed Merger.

On April 21, 2009, DP&L entered into a $100 million unsecured revolving credit agreement with a syndicated bank group. The agreement was for a 364-day term and expired on April 20, 2010.

On April 20, 2010, DP&L entered into a $200 million unsecured revolving credit agreement with a syndicated bank group. This agreement is for a three year term expiring on April 20, 2013 and provides DP&L with the ability to increase the size of the facility by an additional $50 million. DP&L had no outstanding borrowings under this credit facility at September 30, 2011. Fees associated with this credit facility were not material during the three and nine months ended September 30, 2011. The fees and interest rate associated with this facility have increased as a result of the changes to our credit ratings that occurred in April 2011. This facility also contains a $50 million letter of credit sublimit. As of September 30, 2011, DP&L had no outstanding letters of credit against the facility. DP&L, Bank of America and the Lenders have entered into a Limited Consent and Waiver which provides for a waiver of any event of default under the Credit Agreement that would otherwise result from the closing of the Proposed Merger.

On February 23, 2011, DPL purchased $122.0 million principal amount of DPL Capital Trust II 8.125% capital securities in a privately negotiated transaction. As part of this transaction, DPL paid a $12.2 million, or 10%, premium. Debt issuance costs and unamortized debt discount totaling $3.1 million were also recognized in February 2011 associated with this transaction.

On February 28, 2011, DPLER purchased MC Squared. As part of the purchase price, DPL acquired restricted cash for repayment of MC Squared debt. On the day of the purchase, DPL issued a guarantee to a third party for the MC Squared debt. By issuing the guarantee, all restrictions on the cash were released and DPL used the cash to redeem most of the MC Squared debt owed to a third party totaling $13.5 million.

On March 1, 2011, DP&L purchased $18.7 million of electric transmission and distribution assets from the federal government that are located at the Wright-Patterson Air Force Base. 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 August 24, 2011, DP&L entered into a $200 million unsecured revolving credit agreement with a syndicated bank group. This agreement is for a four year term expiring on August 24, 2015 and provides DP&L with the ability to increase the size of the facility by an additional $50 million. DP&L had no outstanding borrowings under this credit facility at September 30, 2011. Fees associated with this credit facility were not material during the three and nine months ended September 30, 2011. This facility also contains a $50 million letter of credit sublimit. As of September 30, 2011, DP&L had no outstanding letters of credit against the facility.

On August 24, 2011, DPL entered into a $125 million unsecured revolving credit agreement with a syndicated bank group. This agreement is for a three year term expiring on August 24, 2014. DPL had no outstanding borrowings under this credit facility at September 30, 2011. Fees associated with this credit facility were not material during the three and nine months ended September 30, 2011. This facility may also be used to issue letters of credit up to the $125 million limit. As of September 30, 2011, DPL had no outstanding letters of credit against the facility.

On August 24, 2011, DPL entered into a $425 million unsecured term loan agreement with a syndicated bank group. This agreement is for a three year term expiring on August 24, 2014. DPL has borrowed $300 million of the $425 million available under the facility at September 30, 2011. Fees associated with this term loan were not material during the three and nine months ended September 30, 2011.

On September 1, 2011 DPL retired $297.4 million of 6.875% senior unsecured notes. DPL used the proceeds from a $300 million drawdown of the $425 million unsecured term loan to redeem these maturing bonds.

Refer to Note 16 of the Condensed Consolidated Financial Statements for additional information on the Proposed Merger with AES and refinancing related to DPL's existing credit facilities.

Substantially all property, plant and equipment of DP&L is subject to the lien of the mortgage securing DP&L's First and Refunding Mortgage, dated October 1, 1935, with the Bank of New York Mellon as Trustee.

DP&L [Member]

Debt Obligations

5. Debt Obligations

Long-term Debt		At			At
		September 30,			December 31,
$ in millions		2011			2010
DP&L
First mortgage bonds maturing in October 2013 - 5.125%	$	470.0		$	470.0
Pollution control series maturing in January 2028 - 4.70%		35.3			35.3
Pollution control series maturing in January 2034 - 4.80%		179.1			179.1
Pollution control series maturing in September 2036 - 4.80%		100.0			100.0
Pollution control series maturing in November 2040 -
variable rates: 0.06% - 0.29% and 0.16% - 0.36% (a)		100.0			100.0
U.S. Government note maturing in February 2061 - 4.20%		18.5			-
		902.9			884.4
Obligation for capital lease		0.5			0.1
Unamortized debt discount		(0.4	)		(0.5	)
Total long-term debt - DP&L	$	903.0		$	884.0
DPL
Bank Term Loan - variable rates: 1.48% - 1.49% (b)		300.0			-
Note to DPL Capital Trust II maturing in September 2031 - 8.125%		20.6			142.6
Total long-term debt - DPL	$	1,223.6		$	1,026.6
Current portion - Long-term Debt		At			At
		September 30,			December 31,
$ in millions		2011			2010
DP&L
U.S. Government note maturing in February 2061 - 4.20%	$	0.1		$	-
Obligation for capital lease		0.3			0.1
Total current portion - long-term debt - DP&L	$	0.4		$	0.1
DPL
Senior notes maturing in September 2011 - 6.875%		-			297.4
Total current portion - long-term debt - DPL	$	0.4		$	297.5

(a)	Range of interest rates for the nine months ended September 30, 2011 and the twelve months ended December 31, 2010, respectively.
(b)	Range of interest rates since the loan was drawn in August 2011.

