CenterPoint Energy 2009 Annual Report Download - page 80

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default. In addition, four outstanding series of our senior notes, aggregating $950 million in principal amount as of
February 15, 2010, provide that a payment default by us, CERC Corp. or CenterPoint Houston in respect of, or an
acceleration of, borrowed money and certain other specified types of obligations, in the aggregate principal amount
of $50 million, will cause a default. A default by CenterPoint Energy would not trigger a default under our
subsidiaries’ debt instruments or bank credit facilities.
Possible Acquisitions, Divestitures and Joint Ventures. From time to time, we consider the acquisition or the
disposition of assets or businesses or possible joint ventures or other joint ownership arrangements with respect to
assets or businesses. Any determination to take any action in this regard will be based on market conditions and
opportunities existing at the time, and accordingly, the timing, size or success of any efforts and the associated
potential capital commitments are unpredictable. We may seek to fund all or part of any such efforts with proceeds
from debt and/or equity issuances. Debt or equity financing may not, however, be available to us at that time due to
a variety of events, including, among others, maintenance of our credit ratings, industry conditions, general
economic conditions, market conditions and market perceptions.
Other Factors that Could Affect Cash Requirements. In addition to the above factors, our liquidity and capital
resources could be affected by:
• cash collateral requirements that could exist in connection with certain contracts, including gas purchases,
gas price and weather hedging and gas storage activities of our Natural Gas Distribution and Competitive
Natural Gas Sales and Services business segments;
• acceleration of payment dates on certain gas supply contracts under certain circumstances, as a result of
increased gas prices and concentration of natural gas suppliers;
• increased costs related to the acquisition of natural gas;
• increases in interest expense in connection with debt refinancings and borrowings under credit facilities;
• various regulatory actions;
• the ability of RRI and its subsidiaries to satisfy their obligations in respect of RRI’s indemnity obligations
to us and our subsidiaries or in connection with the contractual obligations to a third party pursuant to
which CERC is a guarantor;
• the ability of REPs that are subsidiaries of NRG Retail LLC and TXU Energy, which are CenterPoint
Houston’s two largest customers, to satisfy their obligations to us and our subsidiaries;
• slower customer payments and increased write-offs of receivables due to higher gas prices or changing
economic conditions;
• the outcome of litigation brought by and against us;
• contributions to pension and postretirement benefit plans;
• restoration costs and revenue losses resulting from natural disasters such as hurricanes and the timing of
recovery of such restoration costs; and
• various other risks identified in “Risk Factors” in Item 1A of this report.
Certain Contractual Limits on Our Ability to Issue Securities and Borrow Money. CenterPoint Houston’s credit
facilities limit CenterPoint Houston’s debt (excluding transition and system restoration bonds) as a percentage of its
total capitalization to 65%. CERC Corp.’s bank facility and its receivables facility limit CERC’s debt as a
percentage of its total capitalization to 65%. Our $1.2 billion credit facility contains a debt, excluding transition and
system restoration bonds, to EBITDA covenant. Such covenant was modified twice in 2008 to provide additional
debt capacity. The second modification was to provide debt capacity pending the financing of system restoration