Entergy 2008 Annual Report Download - page 85

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ENTERGY CORPORATION AND SUBSIDIARIES 2008
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Notes to Consolidated Financial Statements continued
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The annual long-term debt maturities (excluding lease obligations)
for debt outstanding as of December 31, 2008, for the next five years
are as follows (in thousands):
2009 $ 516,019
2010 $ 763,036
2011 $ 897,367
2012 $3,625,459
2013 $ 579,461
In November 2000, Entergy’s Non-Utility Nuclear business
purchased the FitzPatrick and Indian Point 3 power plants in a
seller-financed 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.
These 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. This 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 financing orders authorizing long-term securities
issuances. Entergy Arkansas has received an APSC long-term
financing order authorizing long-term securities issuances. The
long-term securities issuances of Entergy New Orleans are limited
to amounts authorized by the City Council, and the current
authorization extends through August 2010.
CA P I T A L FU N D S AG RE E M E N T
Pursuant to an agreement with certain creditors, Entergy Corporation
has agreed to supply System Energy with sufficient 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 specific System
Energy debt, under supplements to the agreement assigning
System Energy’s rights in the agreement as security for the
specific debt.
EN T E R G Y TE X A S SE C U R I T I Z A T I O N BO N D S
In April 2007, the PUCT issued a financing 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, offset by $32 million of related deferred income
tax benefits. 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
Total 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
five years in the amounts of $17.7 million for 2009, $18.6 million
for 2010, $19.7 million for 2011, $20.8 million for 2012, and $21.9
million for 2013. All of the scheduled principal payments for 2009-
2012 are for Tranche A-1, except for $2.3 million for Tranche A-2
in 2012, and all of the scheduled principal payments for 2013 are
for Tranche A-2.
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 sufficient to service the securitization bonds. Entergy
Texas began cost recovery through the transition charge in July
2007. The 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.
EN T E R G Y TE X A S DE B T IS S U A N C E
In January 2009, Entergy Texas issued $500 million of 7.125%
Series Mortgage Bonds due February 2019. Entergy Texas used a
portion of the proceeds to repay its $160 million note payable to
Entergy Corporation, to repay the $100 million outstanding on
its credit facility, and to repay short-term borrowings under the
Entergy System money pool. Entergy Texas intends to use the
remaining proceeds to repay on or prior to maturity approximately
$70 million of obligations that had been assumed by Entergy Texas
under the debt assumption agreement with Entergy Gulf States
Louisiana and for other general corporate purposes.