CenterPoint Energy 2008 Annual Report Download - page 114

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CenterPoint Houston’s $289 million credit facility’s first drawn cost is LIBOR plus 45 basis points based on
CenterPoint Houston’s current credit ratings. The facility contains a debt (excluding transition bonds) to total
capitalization covenant.
CERC Corp.’s $950 million credit facility’s first drawn cost is LIBOR plus 45 basis points based on CERC
Corp.’s current credit ratings. The facility contains a debt to total capitalization covenant.
Under the Company’s $1.2 billion credit facility, CenterPoint Houston’s $289 million credit facility and CERC
Corp’s $950 million credit facility, an additional utilization fee of 5 basis points applies to borrowings any time
more than 50% of the facility is utilized. The spread to LIBOR and the utilization fee fluctuate based on the
borrower’s credit rating.
As of December 31, 2007 and 2008, the following loan balances were outstanding under the Company’s
revolving credit facilities (in millions):
December 31,
2007
December 31,
2008
CenterPoint Energy $1.2 billion credit facility borrowings ......................
$ 131
$ 264
CenterPoint Houston $289 million credit facility borrowings ..................
50
251
CERC Corp. $950 million credit facility borrowings ...............................
150
926
Total credit facility borrowings .............................................................
$ 331
$ 1,441
In addition, as of December 31, 2007 and 2008, the Company had approximately $28 million and $27 million,
respectively, of outstanding letters of credit under its $1.2 billion credit facility and CenterPoint Houston had
approximately $4 million of outstanding letters of credit under its $289 million credit facility as of both December
31, 2007 and 2008. There was no commercial paper outstanding that would have been backstopped by the
Company’s $1.2 billion credit facility or CERC Corp.’s $950 million credit facility at December 31, 2007 and 2008.
The Company, CenterPoint Houston and CERC Corp. were in compliance with all debt covenants as of
December 31, 2008.
Transition Bonds. Pursuant to a financing order issued by the Texas Utility Commission in September 2007, in
February 2008 a subsidiary of CenterPoint Houston issued approximately $488 million in transition bonds in two
tranches with interest rates of 4.192% and 5.234% and final maturity dates of February 2020 and February 2023,
respectively. Scheduled final payment dates are February 2017 and February 2020. Through issuance of the
transition bonds, CenterPoint Houston securitized transition property of approximately $483 million representing the
remaining balance of the CTC less an environmental refund as reduced by the fuel reconciliation settlement amount.
See Note 3(b) for further discussion.
Convertible Debt. On May 19, 2003, the Company issued $575 million aggregate principal amount of
convertible senior notes due May 15, 2023 with an interest rate of 3.75%.
In the fourth quarter of 2007, holders of the Company’s 3.75% convertible senior notes converted approximately
$40 million principal amount of such notes. Substantially all of such conversions were settled with a cash payment
for the principal amount and delivery of 1.3 million shares of the Company’s common stock for the excess value due
converting holders.
In April 2008, the Company called its 3.75% convertible senior notes for redemption on May 30, 2008. At the
time of the announcement, the notes were convertible at the option of the holders, and substantially all of the notes
were submitted for conversion on or prior to the May 30, 2008 redemption date. During the year ended December
31, 2008, the Company issued 16.9 million shares of its common stock and paid cash of approximately $532 million
to settle conversions of approximately $535 million principal amount of its 3.75% convertible senior notes.
In December 2006, the Company called its 2.875% convertible senior notes for redemption on January 22, 2007.
The 2.875% convertible senior notes became immediately convertible at the option of the holders upon the call for
redemption and were convertible through the close of business on the redemption date. Substantially all the
$255 million aggregate principal amount of the 2.875% convertible senior notes were converted in January 2007.