CenterPoint Energy 2008 Annual Report Download - page 113

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91
(a) Short-term Borrowings
Receivables Facility. On November 25, 2008, CERC replaced a receivables facility that had terminated
on October 28, 2008 with a new 364-day receivables facility. Availability under the new facility ranges from
$128 million to $375 million, reflecting seasonal changes in receivables balances. At December 31, 2007 and 2008
the facility size was $300 and $128 million, respectively. As of December 31, 2007 and 2008, advances under the
receivables facilities were $232 million and $78 million, respectively. As of December 31, 2008, advances had an
interest rate of 3.81%.
Inventory Financing. In December 2008, CERC entered into an asset management agreement whereby it sold
$110 million of its natural gas in storage and agreed to repurchase an equivalent amount of natural gas during the
2008-2009 winter heating season for payments totaling $114 million. This transaction was accounted for as a
financing and, as of December 31, 2008, the Company’s financial statements reflect natural gas inventory of
$75 million and a financing obligation of $75 million related to this transaction.
Revolving Credit Facility. In November 2008, CenterPoint Houston entered into a $600 million 364-day credit
facility. The $600 million CenterPoint Houston credit facility will terminate if bonds are issued to securitize the
costs incurred as a result of Hurricane Ike and if those bonds are issued prior to the November 24, 2009 expiration of
the facility. CenterPoint Houston expects to seek legislative and regulatory approval for the issuance of such bonds
during 2009.
The $600 million CenterPoint Houston credit facility is secured by a pledge of $600 million of general mortgage
bonds issued by CenterPoint Houston. Borrowing costs for London Interbank Offered Rate (LIBOR)-based loans
will be at a margin of 2.25 percent above LIBOR rates, based on CenterPoint Houston’s current ratings. In addition,
CenterPoint Houston will pay lenders, based on current ratings, a per annum commitment fee of 0.5 percent for their
commitments under the facility and a quarterly duration fee of 0.75 percent on the average amount of outstanding
borrowings during the quarter. The spread to LIBOR and the commitment fee fluctuate based on the borrower’s
credit rating. The facility contains covenants, including a debt (excluding transition and other securitization bonds)
to total capitalization covenant. As of December 31, 2008, there were no borrowings outstanding under the
$600 million CenterPoint Houston credit facility.
(b) Long-term Debt
Senior Notes and General Mortgage Bonds. In May 2008, the Company issued $300 million aggregate principal
amount of senior notes due in May 2018 with an interest rate of 6.50%. The proceeds from the sale of the senior
notes were used for general corporate purposes, including the satisfaction of cash payment obligations in connection
with conversions of the Company’s 3.75% convertible senior notes.
In May 2008, CERC Corp. issued $300 million aggregate principal amount of senior notes due in May 2018 with
an interest rate of 6.00%. The proceeds from the sale of the senior notes were used for general corporate purposes,
including capital expenditures, working capital and loans to or investments in affiliates.
In January 2009, CenterPoint Houston issued $500 million aggregate principal amount of general mortgage
bonds, due in March 2014 with an interest rate of 7.00%. The proceeds from the sale of the bonds were used for
general corporate purposes, including the repayment of outstanding borrowings under its revolving credit facility
and the money pool, capital expenditures and storm restoration costs associated with Hurricane Ike.
Revolving Credit Facilities. The Company’s $1.2 billion credit facility has a first-drawn cost of LIBOR plus 55
basis points based on the Company’s current credit ratings. The facility contains a debt (excluding transition bonds)
to earnings before interest, taxes, depreciation and amortization (EBITDA) covenant, which was modified (i) in
August 2008 so that the permitted ratio of debt to EBITDA would continue at its then-current level for the remaining
term of the facility and (ii) in November 2008 so that the permitted ratio of debt to EBITDA would be temporarily
increased until the earlier of December 31, 2009 or CenterPoint Houston’s issuance of bonds to securitize the costs
incurred as a result of Hurricane Ike, after which time the permitted ratio would revert to the level that existed prior
to the November 2008 modification.