At September 30, 2011, maturities of long-term debt, including capital lease obligations and excluding the unamortized debt discount, are summarized as follows:

$ in millions		DPL		DP&L
Due within one year	$	0.4	$	0.4
Due within two years		0.4		0.4
Due within three years		770.3		470.3
Due within four years		0.1		0.1
Due within five years		0.1		0.1
Thereafter		453.1		432.5
	$	1,224.4	$	903.8

In connection with the closing of the Proposed Merger (see Note 16 of Notes to Condensed Consolidated Financial Statements), DPL expects to assume $1.25 billion of debt that Dolphin Subsidiary II, Inc., a subsidiary of AES, issued on October 3, 2011 to finance a portion of the acquisition. The $1.25 billion was issued in two tranches. The first tranche was $450 million of five year senior unsecured notes issued at 6.50% maturing on October 15, 2016. The second tranche was $800 million of ten year senior unsecured notes issued at 7.25% maturing on October 15, 2021. As a result of this expected additional indebtedness, in April 2011, DPL and DP&L were downgraded by one of the major credit rating agencies. All three of the major credit rating agencies reduced their outlook from stable to negative and indicated they may reduce DPL's ratings to below investment grade upon assumption by DPL of the additional debt in connection with the Proposed Merger discussed in Note 16 of Notes to Condensed Consolidated Financial Statements.

On November 21, 2006, DP&L entered into a $220 million unsecured revolving credit agreement. This agreement was terminated by DP&L on August 29, 2011.

On December 4, 2008, the OAQDA issued $100 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 LOC issued by JPMorgan Chase Bank, N.A. This LOC facility, which expires in December 2013, is irrevocable and has no subjective acceleration clauses. The fees associated with this facility have increased as a result of the changes to our credit ratings that occurred in April 2011. Fees associated with this credit facility were not material during the three and nine months ended September 30, 2011, respectively. DP&L and JPMorgan have entered into a Limited Consent and Waiver which provides for a waiver of any event of default under the LOC Agreement that would otherwise result from the closing of the Proposed Merger.

On April 21, 2009, DP&L entered into a $100 million unsecured revolving credit agreement with a syndicated bank group. The agreement was for a 364-day term and expired on April 20, 2010.

On April 20, 2010, DP&L entered into a $200 million unsecured revolving credit agreement with a syndicated bank group. This agreement is for a three year term expiring on April 20, 2013 and provides DP&L with the ability to increase the size of the facility by an additional $50 million. DP&L had no outstanding borrowings under this credit facility at September 30, 2011. Fees associated with this credit facility were not material during the three and nine months ended September 30, 2011. The fees and interest rate associated with this facility have increased as a result of the changes to our credit ratings that occurred in April 2011. This facility also contains a $50 million letter of credit sublimit. As of September 30, 2011, DP&L had no outstanding letters of credit against the facility. DP&L, Bank of America and the Lenders have entered into a Limited Consent and Waiver which provides for a waiver of any event of default under the Credit Agreement that would otherwise result from the closing of the Proposed Merger.

On February 23, 2011, DPL purchased $122.0 million principal amount of DPL Capital Trust II 8.125% capital securities in a privately negotiated transaction. As part of this transaction, DPL paid a $12.2 million, or 10%, premium. Debt issuance costs and unamortized debt discount totaling $3.1 million were also recognized in February 2011 associated with this transaction.

On February 28, 2011, DPLER purchased MC Squared. As part of the purchase price, DPL acquired restricted cash for repayment of MC Squared debt. On the day of the purchase, DPL issued a guarantee to a third party for the MC Squared debt. By issuing the guarantee, all restrictions on the cash were released and DPL used the cash to redeem most of the MC Squared debt owed to a third party totaling $13.5 million.

On March 1, 2011, DP&L purchased $18.7 million of electric transmission and distribution assets from the federal government that are located at the Wright-Patterson Air Force Base. 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 August 24, 2011, DP&L entered into a $200 million unsecured revolving credit agreement with a syndicated bank group. This agreement is for a four year term expiring on August 24, 2015 and provides DP&L with the ability to increase the size of the facility by an additional $50 million. DP&L had no outstanding borrowings under this credit facility at September 30, 2011. Fees associated with this credit facility were not material during the three and nine months ended September 30, 2011. This facility also contains a $50 million letter of credit sublimit. As of September 30, 2011, DP&L had no outstanding letters of credit against the facility.

On August 24, 2011, DPL entered into a $125 million unsecured revolving credit agreement with a syndicated bank group. This agreement is for a three year term expiring on August 24, 2014. DPL had no outstanding borrowings under this credit facility at September 30, 2011. Fees associated with this credit facility were not material during the three and nine months ended September 30, 2011. This facility may also be used to issue letters of credit up to the $125 million limit. As of September 30, 2011, DPL had no outstanding letters of credit against the facility.

On August 24, 2011, DPL entered into a $425 million unsecured term loan agreement with a syndicated bank group. This agreement is for a three year term expiring on August 24, 2014. DPL has borrowed $300 million of the $425 million available under the facility at September 30, 2011. Fees associated with this term loan were not material during the three and nine months ended September 30, 2011.

On September 1, 2011 DPL retired $297.4 million of 6.875% senior unsecured notes. DPL used the proceeds from a $300 million drawdown of the $425 million unsecured term loan to redeem these maturing bonds.

Refer to Note 16 of the Condensed Consolidated Financial Statements for additional information on the Proposed Merger with AES and refinancing related to DPL's existing credit facilities.

Substantially all property, plant and equipment of DP&L is subject to the lien of the mortgage securing DP&L's First and Refunding Mortgage, dated October 1, 1935, with the Bank of New York Mellon as Trustee.