CenterPoint Energy 2014 Annual Report Download - page 36

under Enable’
s commercial paper program. 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:
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.
Enable’
s credit facilities contain operating and financial restrictions, including covenants and restrictions that may be affected by events
beyond Enable’
s control, which could adversely affect its business, financial condition, results of operations and ability to make quarterly
distributions.
Enable’s credit facilities contain customary covenants that, among other things, limit its ability to:
Enable’s credit facilities also require it to maintain certain financial ratios. Enable’
s ability to meet those financial ratios can be affected by
events beyond its control, and we cannot assure you that it will meet those ratios. In addition, Enable’
s credit facilities contain events of default
customary for agreements of this nature.
Enable’
s ability to comply with the covenants and restrictions contained in its credit facilities may be affected by events beyond its control,
including prevailing economic, financial and industry conditions. If market or other economic conditions deteriorate, Enable’
s ability to comply
with these covenants may be impaired. If Enable violates any of the restrictions, covenants, ratios or tests in its credit facilities, a significant
portion of its indebtedness may become immediately due and payable. In addition, Enable’s lenders’
commitments to make further loans to it
under the revolving credit facility may be suspended or terminated. Enable might not have, or be able to obtain, sufficient funds to make these
accelerated payments.
Costs of compliance with existing environmental laws and regulations are significant, and the cost of compliance with future
environmental laws and regulations may adversely affect Enable’s results of operations and its ability to make cash distributions.
Enable is subject to extensive federal, state and local environmental statutes, rules and regulations relating to air quality, water quality, waste
management, wildlife conservation, natural resources and health and safety that could, among other things, delay or increase its costs of
construction, restrict or limit the output of certain facilities and/or require additional pollution control equipment and otherwise increase costs.
There are significant capital, operating and other costs associated with compliance with these environmental statutes, rules and regulations and
those costs may be even more significant in the future.
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•
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.
•
permit its subsidiaries to incur or guarantee additional debt;
•
incur or permit to exist certain liens on assets;
•
dispose of assets;
•
merge or consolidate with another company or engage in a change of control;
• enter into transactions with affiliates on non-arm’
s length terms; and
•
change the nature of its business.