CenterPoint Energy 2008 Annual Report Download - page 71

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2008, we issued 16.9 million shares of our common stock and paid cash of approximately $532 million to settle
conversions of approximately $535 million principal amount of our 3.75% convertible senior notes.
In May 2008, we issued $300 million aggregate principal amount of senior notes due in May 2018 with an
interest rate of 6.50%. The proceeds from the sale of the senior notes were used for general corporate purposes,
including the satisfaction of cash payment obligations in connection with conversions of our 3.75% convertible
senior notes as discussed above.
In May 2008, CERC Corp. issued $300 million aggregate principal amount of senior notes due in May 2018 with
an interest rate of 6.00%. The proceeds from the sale of the senior notes were used for general corporate purposes,
including capital expenditures, working capital and loans to or investments in affiliates.
In December 2008, CERC entered into an asset management agreement whereby it sold $110 million of its
natural gas in storage and agreed to repurchase an equivalent amount of natural gas during the 2008-2009 winter
heating season for payments totaling $114 million. This transaction was accounted for as a financing and, as of
December 31, 2008, the consolidated financial statements reflect natural gas inventory of $75 million and a
financing obligation of $75 million related to this transaction.
In January 2009, CenterPoint Houston issued $500 million principal amount of general mortgage bonds, due in
March 2014 with an interest rate of 7.00%. The proceeds from the sale of the bonds were used for general corporate
purposes, including the repayment of outstanding borrowings under its revolving credit facility and from the money
pool, capital expenditures and storm restoration costs associated with Hurricane Ike.
Equity Financing Transactions. In 2008, we received proceeds of approximately $65 million from the sale of
approximately 4.9 million common shares to our defined contribution plan and proceeds of approximately
$13 million from the sale of approximately 0.9 million common shares to participants in our enhanced dividend
reinvestment plan.
Credit and Receivables Facilities. In November 2008, CenterPoint Houston entered into a $600 million 364-day
credit facility. The credit facility will terminate if bonds are issued to securitize the costs incurred as a result of
Hurricane Ike and if those bonds are issued prior to the November 24, 2009 expiration of the facility. CenterPoint
Houston expects to seek legislative and regulatory approval for the issuance of such bonds during 2009.
The 364-day credit facility is secured by a pledge of $600 million of general mortgage bonds issued by
CenterPoint Houston. Borrowing costs for London Interbank Offered Rate (LIBOR)-based loans will be at a margin
of 2.25 percent above LIBOR rates, based on CenterPoint Houston’s current ratings. In addition, CenterPoint
Houston will pay lenders, based on current ratings, a per annum commitment fee of 0.5 percent for their
commitments under the facility and a quarterly duration fee of 0.75 percent on the average amount of outstanding
borrowings during the quarter. The spread to LIBOR and the commitment fee fluctuate based on the borrower’s
credit rating. The facility contains covenants, including a debt (excluding transition and other securitization bonds)
to total capitalization covenant.
Our $1.2 billion credit facility has a first drawn cost of LIBOR plus 55 basis points based on our current credit
ratings. The facility contains a debt (excluding transition bonds) to earnings before interest, taxes, depreciation and
amortization (EBITDA) covenant, which was modified (i) in August 2008 so that the permitted ratio of debt to
EBITDA would continue at its then-current level for the remaining term of the facility and (ii) in November 2008 so
that the permitted ratio of debt to EBITDA would be temporarily increased until the earlier of December 31, 2009 or
CenterPoint Houston’s issuance of bonds to securitize the costs incurred as a result of Hurricane Ike, after which
time the permitted ratio would revert to the level that existed prior to the November 2008 modification.
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 and other
securitization 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.