Vectren 2010 Annual Report Download - page 94

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SIGECO 2009 Debt Issuance
On August 19, 2009 SIGECO also completed a $22.3 million tax-exempt first mortgage bond issuance at an interest rate of 5.4
percent that is fixed through maturity. The bonds mature in 2040. The proceeds from the sale of the bonds, net of issuance
costs, totaled approximately $21.3 million.
Long-Term Debt Put and Call Provisions
Certain long-term debt issues contain put and call provisions that can be exercised on various dates before maturity. Other than
certain instruments that can be put to the Company upon the death of the holder (death puts), these put or call provisions are
not triggered by specific events, but are based upon dates stated in the note agreements. During 2010, 2009, and 2008, the
Company repaid approximately $1.8 million, $3.0 million, and $1.6 million, respectively, related to death puts. Debt which may
be put to the Company for reasons other than a death during the years following 2010 (in millions) is $30.0 in 2011, zero in 2012
and thereafter. Investors had the one-time option to put $10 million in May 2010; however, no notice was received during the
notification period and such debt is classified as long-term at December 31, 2010. Debt that may be put to the Company within
one year or debt that is supported by lines of credit that expire within one year are classified as Long-term debt subject to tender
in current liabilities.
Utility Holdings 2008 Debt Issuance
In March 2008, Utility Holdings issued $125 million in 6.25 percent senior unsecured notes due April 1, 2039 (2039 Notes) at
par. The 2039 Notes are guaranteed by Utility Holdings’ three public utilities: SIGECO, Indiana Gas, and VEDO. These
guarantees are full and unconditional and joint and several. The 2039 Notes have no sinking fund requirements and interest
payments are due monthly. The notes may be called by Utility Holdings, in whole or in part, at any time on or after April 1, 2013,
at 100 percent of principal amount plus accrued interest. During 2007, Utility Holdings entered into several interest rate hedges
with an $80 million notional amount. Upon issuance of the notes, these instruments were settled resulting in the payment of
approximately $9.6 million, which was recorded as a Regulatory asset pursuant to existing regulatory orders. The value paid is
being amortized as an increase to interest expense over the life of the issue. The proceeds from the sale of the 2039 Notes
less settlement of the hedging arrangements and payments of issuance costs amounted to approximately $111.1 million.
Auction Rate Securities
In February 2008, SIGECO provided notice to the current holders of approximately $103 million of tax-exempt auction rate
mode long-term debt of its plans to convert that debt from its current auction rate mode into a daily interest rate mode. In March
2008, the debt was tendered at 100 percent of the principal amount plus accrued interest. During March 2008, SIGECO
remarketed approximately $61.8 million of these instruments at interest rates that are fixed to maturity, receiving proceeds, net
of issuance costs, of approximately $60.0 million. The terms are $22.6 million at 5.15 percent due in 2023, $22.2 million at 5.35
percent due in 2030 and $17.0 million at 5.45 percent due in 2041.
On March 26, 2009, SIGECO remarketed the remaining $41.3 million of these obligations, receiving proceeds, net of issuance
costs of approximately $40.6 million. The remarketed notes have a variable rate interest rate which is reset weekly and are
supported by a standby letter of credit. The notes are collateralized by SIGECO’s utility plant, and $9.8 million are due in 2015
and $31.5 million are due in 2025.
Future Long-Term Debt Sinking Fund Requirements and Maturities
The annual sinking fund requirement of SIGECO's first mortgage bonds is 1 percent of the greatest amount of bonds
outstanding under the Mortgage Indenture. This requirement may be satisfied by certification to the Trustee of unfunded
property additions in the prescribed amount as provided in the Mortgage Indenture. SIGECO intends to meet the 2010 sinking
fund requirement by this means and, accordingly, the sinking fund requirement for 2010 is excluded from Current liabilities in the
Consolidated Balance Sheets. At December 31, 2010, $1.2 billion of SIGECO's utility plant remained unfunded under
SIGECO's Mortgage Indenture. SIGECO’s gross utility plant balance subject to the Mortgage Indenture approximated $2.6
billion at December 31, 2010.
Consolidated maturities of long-term debt during the five years following 2010 (in millions) are $250.7 in 2011, $60.0 in 2012,
$105.0 in 2013, $30.0 in 2014, and $179.8 in 2015.