CenterPoint Energy 2009 Annual Report Download - page 143

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(4) Capital Stock. During the year ended December 31, 2009, CenterPoint Energy received net proceeds of
approximately $280 million from the issuance of 24.2 million common shares in an underwritten public offering, net
proceeds of $148 million from the issuance of 14.3 million common shares through a continuous offering program,
proceeds of approximately $57 million from the sale of approximately 4.9 million common shares to CenterPoint
Energy’s defined contribution plan and proceeds of approximately $15 million from the sale of approximately
1.3 million common shares to participants in CenterPoint Energy’s enhanced dividend reinvestment plan.
(5) Long-term Debt. As of December 31, 2009, CenterPoint Energy had no borrowings and approximately
$27 million of outstanding letters of credit under its $1.2 billion credit facility. CenterPoint Energy had no
commercial paper outstanding at December 31, 2009. CenterPoint Energy was in compliance with all covenants as
of December 31, 2009.
CenterPoint Energy’s $1.2 billion credit facility has a first drawn cost of the London Interbank Offered Rate
(LIBOR) plus 55 basis points based on CenterPoint Energy’s current credit ratings. 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. The facility contains a debt (excluding transition and
system restoration bonds) to earnings before interest, taxes, depreciation and amortization (EBITDA) covenant (as
those terms are defined in the facility). Such covenant was modified twice in 2008 to provide additional debt
capacity. The second modification was to provide debt capacity pending the financing of system restoration costs
following Hurricane Ike. That modification was terminated with CenterPoint Houston’s issuance of bonds to
securitize such costs in November 2009. In February 2010, CenterPoint Energy amended its credit facility to
modify the financial ratio covenant to allow for a temporary increase of the permitted ratio of debt (excluding
transition and system restoration bonds) to EBITDA from 5 times to 5.5 times if CenterPoint Houston experiences
damage from a natural disaster in its service territory and CenterPoint Energy certifies to the administrative agent
that CenterPoint Houston has incurred system restoration costs reasonably likely to exceed $100 million in a
calendar year, all or part of which CenterPoint Houston intends to seek to recover through securitization financing.
Such temporary increase in the financial ratio covenant would be in effect from the date CenterPoint Energy delivers
its certification until the earliest to occur of (i) the completion of the securitization financing, (ii) the first
anniversary of CenterPoint Energy’s certification or (iii) the revocation of such certification.
CenterPoint Energy’s maturities of long-term debt, excluding the ZENS obligation, are $490 million in 2010 and
$19 million in 2011. There are no maturities of long-term debt in 2012, 2013 and 2014. Maturities in 2010 include
$290 million of pollution control bonds issued on behalf of CenterPoint Energy which were purchased by
CenterPoint Energy in January 2010.
(6) Guaranties. CenterPoint Energy Services, Inc. (CES) provides comprehensive natural gas sales and services
to industrial and commercial customers. In order to hedge their exposure to natural gas prices, CES has entered
standard purchase and sale agreements with various counterparties. CenterPoint Energy has guaranteed the payment
obligations of CES under certain of these agreements, typically for one-year terms. As of December 31, 2009,
CenterPoint Energy had guaranteed $13 million under these agreements.
In September 2009, CenterPoint Energy Field Services, Inc. (CEFS), an indirect wholly-owned subsidiary of
CenterPoint Energy, entered into long-term agreements with an indirect wholly-owned subsidiary of EnCana
Corporation (EnCana) and an indirect wholly-owned subsidiary of Royal Dutch Shell plc (Shell) to provide
gathering and treating services for their natural gas production from certain Haynesville Shale and Bossier Shale
formations in Louisiana. CEFS also acquired jointly-owned gathering facilities from EnCana and Shell in De Soto
and Red River parishes in northwest Louisiana. Each of the agreements includes acreage dedication and volume
commitments for which CEFS has rights to gather Shell’s and EnCana’s natural gas production from the dedicated
areas.
In connection with the agreements, CEFS commenced gathering and treating services utilizing the acquired
facilities. CEFS is expanding the acquired facilities in order to gather and treat up to 700 million cubic feet (MMcf)
per day of natural gas. If EnCana or Shell elect, CEFS will further expand the facilities in order to gather and treat
additional future volumes. CenterPoint Energy has guaranteed to fund CEFS’ obligations, including the initial
expansion of the facilities, under these long-term agreements. CenterPoint Energy’s initial guarantee is for $200
million to both Shell and EnCana ($400 million total), however the amount of the guarantee could increase if the