Progress Energy 2004 Annual Report Download - page 86

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The following table summarizes the Company’s
credit facilities:
84
Notes to Consolidated Financial Statements
At December 31, 2004 and 2003, the Company had
$424 million and $4 million, respectively, of outstanding
commercial paper and other short-term debt classified as
short-term obligations. The weighted-average interest
rates of such short-term obligations at December 31, 2004
and 2003 were 2.77% and 2.25%, respectively. At
December 31, 2004, the Company has reserved $150 million
of its lines of credit for backing of letters of credit.
Both Progress Energy and PEF have an uncommitted
bank bid facility authorizing them to borrow and
reborrow, and have loans outstanding at any time, up to
$300 million and $100 million, respectively. These bank bid
facilities were not drawn at December 31, 2004.
On January 31, 2005, Progress Energy, Inc., entered into a
new $600 million revolving credit agreement, which
expires December 30, 2005. This facility was added to
provide additional liquidity during 2005 due in part to
storm restoration costs incurred in Florida during 2004.
The credit agreement includes a defined maximum total
debt to total capital ratio of 68% and a minimum interest
coverage ratio of 2.5 to 1. The credit agreement also
contains various cross-default and other acceleration
provisions. On February 4, 2005, $300 million was drawn
under the new facility to reduce commercial paper and
bank loans outstanding.
The combined aggregate maturities of long-term debt
for 2005 through 2009 are approximately $349 million,
$963 million, $674 million, $827 million and $560 million,
respectively.
B. Covenants and Default Provisions
FINANCIAL COVENANTS
Progress Energy’s, PEC’s and PEF’s credit lines contain
various terms and conditions that could affect the
Company’s ability to borrow under these facilities. These
include maximum debt to total capital ratios, interest
coverage tests, material adverse change clauses and
cross-default provisions.
All of the credit facilities include a defined maximum total
debt to total capital ratio. At December 31, 2004, the
maximum and calculated ratios for the companies,
pursuant to the terms of the agreements, are as follows:
Progress Energy’s 364-day credit facility and both PEF’s
364-day and three-year credit facilities have a financial
covenant for interest coverage. The covenants require
Progress Energy’s and PEF’s earnings before interest,
taxes, and depreciation and amortization to interest
expense ratio to be at least 2.5 to 1 and 3 to 1,
respectively. For the year ended December 31, 2004, the
ratios were 4.00 to 1 and 7.93 to 1 for the Company and
PEF, respectively.
In March 2005, Progress Energy, Inc.’s five-year credit
facility was amended to increase the maximum total debt
to total capital ratio from 65% to 68% in anticipation of the
potential impacts of proposed accounting rules for
uncertain tax positions. See Notes 2 and 23E.
MATERIAL ADVERSE CHANGE CLAUSE
The credit facilities of Progress Energy, PEC, and PEF
include a provision under which lenders could refuse to
advance funds in the event of a material adverse change
(MAC) in the borrower’s financial condition. Pursuant to
(in millions)
Company Description Total Outstanding Available
Progress Energy, Inc. 5-Year (expiring 8/5/09) $1,130 $160 $970
Progress Energy Carolinas, Inc. 364-Day (expiring 7/27/05) 165 90 75
Progress Energy Carolinas, Inc. 3-Year (expiring 7/31/05) 285 – 285
Progress Energy Florida, Inc. 364-Day (expiring 3/29/05) 200 170 30
Progress Energy Florida, Inc. 3-Year (expiring 4/01/06) 200 55 145
Less: amounts reserved(a) (574)
Total credit facilities $1,980 $475 $931
(a) To the extent amounts are reserved for commercial paper outstanding or backing letters of credit, they are not available for additional borrowings.
Company Maximum Ratio Actual Ratio(a)
Progress Energy, Inc. 65% 60.7%
Progress Energy Carolinas, Inc. 65% 52.3%
Progress Energy Florida, Inc. 65% 50.8%
(a)Indebtedness as defined by the bank agreements includes certain letters
of credit and guarantees that are not recorded on the Consolidated
Balance Sheets.