OG&E 2011 Annual Report Download - page 73

All of these bonds are subject to an optional tender at the request of
the holders, at 100 percent of the principal amount, together with accrued
and unpaid interest to the date of purchase. The bond holders, on any
business day, can request repayment of the bond by delivering an irrevo-
cable notice to the tender agent stating the principal amount of the bond,
payment instructions for the purchase price and the business day the
bond is to be purchased. The repayment option may only be exercised
by the holder of a bond for the principal amount. When a tender notice
has been received by the trustee, a third party remarketing agent for the
bonds will attempt to remarket any bonds tendered for purchase. This
process occurs once per week. Since the original issuance of these
series of bonds in 1995 and 1997, the remarketing agent has success-
fully remarketed all tendered bonds. If the remarketing agent is unable
to remarket any such bonds, OG&E is obligated to repurchase such
unremarketed bonds. As OG&E has both the intent and ability to refi-
nance the bonds on a long-term basis and such ability is supported by
an ability to consummate the refinancing, the bonds are classified as
long-term debt in the Company’s Consolidated Financial Statements.
OG&E believes that it has sufficient liquidity to meet these obligations.
Long-Term Debt Maturities
Maturities of the Company’s long-term debt during the next five
years consist of $300 million and $260 million in years 2014 and 2016,
respectively. There are no maturities of the Company’s long-term debt
in years 2012, 2013 or 2015.
The Company has previously incurred costs related to debt
refinancings. Unamortized debt expense and unamortized loss on
reacquired debt are classified as Deferred Charges and Other Assets
and the unamortized premium and discount on long-term debt is classi-
fied as Long-Term Debt, respectively, in the Consolidated Balance Sheets
and are being amortized over the life of the respective debt.
OG&E Issuance of Long-Term Debt
On May 24, 2011, OG&E issued $250 million of 5.25% senior notes
due May 15, 2041. The proceeds from the issuance were added to
OGE Energy’s general funds and were used to repay short-term debt.
OG&E expects to issue additional long-term debt from time to time
when market conditions are favorable and when the need arises.
13. Short-Term Debt and Credit Facilities
The Company borrows on a short-term basis, as necessary, by the
issuance of commercial paper and by borrowings under its revolving
credit agreements. The short-term debt balance was $277.1 million
and $145.0 million at December 31, 2011 and 2010, respectively, at
a weighted-average interest rate of 0.48 percent and 0.34 percent,
respectively. The following table provides information regarding the
Company’s revolving credit agreements and available cash at
December 31, 2011.
Weighted-
Aggregate Amount Average
(In millions) Commitment Outstanding (A) Interest Rate Maturity
Revolving credit agreements
and available cash
OGE Energy(B) $÷«750.0 $277.1 0.48% 12/13/16
OG&E(C) 400.0 2.2 0.53% 12/13/16
Enogex LLC(E) 400.0 150.0 1.65% 12/13/16
1,550.0 429.3 0.89%
Cash 4.6 N/A N/A N/A
Total $1,554.6 $429.3 0.89%
(A) Includes direct borrowings under the revolving credit agreements, commercial paper borrowings
and letters of credit at December 31, 2011.
(B) This bank facility is available to back up OGE Energy’s commercial paper borrowings and to
provide revolving credit borrowings. This bank facility can also be used as a letter of credit facility.
At December 31, 2011, there was $277.1 million in outstanding commercial paper borrowings.
(C) This bank facility is available to back up OG&E’s commercial paper borrowings and to provide
revolving credit borrowings. This bank facility can also be used as a letter of credit facility. At
December 31, 2011, there was $2.2 million supporting letters of credit.
(D) Represents the weighted-average interest rate for the outstanding borrowings under the revolving
credit agreements, commercial paper borrowings and letters of credit.
(E) This bank facility is available to provide revolving credit borrowings for Enogex LLC. As Enogex
LLC’s credit agreement matures on December 13, 2016, along with its intent in utilizing its credit
agreement, borrowings thereunder are classified as long-term debt in the Company’s Consolidated
Balance Sheets.
(F) In December 2011, the Company, OG&E and Enogex LLC each entered into new unsecured five-
year revolving credit facilities totaling in the aggregate $1,550 million ($750 million for the Company,
$400 million for OG&E and $400 million for Enogex LLC). Each of the credit facilities contain an
option, which may be exercised up to two times, to extend the term for an additional year.
The Company’s ability to access the commercial paper market
could be adversely impacted by a credit ratings downgrade or major
market disruptions. Pricing grids associated with the Company’s credit
facilities could cause annual fees and borrowing rates to increase if an
adverse ratings impact occurs. The impact of any future downgrade
could include an increase in the costs of the Company’s short-term
borrowings, but a reduction in the Company’s credit ratings would not
result in any defaults or accelerations. Any future downgrade of the
Company could also lead to higher long-term borrowing costs and,
if below investment grade, would require the Company to post cash
collateral or letters of credit.
OG&E must obtain regulatory approval from the FERC in order
to borrow on a short-term basis. OG&E has the necessary regulatory
approvals to incur up to $800 million in short-term borrowings at any
one time for a two-year period beginning January 1, 2011 and ending
December 31, 2012.
14. Retirement Plans and Postretirement Benefit Plans
Pension Plan and Restoration of Retirement Income Plan
In October 2009, the Company’s Pension Plan and the Company’s
qualified defined contribution retirement plan (“401(k) Plan”) were
amended, effective January 1, 2010 to provide eligible employees
a choice to select a future retirement benefit combination from the
Company’s Pension Plan and the Company’s 401(k) Plan.
Employees hired or rehired on or after December 1, 2009 do not
participate in the Pension Plan but are eligible to participate in the 401(k)
Plan where, for each pay period, the Company contributes to the 401(k)
Plan, on behalf of each participant, 200 percent of the participant’s
contributions up to five percent of compensation.
OGE Energy Corp. 71
(D)
(D)
(D)
(F)
(F)
(F)