Entergy 2007 Annual Report Download - page 82

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Entergy Corporation and Subsidiaries 2007
Notes to Consolidated Financial Statements continued
e annual long-term debt maturities (excluding lease obligations) for
debt outstanding as of December 31, 2007, for the next ve years are as
follows (in thousands):
2008 $ 970,002
2009 $ 515,950
2010 $ 762,061
2011 $ 896,961
2012 $2,537,488
In November 2000, Entergy’s Non-Utility Nuclear business
purchased the FitzPatrick and Indian Point 3 power plants in a seller-
nanced transaction. Entergy issued notes to NYPA with seven annual
installments of approximately $108 million commencing one year from
the date of the closing, and eight annual installments of $20 million
commencing eight years from the date of the closing. ese notes do
not have a stated interest rate, but have an implicit interest rate of 4.8%.
In accordance with the purchase agreement with NYPA, the purchase
of Indian Point 2 in 2001 resulted in Entergy’s Non-Utility Nuclear
business becoming liable to NYPA for an additional $10 million per
year for 10 years, beginning in September 2003. is liability was
recorded upon the purchase of Indian Point 2 in September 2001, and
is included in the note payable to NYPA balance above. In July 2003,
a payment of $102 million was made prior to maturity on the note
payable to NYPA. Under a provision in a letter of credit supporting
these notes, if certain of the Utility operating companies or System
Energy were to default on other indebtedness, Entergy could be
required to post collateral to support the letter of credit.
Covenants in the Entergy Corporation notes require it to maintain
a consolidated debt ratio of 65% or less of its total capitalization. If
Entergy’s debt ratio exceeds this limit, or if Entergy or certain of the
Utility operating companies default on other indebtedness or are in
bankruptcy or insolvency proceedings, an acceleration of the notes’
maturity dates may occur.
Entergy Gulf States Louisiana, Entergy Louisiana, Entergy
Mississippi, Entergy Texas, and System Energy have received FERC
long-term nancing orders authorizing long-term securities issuances.
Entergy Arkansas has received an APSC long-term nancing order
authorizing long-term securities issuances. e long-term securities
issuances of Entergy New Orleans are limited to amounts authorized
by the City Council, and it intends to le a request during 2008 for
renewal of its authority.
CA P I TA L FU N D S AG R E E M E N T
Pursuant to an agreement with certain creditors, Entergy Corporation
has agreed to supply System Energy with sucient capital to:
n฀ ฀maintain System Energy’s equity capital at a minimum of 35% of
its total capitalization (excluding short-term debt);
n฀ permit the continued commercial operation of Grand Gulf;
n฀ ฀pay in full all System Energy indebtedness for borrowed money
when due; and
n฀ ฀enable System Energy to make payments on specic System
Energy debt, under supplements to the agreement assigning
System Energy’s rights in the agreement as security for the
specic debt.
EN T E R G Y T E X A S SE C U R I T I Z AT I O N BO N D S
In April 2007, the PUCT issued a nancing order authorizing the
issuance of securitization bonds to recover $353 million of Entergy
Texas’ Hurricane Rita reconstruction costs and up to $6 million of
transaction costs, oset by $32 million of related deferred income tax
benets. In June 2007, Entergy Gulf States Reconstruction Funding I,
LLC, a company wholly-owned and consolidated by Entergy Texas,
issued $329.5 million of senior secured transition bonds (securitization
bonds), as follows (in thousands):
Senior Secured Transition Bonds, Series A:
Tranche A-1 (5.51%) due October 2013 $ 93,500
Tranche A-2 (5.79%) due October 2018 121,600
Tranche A-3 (5.93%) due June 2022 114,400
Tot al senior secured transition bonds $329,500
Although the principal amount of each tranche is not due until the
dates given above, Entergy Gulf States Reconstruction Funding expects
to make principal payments on the bonds over the next ve years in
the amounts of $19.1 million for 2008, $17.7 million for 2009, $18.6
million for 2010, $19.7 million for 2011, and $20.8 million for 2012.
All of the scheduled principal payments for 2008-2012 are for Tranche
A-1, except for $2.3 million for Tranche A-2 in 2012.
With the proceeds, Entergy Gulf States Reconstruction Funding
purchased from Entergy Texas the transition property, which is the
right to recover from customers through a transition charge amounts
sucient to service the securitization bonds. Entergy Texas began cost
recovery through the transition charge in July 2007. e creditors of
Entergy Texas do not have recourse to the assets or revenues of Entergy
Gulf States Reconstruction Funding, including the transition property,
and the creditors of Entergy Gulf States Reconstruction Funding do not
have recourse to the assets or revenues of Entergy Texas. Entergy Texas
has no payment obligations to Entergy Gulf States Reconstruction
Funding except to remit transition charge collections.