CenterPoint Energy 2013 Annual Report Download - page 55

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insurance proceeds received for any loss of, or any damage to, any of Enable’s facilities may not be sufficient to restore the loss
or damage without negative impact on its results of operations and its ability to make cash distributions.
Enable’s ability to grow is dependent on its ability to access external financing sources.
Enable expects that it will distribute all of its “available cash” to its unitholders following its initial public offering. As a result,
Enable is expected to rely primarily upon external financing sources, including commercial bank borrowings and the issuance of
debt and equity securities, to fund acquisitions and expansion capital expenditures. As a result, to the extent Enable is unable to
finance growth externally, Enable’ s cash distribution policy will significantly impair its ability to grow. In addition, because Enable
is expected to distribute all of its available cash, its growth may not be as fast as businesses that reinvest their available cash to
expand ongoing operations.
To the extent Enable issues additional units in connection with any acquisitions or expansion capital expenditures, the payment
of distributions on those additional units may increase the risk that Enable will be unable to maintain or increase its per unit
distribution level, which in turn may impact the available cash that it has to distribute on each unit. There are no limitations in
Enable’s partnership agreement on its ability to issue additional units, including units ranking senior to the common units. The
incurrence of additional commercial borrowings or other debt by Enable to finance its growth strategy would result in increased
interest expense, which in turn may negatively impact the available cash that Enable has to distribute to its unitholders.
If Enable does not make acquisitions or is unable to make acquisitions on economically acceptable terms, its future growth
will be limited.
Enable’s ability to grow depends, in part, on its ability to make acquisitions that result in an increase in its cash generated
from operations. If Enable is unable to make accretive acquisitions either because: (i) it is unable to identify attractive acquisition
targets or it is unable to negotiate purchase contracts on acceptable terms, (ii) it is unable to obtain acquisition financing on
economically acceptable terms, or (iii) it is outbid by competitors, then its future growth and ability to increase distributions will
be limited.
Enable’s debt levels may limit its flexibility in obtaining additional financing and in pursuing other business opportunities.
As of December 31, 2013, Enable had approximately $1.9 billion of long-term debt outstanding and $200 million of short-
term debt outstanding, excluding the premiums on senior notes. Enable has $363 million of long-term notes payable-affiliated
companies due to CenterPoint Energy. Enable has a $1.4 billion revolving credit facility for working capital, capital expenditures
and other partnership purposes, including acquisitions, of which $1.1 billion was available as of December 31, 2013. As of January
2014, Enable has the ability to issue up to $1.4 billion in commercial paper, subject to available borrowing capacity under its
revolving credit facility and market conditions. Enable will continue to have the ability to incur additional debt, subject to limitations
in its credit facilities. The levels of Enable’s debt could have important consequences, including the following:
• the ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other
purposes may be impaired or the financing may not be available on favorable terms, if at all;
• a portion of cash flows will be required to make interest payments on the debt, reducing the funds that would otherwise
be available for operations, future business opportunities and distributions;
• Enable’s debt level will make it more vulnerable to competitive pressures or a downturn in its business or the economy
generally; and
• Enable’s debt level may limit its flexibility in responding to changing business and economic conditions.
Enable’s ability to service its debt will depend upon, among other things, its future financial and operating performance, which
will be affected by prevailing economic conditions and financial, business, regulatory and other factors, some of which are beyond
Enable’s control. If operating results are not sufficient to service current or future indebtedness, Enable may be forced to take
actions such as reducing distributions, reducing or delaying business activities, acquisitions, investments or capital expenditures,
selling assets, restructuring or refinancing debt, or seeking additional equity capital. These actions may not be effected on
satisfactory terms, or at all.