Vectren 2013 Annual Report Download - page 64

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Utility Holdings 2012 Debt Transactions
On February 1, 2012, Utility Holdings issued $100 million of senior unsecured notes at an interest rate of 5.00 percent per
annum and with a maturity date of February 3, 2042. The notes were sold to various institutional investors pursuant to a private
placement note purchase agreement executed in November 2011 with a delayed draw feature. These senior notes are
unsecured and jointly and severally guaranteed by Utility Holdings’ regulated utility subsidiaries, SIGECO, Indiana Gas, and
VEDO. The proceeds from the sale of the notes, net of issuance costs, totaled approximately $99.5 million. These notes have
no sinking fund requirements and interest payments are due semi-annually. These notes contain customary representations,
warranties and covenants, including a leverage covenant consistent with leverage covenants contained in other Utility Holdings’
borrowing arrangements.
Utility Holdings 2011 Debt Issuance
On November 21, 2011, the Company exercised a call option on Utility Holdings' $96.2 million 5.95 percent senior notes due in
2036. This debt was refinanced on November 30, 2011. On that date, Utility Holdings closed a financing under a private
placement note purchase agreement pursuant to which various institutional investors purchased the following tranches of
notes: (i) $55 million of 4.67 percent Senior Guaranteed Notes, due November 30, 2021, (ii) $60 million of 5.02 percent Senior
Guaranteed Notes, due November 30, 2026, and (iii) $35 million of 5.99 percent Senior Guaranteed Notes, due December 2,
2041. These senior notes are unsecured and jointly and severally guaranteed by Utility Holdings’ regulated utility subsidiaries,
SIGECO, Indiana Gas, and VEDO. The proceeds from the sale of the notes, net of issuance costs, totaled $149.0
million. These notes have no sinking fund requirements and interest payments are due semi-annually. These notes contain
customary representations, warranties and covenants, including a leverage covenant consistent with leverage covenants
contained in other Utility Holdings’ borrowing arrangements.
Long-Term Debt Puts, Calls, and Mandatory Tenders
Certain long-term debt issues contain optional put and call provisions that can be exercised on various dates before maturity.
During 2013, the Company had no repayments related to investor put provisions and at December 31, 2013, the only debt with
investor puts were two series of SIGECO variable rate demand bonds, aggregating $41.3 million, with a variable interest rate
that is reset weekly. This SIGECO debt is fully supported by letters of credit that are available should any of the debt holders
decide to put the debt to SIGECO and the remarketing agent is unable to remarket it to other investors.
Certain other series of SIGECO bonds, aggregating $49.1 million, currently bear interest at fixed rates and are subject to
mandatory tender in September 2017.
In April and May, 2013, the Company exercised call options on six issues of SIGECO's tax exempt long-term debt totaling
$110.9 million with interest rates ranging from 4.50 percent to 5.45 percent, and with maturity dates from 2020 to 2041.
Investing Cash Flow
Cash flow required for investing activities was $405.1 million in 2013, $356.9 million in 2012, and $319.7 million in 2011. Capital
expenditures are the primary component of investing activities and totaled $393.4 million in 2013, $365.8 million in 2012 and
$321.3 million in 2011. Utility Group capital expenditures increased approximately $15 million in 2013 compared to 2012 and is
attributable to greater expenditures for bare/steel cast iron replacement and regional electric transmission projects. In addition,
capital expenditures for nonutility equipment have increased approximately $13 million in 2013 compared to 2012, primarily due
to continued growth in the Infrastructure Services segment. The increase in capital expenditures in 2012 compared to 2011 of
$32 million is primarily due to growth in the Infrastructure Services segment.